Ichigo Hotel Reit Investment Corp. · TSE:3463
Ichigo Hotel Reit Investment — July 2020 Fiscal Period Earnings Presentation
59 slides from Ichigo Hotel Reit Investment's earnings presentation, Sep 14, 2020
Slide 1: Ichigo Hotel July 2020 Fiscal Period Corporate Presentation
Ichigo Hotel (3463) Ichigo Hotel July 2020 Fiscal Period Corporate Presentation September 14, 2020 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-hote
Slide 2: Condolences for Covid-19 and Typhoon Haishen
We would like to express our deepest condolences to all those across the world affected by the Covid-19 pandemic and to all those in Japan affected by Typhoon Haishen (aka Typhoon No. 10), and our wishes for the earliest possible recovery. © Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Inv
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.
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.
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.
Slide 6: Agenda
July 2020 Results January 2021 and July 2021 Forecasts July 2020 Highlights Market Environment & Forecast Assumptions July 2020 Earnings Breakdown January 2021 Forecast Operating Results Down YOY due to July 2021 Forecast Covid-19 Impact Ichigo’s Commitment to ESG RevPAR Down by Over 5
Slide 7: July 2020 Results
July 2020 Results © Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved. 7
Slide 8: July 2020 Highlights
July 2020 Highlights Results Details • No variable rent from March to July JPY 170M Net Income -JPY 633M (-78.8%) YOY • Reached agreement with one operator to reduce its current rent & adjust upward its forward variable rent JPY 2,556 (11 variable rent hotels) • Occupancy: 49.0% (vs. 90.5% in previo
Slide 9: July 2020 Earnings Breakdown
July 2020 Earnings Breakdown (JPY million) Forecast (B) July 2019 Jul 2020 vs. Forecast (Announced Major Variation Factors (vs. Forecast) Actual Actual (A) (A) - (B) Apr 2020) Operating Revenue 1,789 953 1,038 -85 Variable Rent 735 -25 41 -66 Variable rent adjustment: -66 Fixed Rent 984 935 953 -18
Slide 10: Operating Results Down YOY due to Covid-19 Impact
Operating Results Down YOY due to Covid-19 Impact Variable Rent Hotels (11 Hotels) Feb 1, 2019 Feb 1, 2020 Change YOY - Jul 31, 2019 - Jul 31, 2020 O Room Revenue (JPY M) 2,424 610 -1,814 -74.8% Total Revenue (JPY M) 2,742 707 -2,034 -74.2% RevPAR (JPY) 7,581 2,556 -5,024 -66.3% Occupancy 90.5% 49.0
Slide 11: RevPAR Down by Over 50% in All Areas
RevPAR Down by Over 50% in All Areas 18 Hotels (excludes Grandpark-Inn Yokohama, Hotel Wing YOY by Region (Feb 2020 – Jul 2020) International Kobe Shin Nagata Ekimae, Valie Hotel Hiroshima, HOTEL EMIT SHIBUYA, and Washington Hotel Plaza RevPAR Occupancy ADR Shimonoseki Eki Nishi) Tokai/ Chugoku/ Tot
Slide 12: Covid-19 Response
Covid-19 Response Safety Measures and Services for Guests − Hand sanitizers, periodic disinfections, and mandatory mask-wearing for employees − Confirming guest and staff health − Offering remote work options Temporarily Closed 9 Hotels during Nationwide State of Emergency Hotel Date Closed Status S
Slide 13: Ichigo J.League 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 (55,000 shareholders total) − First company t
