Japan Hotel REIT Investment : Notice Concerning Acquisition and Lease of New Assets (La’gent Stay Sapporo Odori, Oriental Hotel Kyoto Rokujo and Hotel Oriental Express Fukuoka Nakasukawabata)

This English translation is provided for information purposes only. If any discrepancy is identified between this translation and the Japanese original, the Japanese original shall prevail.

September 11, 2023

REIT Issuer:

Japan Hotel REIT Investment Corporation (TSE code: 8985)

Kaname Masuda, Executive Director

Asset Management Company:

Japan Hotel REIT Advisors Co., Ltd.

Hisashi Furukawa, President and CEO

Contact:

Makoto Hanamura

Director of the Board, Managing Director

Head of Finance and Planning Division

TEL: [phone]

Notice Concerning Acquisition and Lease of New Assets

(La'gent Stay Sapporo Odori, Oriental Hotel Kyoto Rokujo and

Hotel Oriental Express Fukuoka Nakasukawabata)

This is to inform you that Japan Hotel REIT Advisors, Co., Ltd. (hereinafter called the "Asset Management Company"), the asset management company of Japan Hotel REIT Investment Corporation (hereinafter called "JHR"), has resolved to acquire and lease the properties below (hereinafter called the "Assets for Anticipated Acquisition") today on behalf of JHR.

The lessees of Oriental Hotel Kyoto Rokujo and Hotel Oriental Express Fukuoka Nakasukawabata fall under an "Interested Party, etc." as stipulated in the Act on Investment Trusts and Investment Corporations (Act No. 198 of 1951, as amended; hereinafter the "Investment Trust Act"). Therefore, the execution of lease contracts of Oriental Hotel Kyoto Rokujo and Hotel Oriental Express Fukuoka Nakasukawabata has been approved by JHR based on a resolution at JHR's Board of Directors meeting pursuant to the Investment Trust Act and the Code for Transactions with Sponsor-Related Party stipulated by the Asset Management Company. (Please see "7. Transaction with Interested Party" below.)

1. Summary of the Assets for Anticipated Acquisition

Name of the Assets for	Asset type		Anticipated	Anticipated
Rent structure	acquisition price	Collateral
Anticipated Acquisition	(*1)	acquisition date
	(*2)
La'gent Stay Sapporo	Limited-service	Variable rent	JPY10,020,000	September 27,
Odori	hotel	thousand	2023
Oriental Hotel Kyoto	Limited-service	Fixed rent and	JPY4,446,028	September 27,	Unsecured
Rokujo	hotel	Variable rent	thousand	2023
Hotel Oriental Express	Limited-service	Fixed rent and	JPY4,460,819	September 27,
Fukuoka Nakasukawabata	hotel	Variable rent	thousand	2023
		Total	JPY18,926,848
		thousand

(*1) JHR categorizes hotels into three types, "limited-service hotel" (hotels specialized in selling guest rooms), "full-service hotel" (hotels providing comprehensive services, not only selling guest rooms) and "resort hotel" (among full-service hotels, hotels located in vacation resorts, which are areas with rich natural environment or tourist attractions such as hot spring and scenic spots, or areas surrounding famous leisure facilities, leisure facilities attracting customers, etc.) according to the manner of operation provided. The same shall apply below.

(*2) The purchase and sale agreement for beneficial interest in trust, etc. (hereinafter called the "PSA, etc.") for each real estate beneficial interest in trust has been concluded with the relevant seller to acquire the relevant Assets for Anticipated Acquisition. The anticipated acquisition price is the price set forth in the PSA, etc. for acquisition of the relevant Assets for Anticipated Acquisition (consumption tax, local consumption tax and the acquisition expense such as brokerage fee are not included).

Note: This document is intended to serve as a press release to make available information regarding acquisition and lease of new assets of JHR. The document should not be considered as an offer to sell or a solicitation of an offer to purchase any investment unit or other investment of JHR. Prospective investors are advised to make any investment decision at their own risk and responsibility.

