Japan Hotel REIT Investment : Notice Concerning Revision of Operating Forecast and Forecast of Dividend for the Fiscal Year Ended December 2021 (22nd Period)

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.

February 9, 2022

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 & CEO

Contact:

Makoto Hanamura

Director of the Board, Managing Director

Head of Finance and Planning Division

TEL: [phone]

Notice Concerning Revision of Operating Forecast

and Forecast of Dividend for the Fiscal Year Ended December 2021 (22nd Period)

Japan Hotel REIT Investment Corporation (hereinafter called "JHR") informs you of the revision of the operating forecast and forecast of dividend for the fiscal year ended December 2021 (January 1, 2021 through December 31, 2021), announced in "Notice Concerning Revision of Operating Forecast and Forecast of Dividend for the Fiscal Year Ended December 2021 (22nd Period)" dated September15, 2021.

1. Revision of operating forecast and forecast of dividend for the fiscal year ended December 2021 (January 1, 2021 through December 31, 2021)

Dividend per unit

Dividend per unit

Operating

Operating

Ordinary

(Excess of

Net income

resulting from

revenue

income

income

earnings

excess of earnings

exclusive)

Previous forecast

JPY1M

JPY1M

JPY1M

JPY1M

JPY

JPY

(A)

12,808

1,917

208

207

120

－

Forecast this time

JPY1M

JPY1M

JPY1M

JPY1M

JPY

JPY

(B)

13,633

2,959

1,298

1,296

366

－

Variance

JPY1M

JPY1M

JPY1M

JPY1M

JPY

JPY

(C) = (B)－(A)

824

1,042

1,089

1,089

246

－

Variance ratio

%

%

%

%

%

%

(D) = (C) / (A)

6.4

54.3

522.8

525.9

205.0

－

(Reference)	Forecast of net income per unit for the full fiscal year: ¥290
	(Calculated based on the average number of investment units during the period (4,466,061 units))
(*1)	Dividend per unit is calculated based on the number of investment units issued as of today: 4,467,006 units.
(*2)	Total dividend is planned to be an amount of net income plus the reversed amount of reserve for temporary difference
	adjustment in the amount of ¥335 million.
(*3)	For the details of the operating forecast and forecast of dividend above, please refer to
	"Assumptions of the operating forecast for the full fiscal year ended December 2021 (22nd period)"

(*4) Amounts are rounded down to the nearest millions of yen and percentages are rounded off to the nearest first decimal place. The same shall apply hereinafter.

Note: This document is intended to serve as a press release to make available the information on the revision of operating forecast and forecast of dividend for the fiscal year ended December 2021 (22nd period). This document should not be construed as an offer to sell or solicitation of an offer to purchase any investment units or other investment of JHR. Prospective investors are advised to make any investment decisions at their own risk and responsibility.

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2. Rationale for revisions to the operating forecast for the fiscal year ended December 2021 (January 1, 2021 through December 31, 2021)

Since operational result of JHR for fiscal year ended December 2021 (22nd period) have almost become clear, JHR revises the operating forecast and forecast of dividend as of today.

For the detail of operational result of major hotels with variable rent, etc., please refer to Hotel operation indexes, sales and GOP (Operating income)

Note: This document is intended to serve as a press release to make available the information on the revision of operating forecast and forecast of dividend for the fiscal year ended December 2021 (22nd period). This document should not be construed as an offer to sell or solicitation of an offer to purchase any investment units or other investment of JHR. Prospective investors are advised to make any investment decisions at their own risk and responsibility.

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3. Highlights of the operating forecast and forecast of dividend

The following is the comparison and the major factors causing the variance between the operating forecast and forecast of dividend for the full fiscal year ended December 2021 (22nd period) and the operating forecast and forecast of dividend announced in "Notice Concerning Revision of Operating Forecast and Forecast of Dividend for the Fiscal Year Ended December 2021 (22nd Period)" dated September15, 2021 (previous forecast) for the full fiscal year ended December 2021.

