Ichigo Hotel Reit Investment Corp. · TSE:3463

Ichigo Hotel Reit Investment — January 2016 fiscal period Earnings Presentation

47 slides from Ichigo Hotel Reit Investment's earnings presentation, Mar 16, 2016

  1. Slide 1: Ichigo Hotel REIT January 2016 Fiscal Period Corporate Presentation

    Ichigo Hotel REIT January 2016 Fiscal Period Corporate Presentation March 16, 2016 Ichigo Hotel REIT Investment Corporation (3463) Ichigo Real Estate Investment Advisors Co., Ltd. © 2016 Ichigo Real Estate Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved. ww

  2. Slide 2: © 2016 Ichigo Real Estate Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation

    © 2016 Ichigo Real Estate Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

  3. Slide 3: © 2016 Ichigo Real Estate Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation

    © 2016 Ichigo Real Estate Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

  4. Slide 4: Creating peace of mind through honest and committed management

    Creating peace of mind through honest and committed management. © 2016 Ichigo Real Estate Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

  5. Slide 5: Agenda

    TSE Listing in November 2015 ü IPO Details ü Growth and Shareholder Value-Creation Strategy ü Portfolio Characteristics ü Portfolio Strategy January 2016 Financial Results ü Results Significantly Above Forecast ü Post-IPO Operating Results by Asset ü Post-IPO Total Performance ü (Reference) Year-on-

  6. Slide 6: TSE Listing in November 2015

    TSE Listing in November 2015 © 2016 Ichigo Real Estate Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved. 6

  7. Slide 7: IPO Details

    IPO Details Type of Offering Domestic Securities Code 3463 Public Offering: 129,000 shares Number of Over-allotment secondary share offering: 6,500 shares Shares Offered Total: 135,500 shares Issue Price 106,000 yen per share Offering Amount 14,363 million yen Listing Date November 30, 2015 Media Co

  8. Slide 8: Growth & Shareholder Value-Creation Strategy

    Growth & Shareholder Value-Creation Strategy Growth Strategy that Leverages Ichigo Group’s Strengths ü Increase profitability via strategic value-add CAPEX, drawing upon Ichigo’s extensive real estate value- add capabilities and know-how ü Take advantage of Ichigo Group’s broad network to source dea

  9. Slide 9: Portfolio Characteristics

    Portfolio Characteristics Asset Size Total Assets Total Appraisal Value JPY 20.4B 9 Assets JPY 20.7B Average Appraisal NOI Yield Total Guest Rooms Average NOI Yield 5.9% 1,257 Rooms 5.0% (post-depreciation) Nest Hotel Sapporo Ekimae By Region Smile Hotel Kyoto Shijio Hotel Vista Premio Kyoto Kyushu

  10. Slide 10: Portfolio Strategy

    Portfolio Strategy Initial Focus Primarily on Stay-Only Hotels that Deliver Both Earnings Stability and Income Growth Growth Potential Full-Service Hotels Located in or near train stations, tourist destinations, business centers, Resort Hotels government offices, shopping districts, and other areas

  11. Slide 11: January 2016 Financial Results

    January 2016 Financial Results © 2016 Ichigo Real Estate Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved. 11

  12. Slide 12: Results Significantly Above Forecast

    Results Significantly Above Forecast January 2016 Dividend: 471 yen (+229 yen vs. Initial Forecast) Variable Rents Up; Expenses Down (million yen) Forecast January 2016 Difference Major Factors for Variation (as of November 2015) Operating Revenue 197 178 +19 Increase in variable rent:+16mm yen Vari

  13. Slide 13: Post-IPO Operating Results by Asset

    Post-IPO Operating Results by Asset January 2016 Period RevPAR: 6,240 yen No. of January 2016 (Dec 2015 - Jan 2016) No. Name Location Guest Acquisition Date Occupancy ADR RevPAR Revenues Rooms (%) (yen) (yen) (mm yen) 001 Smile Hotel Kyoto Shijo Kyoto, Kyoto Prefecture 138 November 2015 100.1 8,254

  14. Slide 14: Post-IPO Total Performance (December 2015 - January 2016)

    Post-IPO Total Performance (December 2015 - January 2016) ADR and RevPAR Both Up Year-on-Year Total Portfolio 7 Major Hotels with Variable Rents Jan. 15 Jan. 16 YoY Jan. 15 Jan. 16 YoY Occupancy 89.3% 86.9% -2.4% 92.7% 90.9% -1.8% ADR (yen) 6,431 7,184 +11.7% 6,408 7,571 +18.1% RevPAR (yen) 5,744 6,