Slide 14: Actions to Drive Earnings Growth
Actions to Drive Earnings Growth © Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved. 14
Slide 15: Achieving Organic Rent Growth at Contract Renewals
Achieving Organic Rent Growth at Contract Renewals Negotiating Higher Rents at Contract Renewals to Drive Organic Growth Timing Hotel Name Lease Terms Changes Variable+Fixed Renewal at • Increased fixed rent Jun 2017 Chisun Inn Osaka Hommachi Rent Higher Rent • Increased variable rent Hotel Wing Int
Slide 16: Operator Change to Generate Higher Earnings (1)
Operator Change to Generate Higher Earnings (1) Valie Hotel Tenjin − Hotel operator change from third-party operator to Ichigo-owned Hakata Hotels − Scheduled to rebrand and reopen as The OneFive Fukuoka Tenjin − Revising variable rent component of lease to increase earnings upside on top of fixed r
Slide 17: Operator Change to Generate Higher Earnings (2)
Operator Change to Generate Higher Earnings (2) Grandpark-Inn Yokohama − Hotel operator change to nine hours Inc. (currently operates 16 capsule hotels and 6 standard hotels) − Will be rebranded (New hotel name to be determined) − New lease adds GOP-linked variable rent to current fixed rent-only le
Slide 18: Highly-Stable, Diversified Hotel Portfolio
Highly-Stable, Diversified Hotel Portfolio Geographic Diversification November 30, 2015 (IPO) July 31, 2019 July 31, 2020 Yokohama Yokohama Kobe Kobe 2.7% Nagoya 2.9% 2.9% Nagoya 2.7% 4.9% 5.1% Kobe Osaka Kyushu Kyushu 7.3% 8.0% Osaka 6.9% 6.6% Osaka Nagoya 16.9% 17.8% 13.1% Okinawa Hokkaido Kyushu
Slide 19: Portfolio Lease Details
Portfolio Lease Details Stability Upside Lease Term Fixed Rent Fixed + Variable Rent Total Contract Lease Lease Lease – Fixed Rent Yes Yes Yes – Fixed Portion of Revenue Variable Rent – Fixed Portion of Hotel GOP – Upside Rental Income JPY 462M JPY 129M JPY 318M JPY 910M (Jan 2020 Actual) (50.8%) (1
Slide 20: Portfolio Growth Opportunity via Ichigo Sponsor Support
Portfolio Growth Opportunity via Ichigo Sponsor Support 19 Hotels (JPY 60.7B) in Ichigo Sponsor Pipeline as of May 31, 2020 − Lodging-focused hotels across Japan − Locations: Major cities such as Hokkaido, Tokyo, Yokohama, Osaka, and Fukuoka Fukuoka Hokkaido Tokyo Osaka Fukuoka Yokohama © Ichigo Inv
Slide 21: Performance Fee-Only Asset Management Fee Structure
No Fixed Fee, Performance Fee-Only Structure Directly Linked to Shareholder Value Creation Upon AGM Approval, Gains on Merger Performance Fee and Gains on REIT TOB Sale Performance Fee to be Introduced − Gains on Merger Performance Fee: Directly linked to shareholder value creation, paid when Ichigo
Slide 22: January 2021 and July 2021 Forecasts
January 2021 and July 2021 Forecasts © Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved. 22
Slide 23: Market Environment & Forecast Assumptions
Market Environment & Forecast Assumptions Hotel Market Remains Uncertain − Hotel demand is recovering in certain areas, but not enough to significantly drive ADR − Assuming variable rents will recover from the July 2021 fiscal period Occupancy and ADR Forecasts for 15 Variable Hotels − Forecasting O
Slide 24: January 2021 Forecast