This press release does not constitute an offer of securities in the United States. Securities may not be offered or sold in the United States without registration or an exemption from registration under the United States Securities Act. of 1933 (as amended). Any public offering of securities to be made in the United States will be made by means of an English language prospectus prepared in accordance with the U.S. Securities Act of 1933 that may be obtained from the issuer or distributor of the security and that will contain detailed information about the issuer and its management as well as its financial statements. However, the securities referred to above will not be publicly offered or sold in the United States.

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(*3) Please see "5. Summary of the Sellers" below for the sellers.

2. Rationale for Acquisition and Lease

JHR aims to provide investors with attractive investment opportunities in hotels that can realize "both stability and upside potential". The Asset Management Company has made the determination to acquire the Assets for Anticipated Acquisition as they benefit JHR for the following reasons.

The Assets for Anticipated Acquisition are "La'gent Stay Sapporo Odori", "Oriental Hotel Kyoto Rokujo" and "Hotel Oriental Express Fukuoka Nakasukawabata".

La'gent Stay Sapporo Odori is a limited-service hotel that opened in July 2016 and is located in the central part of Sapporo, a city with high leisure demand. This hotel is equipped with large bathhouses with natural hot spring, Japanese-style rooms with tatami mats, and condominium-type rooms with kitchens, etc., which are advantageous in capturing leisure demand, especially inbound demand.

Oriental Hotel Kyoto Rokujo is a relatively newly built limited-service hotel that opened in November 2019, with easy access to tourist attractions such as Nishi Honganji Temple, one of the World Heritage Sites of "Historic Monuments of Ancient Kyoto", and an attractive space design based on the concept of Japanese culture with an ancient Kyoto atmosphere.

Hotel Oriental Express Fukuoka Nakasukawabata is a relatively newly built limited-service hotel that opened in April 2021, located in a convenient area with easy access to JR Hakata Station and Tenjin Station on the Fukuoka City Subway Airport Line.

As for Oriental Hotel Kyoto Rokujo and Hotel Oriental Express Fukuoka Nakasukawabata, HMJ Group (*1) has been involved in the planning of such hotels since these hotels were first developed, and HMJ Group's operational know- how has been utilized in these hotels, such as the configuration of all guest rooms to accommodate two or more people, which is advantageous for capturing leisure demand.

Each of the Assets for Anticipated Acquisition is a high-quality property located in areas where JHR has an extensive track record in the asset management of hotels it already owns and where stable accommodation demand and steady growth can be expected going forward. In addition, the lease contracts have a rent structure that can be expected to have upside potential through variable rents linked to GOP (*2) or AGOP (*3), and JHR believes that the acquisitions of the Assets for Anticipated Acquisition will enhance the quality of the portfolio.

JHR sets its criteria to select hotel lessees combining credibility and hotel management capability. JHR believes each of the lessees of the Assets for Anticipated Acquisition satisfies its criteria to select hotel tenants mentioned in "Report on the Management Structure and System, etc. of the Issuer of Real Estate Investment Trust Securities and Related Parties" which was disclosed on March 31, 2023 (available in Japanese only).

(*1) HMJ refers to Hotel Management Japan Co., Ltd. (a corporation in which SC J-Holdings Pte. Ltd. indirectly holds 100% of the issued shares), and HMJ Group refers to HMJ and its subsidiaries (a corporation in which HMJ holds more than 50% of the issued shares). The same shall apply hereinafter.

(*2) GOP is the abbreviation of Gross Operating Profit, which is the remaining amount after deducting labor cost, general and administrative expenses and other expenses associated with hotel operation from the hotel's total sales. The same shall apply hereinafter.

(*3) AGOP (Adjusted GOP = GOP after adjustment) is the remaining amount after deducting certain payment of fees and other charges from the GOP. The same shall apply hereinafter.

3. Features of the Assets for Anticipated Acquisition I. La'gent Stay Sapporo Odori

(1) Sapporo Market

Sapporo is one of the most popular destinations in Japan for both domestic and inbound tourists. And it is a government ordinance-designated city that serves as a hub for the entire Hokkaido region. In addition to stable

Note: This document is intended to serve as a press release to make available information regarding acquisition and lease of new assets of JHR. The document should not be considered as an offer to sell or a solicitation of an offer to purchase any investment unit or other investment of JHR. Prospective investors are advised to make any investment decision at their own risk and responsibility.