  15. Slide 15: (Reference) Year-on-Year Total Performance

    (Reference) Year-on-Year Total Performance Substantial Increase in Both ADR and RevPAR Total Portfolio 7 Major Hotels with Variable Rents Jan. 15 Jan. 16 YoY Jan. 15 Jan. 16 YoY Occupancy 90.4% 91.7% +1.3% 93.7% 94.3% +0.7% ADR (yen) 6,980 8,235 +18.0% 7,094 8,739 +23.2% RevPAR (yen) 6,310 7,549 +19

  16. Slide 16: Debt Financing Details

    Debt Financing Details Outstanding Loan Balance Lender Distribution November 30, 2015 Resona January 31, 2016 Bank (at IPO) 10% Outstanding Balance 8,500 mm yen 8,500 mm yen Shinsei Bank 15% SMBC Long-term Loan Ratio 100.0% 100.0% 40% Fixed-rate Loan Ratio 61.8% 61.8% Average Interest Rate 0.96% 0.9

  17. Slide 17: Accelerating Growth

    Accelerating Growth © 2016 Ichigo Real Estate Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved. 17

  18. Slide 18: Ichigo Hotel REIT Growth Strategy Roadmap

    Ichigo Hotel REIT Growth Strategy Roadmap Mid-Term Stage I Stage II Target JPY 200B Continuous Dividend Growth via External Growth, Organic Growth, and Strong Financial Base Total Assets • Construct a diversified portfolio to pursue both income • Quickly achieve JPY100B total asset size by taking fu

  19. Slide 19: External Growth Strategy: Increase Portfolio Size and Scale via Sponsor Support

    External Growth Strategy Increase Portfolio Size and Scale via Ichigo Sponsor Support 21 Hotel Assets Currently Owned or Highly Likely to Be Acquired by Sponsor ü Major locations: Tokyo, Kanagawa, Osaka, Okinawa, Fukuoka, Kumamoto, and other major regional cities Use Ichigo’s Asset Warehousing Capab

  20. Slide 20: Sponsor-Led Value-Add Case

    External Growth Strategy Sponsor-Led Value-Add Case Driving Higher Revenues via Additional Guestrooms ü Converted a floor of retail shops into hotel facilities, adding 21 guestrooms ü Increased floor area leased to hotel operator and introduced variable rent Before After Retail Floor Reception Resta

  21. Slide 21: Strategic Value-Add CAPEX (Valie Hotel Tenjin)

    Organic Growth Strategy Strategic Value-Add CAPEX (Valie Hotel Tenjin) Introduced a Restaurant and Lounge on the First Floor ü Began serving breakfast to guests in February 2016 ü Lounge open 24 hrs for hotel guests to relax ü CAPEX to add value and improve guest experience; Guestroom renovations in

  22. Slide 22: Strategic Value-Add CAPEX

    Organic Growth Strategy Strategic Value-Add CAPEX ü Bring in more tourism demand ü Focus renovations on hotels with consistent demand and high-occupancy in order to improve guest satisfaction and increase ADRs ü Convert non-revenue-generating spaces into guest rooms at hotels with occupancy of >90%

  23. Slide 23: Growing Earnings and Dividend

    Growing Earnings and Dividend Dividend forecast: 2,455 yen for July 2016; 2,606 yen for January 2017 (million yen) Operating Revenue 178 197 730 701 +28 +3.9% 755 687 +68 +9.8% Variable Rent — 66 308 290 +17 +5.8% 325 268 +56 +20.8% Fixed Rent — 119 387 387 — — 395 395 — — Other — 11 34 23 +11 +47.8

  24. Slide 24: Revised Dividend Forecasts

    Revised Dividend Forecasts Annual Dividend Forecast +495 yen (+10.8%) + 10.8% + 5.0% 5,061 +16.8% 4,566 yen yen 2,455 2,606 2,336 2,230 yen yen yen yen Initial Forecast Revised Forecast Initial Forecast Revised Forecast Initial Forecast Revised Forecast July 2016 January 2017 Annual (July 2016 & Jan

  25. Slide 25: Portfolio Overview

    Portfolio Overview © 2016 Ichigo Real Estate Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved. 25

  26. Slide 26: Smile Hotel Kyoto Shijo

    Smile Hotel Kyoto Shijo Location Kyoto, Kyoto Prefecture Hotel Type Stay-Only Number of Guest Rooms 138 Leasable Area 4,891.84 m 2 Structure SRC, Steel, B1F/10F Contractual Terms Fixed + Variable Rent Acquisition Price 4,480 mm yen Term-end Appraisal Value 4,580 mm yen Cap Rate 5.1% January 2016 Act

