Ichigo Hotel Reit Investment Corp. · TSE:3463

Ichigo Hotel Reit Investment — January 2023 fiscal period Earnings Presentation

63 slides from Ichigo Hotel Reit Investment's earnings presentation, Apr 12, 2023

  1. Slide 1: Ichigo Hotel January 2023 Fiscal Period Corporate Presentation

    Ichigo Hotel (3463) Ichigo Hotel January 2023 Fiscal Period Corporate Presentation April 12, 2023 Ichigo Hotel REIT Investment Corporation (3463) Ichigo Investment Advisors Co., Ltd. © Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved. www.ichigo-hotel

  2. Slide 2: Notice on cancelled public offering and apology

    On March 16, 2023, Ichigo Hotel announced its January 2023 fiscal period earnings, the issuance of new shares via a public offering, and an acquisition of hotel assets. However, on March 28, 2023, Ichigo Hotel’s Board of Directors decided to cancel the issuance of new shares via public offering and

  3. Slide 3: Make The World More Sustainable

    Make The World More Sustainable © Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

  4. Slide 4: © Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

    © Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

  5. Slide 5: © Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

    © Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

  6. Slide 6: Agenda

    Cancelled Public Offering Rationale Sustainability as a Key Management Priority  Positive Impact From Growing Ichigo Hotel  Sustainability Initiatives Portfolio Earnings Forecasts January 2023 Results  July 2023/January 2024 Forecast Assumptions  January 2023 Highlights  July 2023 Forecast  Ja

  7. Slide 7: Cancelled Public Offering Rationale

    Cancelled Public Offering Rationale © Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved. 7

  8. Slide 8: Positive Impact From Growing Ichigo Hotel Portfolio

    Positive Impact From Growing Ichigo Hotel Portfolio Upside From New Acquisitions of Hotels With Growth Potential – Japanese hotel market is still in growth stage and is anticipated to grow further – Driving dividend growth potential via acquisitions of hotels with earnings growth potential – NAV gro

  9. Slide 9: January 2023 Results

    January 2023 Results © Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved. 9

  10. Slide 10: January 2023 Highlights

    January 2023 Highlights Results Details Asset Hotel Sunshine Utsunomiya • Acquired with cash-on-hand • Driving stability via fixed-rent hotels and geographic Acquisition (Acquisition Price JPY 2.2B) diversification of portfolio • +JPY 228M (+66.6% YOY) JPY 571M Net Income +JPY 197M (+52.9%) vs. fore

  11. Slide 11: January 2023 Earnings Breakdown

    January 2023 Earnings Breakdown (JPY million) Revised vs. (Reference) Jan 2022 Jan 2023 Forecast Revised Initial J Major Variation Factors (vs. Revised Forecast) Actual Actual (A) (Dec 2022) Forecast Forecast (B) (A) - (B) (Sep 2022) Operating Revenue 1,125 1,537 1,323 +214 1,205 Increase in variabl

  12. Slide 12: Significant YOY Increases in Revenue, RevPAR, Occupancy, ADR

    Hotel Operating Results Significant YOY Increases in Revenue, RevPAR, Occupancy, ADR Variable Rent Hotels (15 Hotels) Aug 1, 2021 Aug 1, 2022 Aug 1, 2019 Change YOY - Jan 31, 2022 - Jan 31, 2023 - Jan 31, 2020 Room Revenue (JPY M) 1,330 2,533 +1,203 +90.5% 2,613 Total Revenue (JPY M) 1,483 2,684 +1,

  13. Slide 13: YOY Growth in All Regions Via ADR Increase

    Hotel Operating Results YOY Growth in All Regions Via ADR Increase YOY by Region (Aug 2022– Jan 2023) 23 Hotels (excludes Capsule Plus Yokohama and Washington RevPAR Occupancy ADR Hotel Plaza Shimonoseki Eki Nishi) Total Kanto/ Tokai/ Chugoku/ Portfolio Hokkaido Tokyo Kyoto Osaka Kobe Kyushu Koshine