This press release does not constitute an offer of securities in the United States. Securities may not be offered or sold in the United States without registration or an exemption from registration under the United States Securities Act. of 1933 (as amended). Any public offering of securities to be made in the United States will be made by means of an English language prospectus prepared in accordance with the U.S. Securities Act of 1933 that may be obtained from the issuer or distributor of the security and that will contain detailed information about the issuer and its management as well as its financial statements. However, the securities referred to above will not be publicly offered or sold in the United States.

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business demand, the area is expected to have stable leisure demand both domestically and inbound due to the location of tourist attractions such as the Sapporo Clock Tower, an important cultural property of Japan, and the former Hokkaido Government Office building, affectionately known as "Red Brick", as well as various events such as the Sapporo Snow Festival. Going forward, JHR believes that the market has potential for further growth, as leisure demand is expected to expand due to, among others, the recovery of inbound travel and the improvement of accessibility such as functional expansion plan of New Chitose Airport and related facilities and the extension of the Hokkaido Shinkansen Line to Sapporo, which is scheduled to be completed by the end of March 2031.

1. Features of the Assets for Anticipated Acquisition

1. Superiority in location
   La'gent Stay Sapporo Odori is about a 4-minute walk from Odori Station and about a 5-minute walk from Susukino Station on the Sapporo Municipal Subway. Both stations are Sapporo's main train station and making it a convenient location for both tourism and business. It is also within walking distance of Odori Park and the Sapporo TV Tower, two of Sapporo's most famous tourist spots, as well as the Tanuki-koji shopping arcade lined with restaurants and shops.
2. Superiority in infrastructure
   La'gent Stay Sapporo Odori is a limited-service hotel that opened in July 2016. This hotel has 219 guest rooms, with the main guest rooms measuring 23 square meters in size, and is equipped with several types of rooms, including Japanese-style rooms, to meet various needs. In particular, almost all guest rooms can accommodate two or more people, making it an excellent guest room configuration for capturing leisure demand. This hotel has a restaurant that serves breakfast using Hokkaido ingredients as well as a bar and lounge space. A convenience store is a tenant on the first floor of the hotel, making it a highly convenient property that meets the needs of hotel guests. In addition, this hotel has two types of large bathhouses using natural hot springs and JHR believes that it also differentiates from other limited-service hotels in the surrounding area.
3. Superiority in operations
   La'gent Stay Sapporo Odori is managed by AB Accommo. Co. Ltd. which has experience to manage 25 hotels across Japan. Also, it has received high evaluation, including a listing in the "Michelin Guide Hokkaido 2017" and an award from "Rakuten Travel Bronze Award 2022".

1. Oriental Hotel Kyoto Rokujo

1. Kyoto Market

Kyoto is one of the most popular tourist cities in Japan and has strong popularity not only in Japan but also from abroad. Although inbound demand declined sharply due to the COVID-19 pandemic, it has been recovering recently, and JHR believes that the number of inbound visitors is expected to increase in the future and the further growth of the market can be expected.

1. Features of the Assets for Anticipated Acquisition

1. Superiority in location
   Oriental Hotel Kyoto Rokujo is located along Aburanokoji Dori, about an 8-minute walk from Gojo Station on the Kyoto Municipal Subway Karasuma Line. The area offers easy access to historical tourist attractions such as Nishi Honganji Temple, a World Heritage Site, and Higashi Honganji Temple, which has important cultural assets, as well as Kyoto Tower and Kyoto Railway Museum, etc.
2. Superiority in infrastructure

Oriental Hotel Kyoto Rokujo is a relatively newly built limited-service hotel that opened in November 2019. This hotel has 166 guest rooms, all of which can accommodate two or more people, and more than half of the rooms can accommodate three people, making it suitable composition for both domestic and inbound leisure

Note: This document is intended to serve as a press release to make available information regarding acquisition and lease of new assets of JHR. The document should not be considered as an offer to sell or a solicitation of an offer to purchase any investment unit or other investment of JHR. Prospective investors are advised to make any investment decision at their own risk and responsibility.