  27. Slide 27: Hotel Vista Premio Kyoto

    Hotel Vista Premio Kyoto Location Kyoto, Kyoto Prefecture Hotel Type Stay-Only Number of Guest Rooms 84 2 Leasable Area 3,867.66 m Structure Steel, RC, B1F/6F Contractual Terms Fixed + Variable Rent Acquisition Price 3,600 mm yen Term-end Appraisal Value 3,730 mm yen Cap Rate 4.6% January 2016 Actua

  28. Slide 28: Hotel Wing International Nagoya

    Hotel Wing International Nagoya Location Nagoya, Aichi Prefecture Hotel Type Stay-Only Number of Guest Rooms 220 2 Leasable Area 5,255.66 m Structure SRC, Steel, B1F/11F Contractual Terms Fixed + Variable Rent Acquisition Price 2,670 mm yen Term-end Appraisal Value 2,760 mm yen Cap Rate 5.2% January

  29. Slide 29: Nest Hotel Sapporo Ekimae

    Nest Hotel Sapporo Ekimae Location Sapporo, Hokkaido Prefecture Hotel Type Stay-Only Number of Guest Rooms 162 2 Leasable Area 5,734.93 m Structure SRC, B1F/11F Contractual Terms Fixed + Variable Rent Acquisition Price 2,160 mm yen Term-end Appraisal Value 2,220 mm yen Cap Rate 5.7% January 2016 Act

  30. Slide 30: Chisun Inn Osaka Hommachi

    Chisun Inn Osaka Hommachi Location Osaka, Osaka Prefecture Hotel Type Stay-Only Number of Guest Rooms 130 2 Leasable Area 3,690.00 m Structure SRC, B1F/10F Contractual Terms Fixed + Variable Rent Acquisition Price 1,630 mm yen Term-end Appraisal Value 1,720 mm yen Cap Rate 4.7% January 2016 Actual O

  31. Slide 31: Comfort Hotel Hamamatsu

    Comfort Hotel Hamamatsu Location Hamamatsu, Shizuoka Prefecture Hotel Type Stay-Only Number of Guest Rooms 196 2 Leasable Area 4,173.92 m Structure Steel, 10F Contractual Terms Fixed Rent Acquisition Price 1,550 mm yen Term-end Appraisal Value 1,640 mm yen Cap Rate 5.8% January 2016 Actual Occupancy

  32. Slide 32: Hotel Suave Kobe Asuta

    Hotel Suave Kobe Asuta Location Kobe, Hyogo Prefecture Hotel Type Stay-Only Number of Guest Rooms 133 2 Leasable Area 4,633.16 m Structure RC, B1F/9F Contractual Terms Fixed + Variable Rent Acquisition Price 1,490 mm yen Term-end Appraisal Value 1,550 mm yen Cap Rate 5.4% January 2016 Actual Occupan

  33. Slide 33: Nest Hotel Sapporo Odori

    Nest Hotel Sapporo Odori Location Sapporo, Hokkaido Prefecture Hotel Type Stay-Only Number of Guest Rooms 117 2 Leasable Area 5,638.78 m Structure SRC, Steel, B1F/15F Contractual Terms Fixed + Variable Rent Acquisition Price 1,450 mm yen Term-end Appraisal Value 1,490 mm yen Cap Rate 5.6% January 20

  34. Slide 34: Valie Hotel Tenjin

    Valie Hotel Tenjin Location Fukuoka, Fukuoka Prefecture Hotel Type Stay-Only Number of Guest Rooms 77 2 Leasable Area 1,910.94 m Structure RC, 8F Contractual Terms Fixed + Variable Rent Acquisition Price 1,380 mm yen Term-end Appraisal Value 1,690 mm yen Cap Rate 4.9% January 2016 Actual Occupancy 8

  35. Slide 35: Appendix

    Appendix © 2016 Ichigo Real Estate Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved. 35

  36. Slide 36: Portfolio Details

    Portfolio Details As of January 31, 2016 Acquisition Book Leasable Jan 2016 Appraisal Contractual Occupancy Use No. Property Area Hotel Type Location Price Value Area Value Cap rate Terms (%) (mm yen) (mm yen) (m 2) (mm yen) (%) Variable + Kyoto, 001 Smile Hotel Kyoto Shijo Kinki Stay-Only 4,480 4,5