January 2021 Forecast Dividend -90.5% YOY (JPY million) Jan 2021 Jan 2021 Jan 2020 Previous Forecast Revised (B) - (A) Major Factors for Variation Actual (A) (July 2020) Forecast (B) Operating Revenue 3,561 1,107 1,037 -2,523 Variable Rent 564 38 18 -545 Forecast RevPAR at 15 variable rent hotels: J
Slide 25: July 2021 Forecast
July 2021 Forecast Dividend +31.5% YOY (JPY million) Jul 2020 Jul 2021 (B) - (A) Major Factors for Variation Actual (A) Forecast (B) Operating Revenue 953 1,041 +88 Forecast RevPAR at Variable Rent Hotels: JPY 3,152 (+24.2% YOY) Variable Rent -25 53 +79 Increase due to new lease contracts (Tenjin, Y
Slide 26: Ichigo's Commitment to ESG
Ichigo’s Commitment to ESG © Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved. 26
Slide 27: 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
Slide 28: Ichigo ESG – Environmental
Ichigo ESG – Environmental Sustainable Real Estate Solar and Wind Energy: Safe and Clean Preserve & Enhance Existing Buildings Annual Power Generation Annual CO2 Reduction to End Wasteful Demolish & Rebuild 158,586,005 kWh 104,666,758 kg ‒ Lengthen useful life of existing real estate Equivalent to a
Slide 29: Ichigo ESG – Social
Ichigo ESG – Social Children’s Cancer Sports Arts Treatment Support National & Paralym Art Sponsor Support University of Miyazaki World-Class Athletes - Support artists with Faculty of Medicine’s Program ‒ Weightlifting disabilities for Children ‒ Riflery ‒ Ichigo subsidiary Miyako City ‒ Track & Fi
Slide 30: Ichigo ESG – Governance
Ichigo ESG – Governance First J-REIT No Fixed Fee, Performance Fee-Only Structure Performance-linked fee structure to support shareholder value creation Pro-active, dynamic management of Ichigo Hotel assets on behalf of shareholders Best Practice Governance REIT Asset Management Company (AMC) Mo
Slide 31: Appendix: Portfolio Details
Appendix: Portfolio Details © Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved. 31
Slide 32: Hotel Map
Hotel Map Tokyo Kanto Hokkaido Hokuriku/Tokai C-1 C-3 C-4 B-1 A-1 A-2 A-3 D-1 D-2 D-3 D-4 Smile Hotel Hotel Livemax HOTEL Grandpark-Inn Nest Hotel Nest Hotel Comfort Comfort Hotel Hotel Wing Comfort Hotel Comfort Hotel Tokyo Asagaya Nihombashi- EMIT Yokohama Sapporo Ekimae Sapporo Odori Hotel Kushir
Slide 33: Portfolio Growth
Portfolio Growth IPO Jan 2017 July 2017 through Jan 2020 July 2020 (Nov 30, 2015) Fiscal Period Fiscal Periods Fiscal Period IPO Acquisitions PO Acquisitions July 2017 Jan 2018 Jan 2019 July 2019 Jan 2020 Acquisitions 9 hotels 10 hotels 1 hotel 1 hotel 1 hotel 2 hotels 2 hotels JPY 20.4B JPY 27.2B J
Slide 34: Hakata Hotels & PROPERA
Hakata Hotels & PROPERA − Hakata Hotels, a consolidated subsidiary of Ichigo, is a hotel operator operating 12 hotels in the Hakata (Fukuoka) area − Hakata Hotels is deploying PROPERA, an AI-based revenue management system developed by Ichigo, to maximize earnings and increase guest satisfaction. Na
Slide 35: Individual Hotel Summary
Individual Hotel Summary Jul 2020 Appraisal Leasable Acquisition Book Value Unrealized Hotel Value Hotel Name Lease Terms Location Area Price (JPY M) Cap Rate Gains (JPY M) No. (JPY M) (m2) (JPY M) (A) (%) (B) - (A) (B) A-1 Nest Hotel Sapporo Ekimae Variable + Fixed Rent Sapporo 5,734.93 2,160 2,129