This press release does not constitute an offer of securities in the United States. Securities may not be offered or sold in the United States without registration or an exemption from registration under the United States Securities Act. of 1933 (as amended). Any public offering of securities to be made in the United States will be made by means of an English language prospectus prepared in accordance with the U.S. Securities Act of 1933 that may be obtained from the issuer or distributor of the security and that will contain detailed information about the issuer and its management as well as its financial statements. However, the securities referred to above will not be publicly offered or sold in the United States.

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demand. The restaurant serves breakfast utilizing ingredients unique to Kyoto and offers time as the café space exclusively for guests.

The overall design of the property is highly competitive, in JHR's opinion, because of its attractive space design based on the concept of Japanese culture, utilizing the atmosphere of the ancient capital of Kyoto.

1. Superiority in operations
   For Oriental Hotel Kyoto Rokujo, HMJ Group has participated in the planning of the hotel since its initial development and has operated the hotel since its opening. The rent structure combines fixed and variable rents to ensure stability and provide upside potential as well. JHR aims to achieve growth through an active asset management strategy that leverages HMJ Group's platform.

1. Hotel Oriental Express Fukuoka Nakasukawabata

1. Fukuoka Market

Fukuoka is the center of business and tourism in Kyushu region and frequently hosts MICE (*) and other large- scale events, making it a market with high accommodation demand for domestic and inbound tourists. This area has good access from Fukuoka Airport to JR Hakata Station, and in addition to robust business demand, future expansion of domestic and inbound leisure demand is also expected due to the Fukuoka Airport expansion project.

1. 1. "MICE" is an acronym for conferences (Meeting), incentive and study tours conducted by companies and other organizations (Incentive Travel), international conferences (Convention)and exhibitions, trade fairs and events (Exhibition/Event) conducted by international organizations, groups and academic societies, and is a generic term for business events that are expected to attract a large number of visitors.
2. Features of the Assets for Anticipated Acquisition

1. Superiority in location
   Hotel Oriental Express Fukuoka Nakasukawabata is located on Kaminishimachi-dori Street, about a 4-minute walk from Nakasukawabata Station on the Fukuoka City Subway Airport Line, which is the central station in the Nakasu area, which is the most popular entertainment district in Kyushu region. Also, the hotel is located at about a 3-minute walk from Gofukumachi Station on the Fukuoka City Subway Hakozaki Line. This hotel is located at the middle of JR Hakata Station and Tenjin Station on the Fukuoka City Subway Airport Line, providing easy access to both stations and making the area convenient for business and leisure travelers.
2. Superiority in infrastructure
   Hotel Oriental Express Fukuoka Nakasukawabata is a relatively newly built limited-service hotel that opened in April 2021. This hotel has 183 guest rooms, all of which can accommodate two or more people, making it suitable for both domestic and inbound leisure travelers. Its restaurant offers a buffet of locally produced ingredients for local consumption. This hotel has highly convenient hotel facilities that can meet the needs of various domestic and international guests, including a 24-hour fitness gym, a self-cloakroom where suitcases can be left, and a self-check-in terminal.
3. Superiority in operations
   Hotel Oriental Express Fukuoka Nakasukawabata has been operated by HMJ Group since its opening, with HMJ Group participating in the planning of the hotel from its initial development. It is also the third hotel in the Hakata area that is operated by HMJ Group. Its goal is to achieve growth through an active asset management strategy that actively uses HMJ Group's platform, which includes taking advantage of the merits of operating multiple properties in the same area, pursuing upside of revenue through mutual introduction of customers and countermeasures against double booking, as well as cost management through synergy effects such as optimizing allocation of human resource at the operator, controlling costs through back office integration, and reducing costs through joint procurement.

Note: This document is intended to serve as a press release to make available information regarding acquisition and lease of new assets of JHR. The document should not be considered as an offer to sell or a solicitation of an offer to purchase any investment unit or other investment of JHR. Prospective investors are advised to make any investment decision at their own risk and responsibility.