  14. Slide 14: RevPAR, Occupancy, & ADR Recovery on Track

    RevPAR, Occupancy, & ADR Recovery on Track Variable Rent Hotels (Jan 2020 – Jan 2023) RevPAR ADR Occupancy 88.5% 84.7% 84.4% 68.8% 7,286 65.4% 49.7% 6,658 47.3% 6,149 5,895 5,132 5,093 4,383 4,381 4,522 4,348 2,865 3,112 2,531 2,073 Jan 2020 Jul 2020 Jan 2021 Jul 2021 Jan 2022 Jul 2022 Jan 2023 (JPY

  15. Slide 15: Driving Earnings Growth (Operator Change)

    Organic Growth Driving Earnings Growth (Operator Change) Smile Hotel Nagano (former Comfort Hotel Nagano) − Changed operator to K.K. Hospitality Operations  Operates 70 lodging-focused hotels and resort hotels across Japan  Operates 3 Ichigo Hotel-owned hotels − Rebranded and reopened as Smile Hot

  16. Slide 16: Ichigo Hotel Value-Add: The OneFive Garden Kurashiki

    Organic Growth Ichigo Hotel Value-Add: The OneFive Garden Kurashiki Completed Full-Scale Renovations to Drive Earnings in Anticipation of Demand Recovery (February 2023) The OneFive Garden Kurashiki Renovations to drive hotel competitiveness that meet guest needs  Full-scale renovations of guest ro

  17. Slide 17: Strengthened Portfolio Via Hotel Acquisition

    External Growth Strengthened Portfolio Via Hotel Acquisition Hotel Sunshine Utsunomiya (Acquisition Price JPY 2.2B, Acquired on Sep 20, 2022) − Acquired using cash-on-hand − Fixed-rent lease hotel acquisition to drive portfolio earnings stability − A lodging-focused hotel located in Utsunomiya City

  18. Slide 18: Portfolio Growth Opportunity Via Ichigo Sponsor Support

    External Growth Portfolio Growth Opportunity Via Ichigo Sponsor Support Sponsor Owns 18 Hotels Across Japan, Mainly Lodging-Focused Hotels Sponsor-Owned Hotels By Area Hokkaido Kanto Koshinetsu Tokyo Hokuriku/Tokai Kinki Sapporo Yokohama Yokohama Utsunomiya, Tochigi Shinjuku Shima, Mie Ogaki, Gifu O

  19. Slide 19: Shareholder Discount Program

    Shareholder Program Shareholder Discount Program Program Established to Express Gratitude to Ichigo Hotel Shareholders and to Support Ichigo Hotel’s Hotel Operators Special Discount Rates (including hotels not owned by Ichigo Hotel) Minacia Co., Ltd. K.K. Hospitality Operations Greens Co., Ltd.  Ho

  20. Slide 20: Ichigo J.League Shareholder Program

    Shareholder Program Ichigo J.League Shareholder Program Represents Two Firsts for a Shareholder Program in Japan − First Japanese company to include not just its own shareholders, but also the shareholders of the REITs and YieldCo that it manages, in its shareholder program (70,000 shareholders tota

  21. Slide 21: Sustainability as a Key Management Priority

    Sustainability as a Key Management Priority © Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved. 21

  22. Slide 22: Sustainability Initiatives (1)

    Sustainability Initiatives (1) Environmental Certifications Minimizing Environmental Impact of Ichigo Hotel-Owned Assets − The OneFive Tokyo Shibuya (BELS 4 Stars) − Joined GRESB Real Estate Assessment in 2021  Awarded 2 Stars in GRESB rating  Won Green Star designation for 2 consecutive years − E

  23. Slide 23: Sustainability Initiatives (2)

    Sustainability Initiatives (2) Energy Consumption & Reduction Target Disclosures − Disclosing environmental performance on IHR website − GHG Emission Reduction Targets  Scope 1 + Scope 2 GHG emission: 50% reduction vs. 2019  Scope 3 GHG emission: 30% reduction vs. 2019 IHR Website Excerpt FY19/2 F