Slide 36: Individual Hotel Operating Results
Individual Hotel Operating Results (year-on-year) No. of July 2020 (February 2020 - July 2020) Hotel No. Hotel Name Lease Terms Location Guest Rooms RevPAR (JPY) Occupancy (%) ADR (JPY) Revenue (JPY M) A-1 004 Nest Hotel Sapporo Ekimae Variable + Fixed Rent Sapporo 162 3,041 (-72.7%) 58.8 (-40.2%) 5
Slide 37: Individual Hotel Financials
Individual Hotel Financials (JPY thousand) A-1 A-2 A-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 Tota l Nest Hotel Nest Hotel Comfort Smile Hotel HOTEL Comfort Comfort Chisun Inn Nest Hotel Comfort Valie Hotel Central Smile Hotel Nest Hotel Court Hotel Valie Hotel Nest Hotel Sa
Slide 38: Fixed/Variable Rent, RevPAR, ADR, & Occupancy Trends
Fixed/Variable Rent, RevPAR, ADR, & Occupancy Trends Fixed/Variable Rent (JPY thousand) Jul 2019 Jan 2020 Jul 2020 Rent Ratio Rent Ratio Rent Ratio Fixed Rent 1,029,238 57.5% 1,032,448 63.9% 963,173 – Fixed Rent from Operators 984,145 55.0% 993,479 61.5% 935,606 – Rent Other (Rent from Retail Tenant
Slide 39: Variable Rent Hotel Details
Variable Rent Hotel Details A-1 Nest Hotel Sapporo Ekimae ADR RevPAR Occupancy Location Sapporo Operating Results (Aug 2019 – Jul 2020) (right) (right) (left) (JPY) 5-minute walk from 100% 15,000 Sapporo Station on Access Sapporo City Metro 80% 12,000 Namboku Line 60% 9,000 Nest Hotel Japan Operator
Slide 40: Variable Rent Hotel Details
Variable Rent Hotel Details C-1 Smile Hotel Tokyo Asagaya ADR RevPAR Occupancy Location Suginami-ku, Tokyo Operating Results (Aug 2019 – Jul 2020) (right) (left) (right) (JPY) 1-minute walk from 100% 10,000 Access Asagaya Station on JR 80% 8,000 Chuo/Sobu Line 60% 6,000 K.K. Hospitality Operator Ope
Slide 41: Variable Rent Hotel Details
Variable Rent Hotel Details D-2 Hotel Wing International Nagoya ADR RevPAR Occupancy Location Nagoya Operating Results (Aug 2019 – Jul 2020) (right) (right) (left) (JPY) 2-minute walk from 100% 10,000 Marunouchi Station on both Nagoya Subway 80% 8,000 Access Network Sakuradori Line and Tsurumai 60%
Slide 42: Variable Rent Hotel Details
Variable Rent Hotel Details E-3 Chisun Inn Osaka Hommachi Location Osaka ADR RevPAR Occupancy Operating Results (Aug 2019 – Jul 2020) (right) (right) (left) 5-minute walk from (JPY) Sakaisuji-Hommachi 100% 10,000 Access Station on Osaka Municipal Subway 80% 8,000 Chuo Line 60% 6,000 SHR Hotel Lease
Slide 43: Variable Rent Hotel Details
Variable Rent Hotel Details E-5 Nest Hotel Osaka Shinsaibashi Location Osaka ADR RevPAR Occupancy Operating Results (Aug 2019 – Jul 2020) (right) (right) (left) (JPY) 1-minute walk from 100% 10,000 Nagahoribashi Station Access on Osaka Municipal 80% 8,000 Subway Sakaisuji Line 60% 6,000 Nest Hotel J
Slide 44: Variable Rent Hotel Details
Variable Rent Hotel Details F-4 Court Hotel Kurashiki Location Kurashiki, Okayama Operating Results (Aug 2019 – Jul 2020) ADR RevPAR Occupancy (right) (right) (left) (JPY) 8-minute walk from 100% 15,000 Access Kurashiki Station on 80% 12,000 JR Sanyo Main Line 60% 9,000 Operator The Court Co., Ltd.