This press release does not constitute an offer of securities in the United States. Securities may not be offered or sold in the United States without registration or an exemption from registration under the United States Securities Act. of 1933 (as amended). Any public offering of securities to be made in the United States will be made by means of an English language prospectus prepared in accordance with the U.S. Securities Act of 1933 that may be obtained from the issuer or distributor of the security and that will contain detailed information about the issuer and its management as well as its financial statements. However, the securities referred to above will not be publicly offered or sold in the United States.

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4. Details of the Assets for Anticipated Acquisition

1. La'gent Stay Sapporo Odori

Property No.		57	Property Name		La'gent Stay Sapporo Odori
1. Asset summary (*1)
Asset category		Real estate beneficial interest in trust and movable assets associated with the hotel
Anticipated acquisition date	September 27, 2023
Anticipated acquisition price	JPY10,020,000 thousand
Appraisal value		JPY10,800,000 thousand (See "12. Real Estate Appraisal Report Summary" below for details.)
2. Summary of real estate (or trusted real estate) (*2)
Intended use of the property	Hotel / Limited-service hotel
Ownership		Land	Ownership
	Building	Ownership
		Plot No.	26-5,26-37,33-4, Minami 2-jo nishi 5-chome,Chuo-ku, Sapporo City, Hokkaido
		Address	5-26-5, Minami 2-jo nishi, Chuo-ku, Sapporo City, Hokkaido
Land		Acreage	1,277.68 m2
	Zoning, etc.	Commercial district, fire prevention district
		Building-to-land ratio	80%
		Floor area ratio	800%
		Structure and stories	RC with flat roof; 14 stories above ground
		Intended use	Hotel / Retail
		Completion	June 15, 2016
Building		Total floor space (*3)	9,742.83 m2
	Designer	First Class Architect Office of Taisei Corporation
		Constructor	Sapporo Branch of Taisei Corporation
		Institute that	Bureau Veritas Japan K.K.
		confirmed building
Present owner		Trustee: Sumitomo Mitsui Trust Bank, Limited (Trust period expires on April 27, 2031)
	Beneficiary: J Hotel Sapporo GK
3. Transportation (*4)
About a 4-minute walk from "Odori Station" on Sapporo Municipal Subway Nanboku Line, Tozai Line and Toho Line
About a 5-minute walk from "Susukino Station" on Sapporo Municipal Subway Nanboku Line
4. Lease status
Total number of tenants	2
Leasable area (*5)	9,742.83 m2
Leased area (*5)		9,742.83m2
Form of lease		Fixed term lease contract (fixed term building lease contract as stipulated in Article 38 of the Act on
	Land and Building Leases)
Contractual rent		Hotel rent		Linked to hotel sales and GOP
	Retail space rent		JPY1,300 thousand per month
Terms of contract		From May 17, 2019 to May 16, 2024
Deposit and guarantee money	JPY0
Change in occupancy rate for the past	End of		End of		End of	End of	End of
December 2018		December 2019		December 2020	December 2021	December 2022
five years (based on area)
100%		100%		100%	100%	100%
5. Related parties for hotel operation
Hotel lessee		AB Accommo. Co. Ltd.
Property manager	CBRE K.K.
6. Hotel website (*6)
https://lagent.jp/sapporo-odori/en/

Note: This document is intended to serve as a press release to make available information regarding acquisition and lease of new assets of JHR. The document should not be considered as an offer to sell or a solicitation of an offer to purchase any investment unit or other investment of JHR. Prospective investors are advised to make any investment decision at their own risk and responsibility.

This press release does not constitute an offer of securities in the United States. Securities may not be offered or sold in the United States without registration or an exemption from registration under the United States Securities Act. of 1933 (as amended). Any public offering of securities to be made in the United States will be made by means of an English language prospectus prepared in accordance with the U.S. Securities Act of 1933 that may be obtained from the issuer or distributor of the security and that will contain detailed information about the issuer and its management as well as its financial statements. However, the securities referred to above will not be publicly offered or sold in the United States.

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