  24. Slide 24: Sustainability Initiatives (3)

    Sustainability Initiatives (3) Shift to Renewable Energy − Sourcing 100% renewable energy at 7 hotels as of February 28, 2023 − Remaining hotels to be transitioned sequentially by January 2024 − Total electricity at 7 transitioned hotels: 2,792,618kWh (FY22/2 Actual) − CO2 reduction: 1,232 tons (usi

  25. Slide 25: Earnings Forecasts

    Earnings Forecasts © Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved. 25

  26. Slide 26: July 2023/January 2024 Forecast Assumptions

    July 2023/January 2024 Forecast Assumptions Assuming Currently-Owned Hotels & No Rebranding/Re-tenanting Contracts Leasing All Rooms of 4 Hotels to Local Governments Ending on March 31, 2023 Occupancy, ADR, & RevPAR Forecasts for 16 Variable Hotels (Reference: Pre-Covid) vs. Pre- July 2022 July 2023

  27. Slide 27: July 2023 Forecast

    July 2023 Forecast Revenue Expected to Exceed Previous Forecast on Back of Strong Demand Recovery (JPY million) Jul 2023 Jul 2023 Jul 2022 Previous Revised (B) - (A) Major Factors for Variation Actual (A) Forecast Forecast (B) (Sep 2022) Operating Revenue 1,248 1,326 1,400 +152 Increase in variable

  28. Slide 28: January 2024 Forecast

    January 2024 Forecast Dividend Forecast to Decrease due to Termination of Contracts Leasing All Rooms to Local Governments (JPY million) Jan 2023 Jan 2024 (B) - (A) Major Factors for Variation Actual (A) Forecast (B) Operating Revenue 1,537 1,559 +22 Increase in variable rent +170 (Kurashiki, Matsuy

  29. Slide 29: Ichigo's Commitment to ESG

    Ichigo’s Commitment to ESG © Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved. 29

  30. Slide 30: Ichigo Sustainability Policy

    Ichigo Sustainability Policy Harmony with the Environment Ichigo actively monitors and minimizes the environmental impact of its business operations. Energy Conservation, CO2 Reduction, and Recycling Ichigo seeks to contribute to a low-carbon, low-waste society by reducing energy consumption, extend

  31. Slide 31: RE100 by 2025 On Track

    RE100 by 2025 On Track Ichigo RE100 Progress FY23/2 Forecast RE100 Transition Impact CO2 Reduction 35,815 tons Renewable Energy % Reduction 47.2% Ratio 60% CO2 Emissions of Cars (+7pts vs. FY22/2 Q4) × 15,572 Note: % Reduction = Amount of CO2 reduction vs. 75,890 tons (FY20/2 actual) Annual CO2 emis

  32. Slide 32: Ichigo ESG – Environmental

    Ichigo ESG – Environmental Sustainability-Driven & Climate Positive Effective Use of Existing Real Estate Towards a Net Zero Carbon Society J-REIT Initiatives Preserve & Improve Real Estate Community-Based, Productive Use of Pro-Active Environmental to End Wasteful Demolition Idle Land for Clean Ene

  33. Slide 33: Ichigo ESG – Social

    Ichigo ESG – Social Contributing to a Sustainable Society Contributing to Regional Revitalization Ichigo University Sports Initiatives Ichigo works to revitalize local communities Ichigo established Ichigo University in May and promote regional economic 2013 to support employees’ continuing As a top

  34. Slide 34: Ichigo ESG – Governance

    Ichigo ESG – Governance Global Best Practice Governance No Fixed Fee, Best Practice Governance Performance Fee- Only Structure REIT Asset Management Company (AMC)  Shifted to performance-  Monitors Asset Management Company  Best Practice linked fee structure to • All Ichigo Hotel Directors are In

  35. Slide 35: Appendix: Portfolio Details

    Appendix: Portfolio Details © Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved. 35