											(Unit: millions of yen)
		FY2020		FY2021
		(21st Period)		(22nd Period)			Comparison with the
									Factors Causing Variance
		Actual	Previous	Forecast This Time		Previous Forecast
		Forecast
				(A)	(B)			(B)-(A)	%
Properties	No. of Properties		42		41		41		-	-
Acquisition Price		370,031		363,542		363,542		-	-
	Operating Revenue		13,838		12,808		13,633		824	6.4%
	Real Estate		10,495		9,643		10,374		730	7.6%
	Operating Revenue
		Composition	Composition		Composition
	Fixed Rent	72.8%	7,640	66.5%	6,411	61.8%	6,413		2	0.0%
	Other Income	8.5%	892	9.4%	907	8.4%	872		(35)	(3.9%)	Mainly due to a decrease in utility revenues
											1) Increase in variable rent of the HMJ Group Hotels (*3) by
											JPY698MM
	Variable Rent	18.7%	1,963	24.1%	2,324	29.8%	3,088		763	32.9%	2) Increase iin variable rent, etc. of the Accor Group Hotels (*3) by
Profit		91MM
										3)Increase in variable rent of the Ishin Group Hotels (*4) by 13MM
and											4)Decrease in variable rent of Hilton Nagoya by 39MM
Loss	Gain on Sale of		3,343		3,165		3,258		93
	Real Estate					3.0%
	Properties, etc.
	NOI (Note 2)		6,547		5,433		6,366		933	17.2%
	NOI Yield		1.8%		1.5%		1.8%		0.3%
	NOI after Depreciation		1,778		648		1,544		895	138.1%
	(Note 2)
										Increase in Depreciation by 31MM
	NOI Yield after
		0.5%		0.2%		0.4%		0.2%
	Depreciation
	Operating Income		3,176		1,917		2,959		1,042	54.3%
	Ordinary Income		1,398		208		1,298		1,089	522.8%
	Net Income		1,527		207		1,296		1,089	525.9%
	Reversal from Reserve for
	Temporary		305		329		335		5	1.8%	Reversed Amount of the Reserve for Temporary Difference
	Difference Adjustments
	(Negative Goodwill)										Adjunsment (*6)
											2020: 50-year negative goodwill amortization: JPY262MM, Loss on
Dividend	Total Dividends		1,829		536		1,634		1,098	205.0%	retirement of noncurrent assets: 5MM, Amortization of trademark
											rights: 37MM
	Number of Units Issued		4,462,347		4,467,006	4,467,006				2021: 50-year negative goodwill amortization: JPY262MM, Loss on
				-	-	retirement of noncurrent assets: 16MM, Amortization of trademark
	(Unit)
										rights: 56MM
	Dividend per Unit (JPY)		410		120		366		246	205.0%

(*1) Factors Causing Variance states a comparison with the previous forecast..

(*2) HMJ Group Hotels refers to 14 hotels: Kobe Meriken Park Oriental Hotel, Oriental Hotel tokyo bay, Namba Oriental Hotel, Hotel Nikko Alivila, and Oriental Hotel Hiroshima, which JHR leases to HMJ, an affiliated company of asset management company (hereinafter called the "HMJ Hotels"), plus Okinawa Marriott 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 Shinsaibash, and Hilton Tokyo Odaiba, which JHR leases to subsidiaries of HMJ. Although, the lessees of Hotel Oriental Express Fukuoka Tenjin (formerly Hotel Ascent Fukuoka) and Oriental Hotel Universal City (formerly Hotel Keihan Universal City) were replaced with HMJ subsidiaries on June 18, 2021 and July 1, 2021 respectively, these hotels are not included in the HMJ Group Hotels. The same shall apply hereinafter.

(*3) Accor Group Hotels refers to 6 hotels: ibis Tokyo Shinjuku, ibis Styles Kyoto Station, ibis Styles Sapporo, Mercure Sapporo, Mercure Okinawa Naha, Mercure Yokosuka. The same shall apply hereinafter.

Note: This document is intended to serve as a press release to make available the information on the revision of operating forecast and forecast of dividend for the fiscal year ended December 2021 (22nd period). This document should not be construed as an offer to sell or solicitation of an offer to purchase any investment units or other investment of JHR. Prospective investors are advised to make any investment decisions at their own risk and responsibility.

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(*4) Ishin Group Hotels refers to 4 hotels: the b suidobashi, the b ikebukuro, the b hachioji, and the b hakata. The same shall apply hereinafter.

(*5) Each is calculated using the following formula. The same shall apply hereinafter.