Slide 45: Variable Rent Hotel Details
Variable Rent Hotel Details G-1 Valie Hotel Tenjin Operating Results (Aug 2019 – Jul 2020) ADR RevPAR Occupancy Location Fukuoka (right) (right) (left) (JPY) 6-minute walk from 100% 12,500 Tenjin Station on Access 80% 10,000 Fukuoka City Subway Kuko Line 60% 7,500 Operator The Court Co., Ltd. 40% 5,
Slide 46: Fixed Rent Hotel Details
Fixed Rent Hotel Details A-3 Comfort Hotel Kushiro B-1 Grandpark-Inn Yokohama Location Kushiro, Hokkaido Location Yokohama 6-minute walk from 2-minute walk from Yokohama Station on Access Kushiro Station on JR Access JR Line, private Nemuro Main Line railways, and subway Operator Greens Co., Ltd. Op
Slide 47: Fixed Rent Hotel Details
Fixed Rent Hotel Details D-3 Comfort Hotel Central International Airport D-4 Comfort Hotel Suzuka Location Tokoname, Aichi Location Suzuka, Mie 5-minute walk from Central International Airport, 3-minute walk from Access 3-minute walk from Central Access Shirako Station on International Airport Stati
Slide 48: Fixed Rent Hotel Details
Fixed Rent Hotel Details F-6 Washington Hotel Plaza Shimonoseki Eki Nishi Location Shimonoseki, Yamaguchi 3-minute walk from Access Shimonoseki Station on JR Sanyo Main Line Operator Washington Hotel Corp. Guest 238 Rooms Acquisition JPY 1.08B Price © Ichigo Investment Advisors Co., Ltd. Ichigo Hote
Slide 49: Appendix: Loan Details & Shareholder Composition
Appendix: Loan Details & Shareholder Composition © Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved. 49
Slide 50: Stable Financial Base
Stable Financial Base − Shorter-term loans are floating rate to take advantage of current low interest rates − 90% of loans are fixed to hedge against a rise in interest rates Outstanding Loan Balance Jul 31, 2018 Jan 31, 2019 Jul 31, 2019 Jan 31, 2020 Jul 31, 2020 Amount JPY 21.75B JPY 21.75B JPY 2
Slide 51: Loan Details
Loan Details Loan Balances (as of July 31, 2020) Amount Floating/ Interest Rate Loan Lender Borrowing Date Maturity (JPY million) Fixed (%) Term Loan 2 SMBC, Mizuho, Shinsei, Resona 5,250 Fixed 1.08000% November 30, 2015 November 30, 2020 Term Loan 4 SMBC, Mizuho, Shinsei, Resona, Fukuoka, Nishi-Nip
Slide 52: Shareholder Composition
Shareholder Composition Major Shareholders (as of July 31, 2020) By Number of Shares Held Foreign Corporations & Individuals Domestic Financial Institutions No. of Non-Financial Domestic Corporations Domestic Individuals Name Share Shares (Shares) 25,161 34,316 40,149 (9.9%) Custody Bank of Japan, L
Slide 53: Appendix: Growth Roadmap, Sponsor, Shareholder Alignment
Appendix: Growth Roadmap, Sponsor, Shareholder Alignment © Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved. 53
Slide 54: Ongoing Actions to Drive Increased Shareholder Value
Ongoing Actions to Drive Increased Shareholder Value Portfolio Growth & Diversification Drive Earnings Growth & Stability Organic Growth External Growth Current Environment Current Environment • Both Japanese and inbound demand has dropped • Sales and acquisitions limited due to market uncertainty.
Slide 55: Growth Strategy Roadmap
Growth Strategy Roadmap Flexibly Responding to Market Environment Stage I Stage II Continuous Dividend Growth via External Growth, Organic Growth, and Strong Financial Base • Construct a diversified portfolio to pursue both income • Drive higher earnings via economies of scale from increased stabili
Slide 56: Ichigo Hotel's Sponsor: Ichigo (2337)
Ichigo Hotel’s Sponsor: Ichigo (2337) Core Businesses: Asset Management, Sustainable Real Estate, Clean Energy ‒ Manages Ichigo Office (8975), Ichigo Hotel (3463), and Ichigo Green (9282) ‒ TSE First Section, JPX-Nikkei 400 Member ‒ Deeply committed to CSR and Sustainability ‒ Japan’s first zero-car
Slide 57: 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
Slide 58: 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 Osamu Miyashita Fiscal Periods January (August 1 - January 31) and July (February 1 - July 31) Asset Management Company Name Ichigo
Slide 59: 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 th
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