  36. Slide 36: Portfolio Lease Details

    Portfolio Lease Details Operator Diversification Driving Earnings Stability (as of January 31, 2023) Lease Terms Fixed Rent Fixed + Variable Rent Variable Rent Total Form of Contract Lease Lease Lease Lease – Fixed Rent Yes Yes Yes – – Fixed Portion of Fixed Portion of Hotel Excess Above Fixed Varia

  37. Slide 37: Individual Hotel Summary

    Individual Hotel Summary (as of January 31, 2023) Jan 2023 Appraisal Unrealized Acquisition Book Value Hotel Leasable Area Value Gains Hotel Name Lease Terms Location Price (JPY M) No. (m2) (JPY M) Cap Rate (%) (JPY M) (JPY M) (A) (B) (B) - (A) A-1 Nest Hotel Sapporo Ekimae Variable + Fixed Rent Sap

  38. Slide 38: January 2023 Fiscal Period Individual Hotel Operating Results

    January 2023 Fiscal Period Individual Hotel Operating Results (year-on-year) No. of January 2023 (August 2022 - January 2023) Hotel Hotel Name Lease Terms Location Guest No. RevPAR (JPY) Occupancy (%) ADR (JPY) Revenue (JPY M) Rooms A-1 Nest Hotel Sapporo Ekimae Variable + Fixed Rent Sapporo 162 7,2

  39. Slide 39: Individual Hotel Financials

    Individual Hotel Financials (JPY thousand) A-1 A-2 A-3 B-3 C-1 C-4 D-1 D-3 D-4 E-1 E-3 E-5 F-1 F-2 F-4 F-5 G-1 G-3 Comfort Nest Nest Smile The Smile The The The Total Comfort Hotel Comfort Hotel Comfort Nest Hotel The Hotel Hotel Hotel OneFive Hotel OneFive Nest Hotel OneFive Valie Hotel OneFive Nes

  40. Slide 40: Fixed/Variable Rent, RevPAR, ADR, & Occupancy Trends

    Fixed/Variable Rent, RevPAR, ADR, & Occupancy Trends Fixed/Variable Rent (JPY thousand) Jan 2022 Jul 2022 Jan 2023 Rent Ratio Rent Ratio Rent Ratio Fixed 962,539 85.5% 929,692 74.5% 1,015,562 66.1% Fixed Rent from Operators 933,355 82.9% 900,497 72.1% 983,771 64.0% Rent Other (Rent from Retail Tenan

  41. Slide 41: Variable Rent Hotel Details

    Variable Rent Hotel Details A-1 Nest Hotel Sapporo Ekimae ADR RevPAR Occupancy Location Sapporo Operating Results (Feb 2022 – Jan 2023) (right) (right) (left) (JPY) 5-minute walk from 100% 10,000 Sapporo Station on Access Sapporo City Metro 80% 8,000 Namboku Line 60% 6,000 Nest Hotel Japan Operator

  42. Slide 42: Variable Rent Hotel Details

    Variable Rent Hotel Details B-1 Capsule Plus Yokohama Location Yokohama, Kanagawa 6-minute walk from Access Yokohama Station on JR/ Subway Line The hotel operator did not give consent to disclose data. Operator nine hours Inc. Guest Rooms 169 Acquisition JPY 1.49B Price C-1 Smile Hotel Tokyo Asagaya

  43. Slide 43: Variable Rent Hotel Details

    Variable Rent Hotel Details C-4 The OneFive Tokyo Shibuya ADR RevPAR Occupancy Location Shibuya-ku, Tokyo Operating Results (Feb 2022 – Jan 2023) (right) (right) (left) (JPY) 6-minute walk from 100% 20,000 Shibuya Station on JR, Access 80% 16,000 Tokyu, Keio, and Tokyo Metro Lines 60% 12,000 40% 8,0

  44. Slide 44: Variable Rent Hotel Details

    Variable Rent Hotel Details E-1 Smile Hotel Kyoto Shijo Location Kyoto ADR RevPAR Occupancy Operating Results (Feb 2022 – Jan 2023) (right) (right) (left) 5-minute walk from (JPY) Shijo Station on Kyoto 100% 10,000 City Subway Karasuma Access Line and Karasuma 80% 8,000 Station on Hankyu Kyoto Main