NOI (Net Operating Income) = Real estate operating revenue - Real estate operating costs + Depreciation + Loss on retirement of noncurrent assets + Asset retirement obligations expenses

NOI yield = NOI ÷ acquisition price

NOI after depreciation = Real estate operating revenue - Real estate operating costs NOI yield after depreciation = NOI after depreciation ÷ acquisition price

(*6) For the details of the reversed amount of the reserve for temporary difference adjustment, please refer to " Assumptions of the operating forecast for the full year of the fiscal year ended December 2021 (22nd period)" below. The same shall apply hereinafter.

(Note)

The above is the forecast based on status of operation as of today, and actual dividend per unit may fluctuate. This forecast does not guarantee the amount of dividend shown above.

* Website of Japan Hotel REIT Investment Corporation: https://www.jhrth.co.jp/en/

Note: This document is intended to serve as a press release to make available the information on the revision of operating forecast and forecast of dividend for the fiscal year ended December 2021 (22nd period). This document should not be construed as an offer to sell or solicitation of an offer to purchase any investment units or other investment of JHR. Prospective investors are advised to make any investment decisions at their own risk and responsibility.

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Assumptions for revision of the operating forecast for the full fiscal year ended December 2021 (22nd period)

Item	Assumptions
Calculation	・ Full fiscal year ended December 2021 (22nd Period): January 1, 2021 through December 31, 2021
Period	(365 days)
Assets under	・ The 41 properties owned by JHR as of today after the sale of ibis Tokyo Shinjuku (hereinafter called the
Management	"Sale") on December 15, 2021 are assumed.

• Gain on sale of real estate properties of ¥3,258 million is assumed to be recognized due to the Sale.
• Operating revenue is calculated based on the conditions of the lease and other effective contracts, taking into consideration the competitiveness of hotels, market environment, and other factors. If there are lease contracts with facilities other than hotels, such as commercial facilities and offices, operating revenue calculated based on the said lease contracts are included.
• Rents, etc. of the main hotels are calculated based on the following assumptions.

1. The HMJ Group Hotels
   JHR concluded a memorandum of understanding for the fixed-term building lease contract with the HMJ Group Hotels on August 25, 2020. From January 1, 2021 through December 31, 2021, the rent is only variable rent and is calculated by multiplying the hotel AGOP (*1) by the variable rent ratio for each hotel. However, if AGOP is less than 0 (zero), the variable rent will be 0 (zero).

					(Unit: millions of yen)
				Hotel AGOP	Variable rent ratio		Variable rent
		Kobe Meriken Park Oriental	Midterm	(85)	86.0%		－
		Hotel	Full year	40		35
		Oriental Hotel tokyo bay	Midterm	(115)	79.0%		－
		Full year	(52)		－
Operating		Namba Oriental Hotel	Midterm	154	91.0%		140
	Full year	316		288
Revenue
	Hotel Nikko Alivila	Midterm	67	74.0%		49
		Full year	209		155
		Oriental Hotel Hiroshima	Midterm	25	89.0%		22
		Full year	333		297
		Oriental Hotel Okinawa Resort	Midterm	(118)	89.0%		－
		& Spa	Full year	(255)		－
		Sheraton Grand Hiroshima	Midterm	71	93.0%		66
		Hotel (*2)	Full year	188		174
		Oriental Hotel Fukuoka Hakata	Midterm	83	97.0%		81
		Station	Full year	251		243
		Holiday Inn	Midterm	(14)	98.0%		－
		Osaka Namba	Full year	73		71
		Hilton Tokyo Narita Airport	Midterm	(2)	95.0%		－
		Full year	43		41
		International Garden Hotel	Midterm	80	95.0%		76
		Narita	Full year	299		284
		Hotel Nikko Nara	Midterm	(101)	95.0%		－
		Full year	(100)		－
		Hotel Oriental Express Osaka	Midterm	(12)	87.0%		－
		Shinsaibashi	Full year	(20)		－

Note: This document is intended to serve as a press release to make available the information on the revision of operating forecast and forecast of dividend for the fiscal year ended December 2021 (22nd period). This document should not be construed as an offer to sell or solicitation of an offer to purchase any investment units or other investment of JHR. Prospective investors are advised to make any investment decisions at their own risk and responsibility.

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