  37. Slide 37: Asset-Level Financials

    Asset-Level Financials 9.4% (thousand yen) No. 001 002 004 005 006 008 009 Total Nest Hotel Chisun Inn Comfort Nest Hotel Other Smile Hotel Hotel Vista Valie Hotel Property Sapporo Osaka Hotel Sapporo Kyoto Shijo Premio Tenjin Ekimae Hommachi Hamamatsu Odori Real Estate (A) Management 197,950 34,879

  38. Slide 38: Contractual Terms and Operating Results

    Contractual Terms and Operating Results Contractual Terms (thousand yen) January 2016 Ratio Fixed Rent 131,079 66.2% Fixed Rent From Each Tenant 119,616 60.4% Other (Rent From Retail Tenants) 11,463 5.8% Variable Rent 66,870 33.8% Total 197,950 100.0% Portfolio Operating Results (Feb. 2015 - Jan. 20

  39. Slide 39: Hotel Market Environment (1)

    Hotel Market Environment (1) Japanese Government Policy Supportive of Inbound Tourism No. of Inbound Tourists No. of Guests Staying at Domestic Hotels (mm persons) (mm persons) 500 Japan’s Tourist Policy 40 2003 450 30 Visit Japan Campaign 30 396 launched 400 382 20 20 359 348 339 20 350 2007 13 309

  40. Slide 40: Hotel Market Environment (2)

    Hotel Market Environment (2) Global Increase in International Tourism, Especially to Asia International Tourists Visiting Europe, US, and Asia (logarithmic axial graph; mm persons) 8.00 Visitors by Country in 2013 100.00 (mm persons) France US France (84.73) 7.75 56.23 China US (69.77) Italy China (

  41. Slide 41: Strengths of Ichigo Hotel REIT

    Strengths of Ichigo Hotel REIT Making Maximum Use of Sponsor Ichigo’s Capabilities to Drive Growth Ichigo’s Business Model Hotel Value-Add Business Model Real Estate Real Estate Ichigo Hotel REIT (3463) Ichigo Acquisition Other Value- Acquisition External Add Ichigo Office REIT (8975) Sale Sale Infr

  42. Slide 42: Hard/Soft Factors Considered in Asset Acquisitions

    Hard/Soft Factors Considered in Asset Acquisitions Hard Location Competitiveness Location Is the asset located near an airport, train station, business center, etc., and is it likely there will be sufficient regular customer traffic? Hard Physical Condition of Building Building What is the physical

  43. Slide 43: Loan Details (as of January 31, 2016)

    Loan Details (as of January 31, 2016) As of January 31, 2016 Balance Borrowing Lender Borrowing Rate Drawdown Date Maturity Date (mm yen) Sumitomo Mitsui Banking Corporation; Mizuho Bank, Term Loan I 3,250 0.77091% November 30, 2015 November 30, 2018 Ltd.; Shinsei Bank Limited; Resona Bank, Limited

  44. Slide 44: Post-IPO Share Price Performance

    Post-IPO Share Price Performance ü Share price above IPO price ü Outperforming TSE REIT index to date Post-IPO Share Prices (November 30, 2015 — March 11, 2016) Share Price on Listing Date (November 30, 2015) Issue: 106,000 yen Initial: 104,100 yen High: 112,000 yen Low: 103,800 yen Closing: 109,200

  45. Slide 45: Shareholder Composition (as of January 31, 2016)

    Shareholder Composition (as of January 31, 2016) Major Shareholders Number of Shares by Shareholder Type Name Shares # Share % Foreign 1 Japan Trustee Services Bank, Ltd., Trust Account 25,089 18% Corporations Domestic & Individuals Individuals & Trust & Custody Service Bank, Ltd., Securities Invest

  46. Slide 46: Ichigo Hotel REIT Overview (as of January 31, 2016)

    Ichigo Hotel REIT Overview (as of January 31, 2016) Investment Corporation Name Ichigo Hotel REIT Investment Corporation (Ichigo Hotel REIT) Securities Code 3463 Address 1-1-1 Uchisaiwaicho, Chiyoda-ku, Tokyo Executive Director Osamu Miyashita Portfolio 9 assets Portfolio Value 20,410 mm yen (acquis

  47. Slide 47: 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 a solicitation of an offer to buy any securities of Ichigo Hotel REIT Investment Corporation (Ichigo Hotel REIT). These materials may contain f

Ichigo Hotel REIT Investment — January 2016 fiscal period Earnings Presentation on 6ix