  45. Slide 45: Variable Rent Hotel Details

    Variable Rent Hotel Details E-4 Hotel Wing International Kobe Shin Nagata Ekimae Location Kobe ADR RevPAR Occupancy Operating Results (Feb 2022 – Jan 2023) (right) (right) (left) (JPY) 2-minute walk from 100% 10,000 Shin Nagata Station Access on JR Kobe Line and 80% 8,000 JR Sanyo Honsen Line 60% 6,

  46. Slide 46: Variable Rent Hotel Details

    Variable Rent Hotel Details F-1 The OneFive Okayama Location Okayama ADR RevPAR Occupancy Operating Results (Feb 2022 – Jan 2023) (right) (right) (left) (JPY) 15-minute walk from Okayama Station on 100% 7,500 Access Sanyo Shinkansen, 80% 6,000 Sanyo Main Line, Uno Line 60% 4,500 Operator Hakata Hote

  47. Slide 47: Variable Rent Hotel Details

    Variable Rent Hotel Details F-4 The OneFive Garden Kurashiki Location Kurashiki, Okayama ADR RevPAR Occupancy Operating Results (Feb 2022 – Jan 2023) (right) (right) (left) (JPY) 8-minute walk from 100% 12,500 Access Kurashiki Station on 80% 10,000 JR Sanyo Main Line 60% 7,500 Operator Hakata Hotels

  48. Slide 48: Variable Rent Hotel Details

    Variable Rent Hotel Details G-1 The OneFive Fukuoka Tenjin ADR RevPAR Occupancy Location Fukuoka Operating Results (Feb 2022 – Jan 2023) (right) (right) (left) (JPY) 6-minute walk from 100% 12,500 Tenjin Station on Access Fukuoka City Subway 80% 10,000 Kuko Line 60% 7,500 Operator Hakata Hotels Inc.

  49. Slide 49: Fixed Rent Hotel Details

    Fixed Rent Hotel Details A-3 Comfort Hotel Kushiro B-2 Comfort Hotel Nagano Location Kushiro, Hokkaido Location Nagano 2-minute walk from 3-minute walk from Access Kushiro Station on JR Access Nagano Station on JR Nemuro Main Line Hokuriku Shinkansen Operator Greens Co., Ltd. Operator Greens Co., Lt

  50. Slide 50: Fixed Rent Hotel Details

    Fixed Rent Hotel Details D-1 Comfort Hotel Hamamatsu D-3 Comfort Hotel Central International Airport Location Hamamatsu, Shizuoka Location Tokoname, Aichi 2-minute walk from 5-minute walk from Hamamatsu Station on JR Central International Access Airport, Tokaido Main Line, Tokaido Shinkansen Access

  51. Slide 51: Fixed Rent Hotel Details

    Fixed Rent Hotel Details F-6 Washington Hotel Plaza Shimonoseki Eki Nishi Shimonoseki, Location Yamaguchi 3-minute walk from Shimonoseki Station Access on JR Sanyo Main Line Washington Hotel Operator Corp. Guest Rooms 238 Acquisition JPY 1.08B Price © Ichigo Investment Advisors Co., Ltd. Ichigo Hote

  52. Slide 52: Appendix: Loan Details & Shareholder Composition

    Appendix: Loan Details & Shareholder Composition © Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved. 52

  53. Slide 53: Stable Financial Base

    Stable Financial Base Outstanding Loan Balance Jan 31, 2021 Jul 31, 2021 Jan 31, 2022 Jul 31, 2022 Jan 31, 2023 Amount JPY 25.47B JPY 25.47B JPY 25.47B JPY 25.47B JPY 25.47B Long-Term Loan Ratio 72.5% 72.5% 72.5% 70.7% 63.7% Fixed Rate Ratio 70.7% 70.7% 70.7% 70.7% 63.7% Average Interest Rate 0.82%

  54. Slide 54: Loan Details

    Loan Details Loan Lender Amount Floating/ Interest Rate Borrowing Date Maturity (as of January 31, 2023) (JPY M) Fixed (%) SMBC, Mizuho, SBI Shinsei, Resona, Fukuoka, Term Loan 4 4,500 Fixed 0.90750% August 17, 2016 February 28, 2023 Nishi-Nippon City Lender Composition SMBC, Mizuho, SBI Shinsei, Re

  55. Slide 55: Shareholder Composition

    Shareholder Composition Major Shareholders (as of January 31, 2023) By Number of Shares Held Foreign Corporations & Individuals Domestic Financial Institutions No. Of Name Share Non-Financial Domestic Corporations Domestic Individuals Shares The Master Trust Bank of Japan, 44,388 42,114 38,686 1 48,

  56. Slide 56: Appendix: Sponsor, Shareholder Alignment

    Appendix: Sponsor, Shareholder Alignment © Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved. 56

  57. Slide 57: Increasing Stability Via Contract Renewals & Rebranding

    Increasing Stability Via Contract Renewals & Rebranding Timing Hotel Name Lease Terms Changes Variable+Fixed • Increased fixed rent Jun 2020 Smile Hotel Tokyo Asagaya Lease Renewal Rent • Revised variable rent The OneFive Okayama Fixed  • Operator change to Hakata Hotels Oct 2020 Variable+Fixed Reb

  58. Slide 58: Hotel Map

    Hotel Map Hokkaido Kanto/Koshinetsu Tokyo Hokuriku/Tokai A-1 A-2 A-3 B-1 B-2 B-3 C-1 C-3 C-4 D-1 D-2 D-3 D-4 Nest Hotel Nest Hotel Comfort Capsule Plus Comfort Hotel Hotel Sunshine Smile Hotel Hotel Livemax The OneFive Comfort Hotel Hotel Wing Comfort Hotel Comfort Hotel Sapporo Ekimae Sapporo Odori

  59. Slide 59: Ichigo Hotel's Sponsor: Ichigo (2337)

    Ichigo Hotel’s Sponsor: Ichigo (2337) Core Businesses: Asset Management, Sustainable Real Estate, Clean Energy ‒ Manages Ichigo Hotel (3463), Ichigo Office (8975), and Ichigo Green (9282) ‒ Sustainable Real Estate business adds value to existing buildings by drawing upon its real estate technologies

  60. Slide 60: Synergies Between Ichigo Hotel and Sponsor

    Synergies Between Ichigo Hotel and Sponsor ‒ Strengthen acquisitions through leveraging Ichigo’s sourcing network ‒ Increase asset value through Ichigo’s real estate value-add capabilities ‒ Drive higher returns for Ichigo Hotel shareholders Ichigo Hotel (3463) Buy Sponsor: Ichigo (2337) Buy Buy Hot

  61. Slide 61: Acquisitions Leveraging Sponsor Support (Hakata Hotels)

    Acquisitions Leveraging Sponsor Support (Hakata Hotels) – Ichigo-Owned Hakata Hotels Operates 14 Hotels With Focus on the Hakata (Fukuoka) Area  Company Name to be Changed to OneFive Hotels on May 31, 2023 – Hakata Hotels Deploys PROPERA, an AI-Based Revenue Management System Developed by Ichigo, t

  62. Slide 62: Ichigo Hotel Overview

    Ichigo Hotel Overview Ichigo Hotel Name Ichigo Hotel REIT Investment Corporation Securities Code 3463 Address 1-1-1 Uchisaiwaicho, Chiyoda-ku, Tokyo Executive Director Eriko Ishii Fiscal Periods January (August 1 - January 31) and July (February 1 - July 31) Asset Management Company Name Ichigo Inve

  63. Slide 63: Disclaimer

    Disclaimer These materials are for informational purposes only, and do not constitute or form a part of, and should not be construed as, an offer to sell or buy securities of Ichigo Hotel REIT Investment Corporation (Ichigo Hotel). These materials may contain forward-looking statements regarding the

Ichigo Hotel REIT Investment — January 2023 fiscal period Earnings Presentation on 6ix