Ichigo Hotel Reit Investment Corp. · TSE:3463

Ichigo Hotel Reit Investment — July 2021 Fiscal Period Earnings Presentation

59 slides from Ichigo Hotel Reit Investment's earnings presentation, Sep 14, 2021

  1. Slide 1: Ichigo Hotel July 2021 Fiscal Period Corporate Presentation

    Ichigo Hotel (3463) Ichigo Hotel July 2021 Fiscal Period Corporate Presentation September 14, 2021 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

  2. Slide 2: Condolences to those affected by Covid

    We would like to express our deepest condolences to all those across the world affected by the Covid pandemic, and our wishes for the earliest and fullest possible recovery. Take care, be safe. © Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved. 2

  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

    July 2021 Results Ichigo’s Commitment to ESG  July 2021 Highlights  Ichigo Sustainability Policy  July 2021 Earnings Breakdown  Ichigo ESG – Environmental  July 2021 Operating Results Up YOY  Ichigo ESG – Social  Hotel Demand Recovering  Ichigo ESG – Governance  Monthly Operating Results Un

  7. Slide 7: July 2021 Results

    July 2021 Results © Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved. 7

  8. Slide 8: July 2021 Highlights

    July 2021 Highlights Net Income and Dividend Exceeded Forecast Announced in June 2021 Results Details JPY 268M Net Income +JPY 35M (+15.2%) vs. forecast • Recorded variable rent at Valie Hotel Hiroshima JPY 2,815 (14 variable rent hotels) • Occupancy: 64.3% (vs. 59.0% forecast) RevPAR +JPY 156 (+5.9

  9. Slide 9: July 2021 Earnings Breakdown

    July 2021 Earnings Breakdown (JPY million) Jul 2020 Jul 2021 Forecast (B) vs. Forecast Major Variation Factors (vs. Forecast) Actual Actual (A) (Jun 2021) (A) - (B) Operating Revenue 953 1,117 1,112 +5 Increase in variable rent +9 (Valie Hiroshima) Variable Rent -25 126 121 +5 Decrease in variable r

  10. Slide 10: July 2021 Operating Results Up YOY

    July 2021 Operating Results Up YOY Variable Rent Hotels (14 Hotels) Feb 1, 2020 Feb 1, 2021 Feb 1, 2019 Change YOY - Jul 31, 2020 - Jul 31, 2021 - Jul 31, 2019 Room Revenue (JPY M) 792 954 +162 +20.5% 2,583 Total Revenue (JPY M) 902 1,086 +184 +20.4% 2,902 RevPAR (JPY) 2,493 2,815 +322 +12.9% 7,104

  11. Slide 11: Hotel Demand Recovering

    Hotel Demand Recovering YOY by Region (Feb 2021 – July 2021) 21 Hotels (excludes Capsule Plus Yokohama and Washington Hotel Plaza Shimonoseki Eki Nishi) RevPAR Occupancy ADR Total Tokai/ Chugoku/ Portfolio Hokkaido Tokyo Chubu Kyoto Osaka Kobe Shikoku Kyushu +50% +37% +29% +31% +33% +28% +19% +21% +

  12. Slide 12: Monthly Operating Results Under Covid

    Monthly Operating Results Under Covid RevPAR RevPAR (left axis, JPY) YOY (right axis) 5,000 150% (JPY) State of +122% Go To Travel Campaign 4,530 4,495 Emergency +102% 4,000 100% +72% +58% 3,035 3,000 3,292 50% 3,156 2,760 2,482 2,592 2,489 2,000 2,306 +32% 2,377 2,291 0% 2,270 2,220 2,001 2,054 -17

  13. Slide 13: Relatively Small Decrease in Ichigo Hotel RevPAR vs. 2019

    Relatively Small Decrease in Ichigo Hotel RevPAR vs. 2019 Ichigo Hotel RevPAR (vs. 2019) and Hotel Reservations +40% Business Hotels Full-Service Hotels Resort Hotels Japanese Inns Number of Guests Ichigo Hotel RevPAR +20% 0% -20% -40% -60% -80% -100% Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec

  14. Slide 14: Driving Stability via Contract Renewals and Rebranding

    Driving Stability via Contract Renewals and Rebranding Timing Hotel Name Lease Terms Changes Variable+Fixed • Increased fixed rent Jun 2020 Smile Hotel Tokyo Asagaya Lease Expiry Rent • Increased variable rent The OneFive Okayama Fixed  • Operator change to Hakata Hotels Oct 2020 Variable+Fixed Reb

  15. Slide 15: Sponsor Support Driving Stability

    Sponsor Support Driving Stability Hakata Hotels (Ichigo’s wholly-owned subsidiary) − A hotel operator with expertise in AI revenue management systems (PROPERA) that operates 12 hotels across Japan, with a focus in the Hakata (Fukuoka) area  Maintained high occupancy despite occupancy decrease at ot

  16. Slide 16: Covid Response

    Covid Response Safety Measures and Services for Guests − Installed self-check-in terminals − Offering remote work options (strengthened Wi-Fi networks to accommodate remote work demand) − Provision of hand sanitizers, periodic disinfections, and mandatory mask- wearing for employees − Confirming gue

  17. Slide 17: Shareholder Hotel Discount Program

    Shareholder Program (1) Shareholder Hotel Discount Program Program Established to Express Gratitude to Ichigo Hotel Shareholders and to Support the Hotel Industry Impacted by Covid Special Discount Rates (including hotels not owned by Ichigo Hotel) Minacia Co., Ltd. Greens Co., Ltd.  Hotel Wing Int

  18. Slide 18: Ichigo J.League Shareholder Program

    Shareholder Program (2) 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 listed solar power producer that it manages, in its shareholder program (

  19. Slide 19: 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. 19

  20. Slide 20: Sustainability Initiatives

    Sustainability Initiatives Minimizing Environmental Impact of Ichigo Hotel-Owned Assets Environmental Certifications − HOTEL EMIT SHIBUYA (BELS 4 Stars) − Joined GRESB Real Estate Assessment in 2021 Shifting to Renewable Energy Ichigo RE100 Target: Sourcing 100% Renewable Electricity Across Its Oper

  21. Slide 21: Market Environment & Forecast Assumptions

    Market Environment & Forecast Assumptions Hotel Market Remains Uncertain − Full-scale recovery is expected to take time despite gradual hotel demand recovery on the back of Covid vaccine rollout (57.6% complete for first-time vaccination as of Sep 1st) Occupancy and ADR Forecasts for 15 Variable Hot

  22. Slide 22: January 2022 Forecast

    January 2022 Forecast Dividend JPY 724, -12.0% YOY (JPY million) Jan 2022 Jan 2022 Jan 2021 Previous Revised (B) - (A) Major Factors for Variation Actual (A) Forecast Forecast (B) (Mar 2021) Operating Revenue 1,035 1,058 1,007 -28 January 2021: Rent from sold asset (Naha) +7 Increase in variable ren

  23. Slide 23: July 2022 Forecast

    July 2022 Forecast Dividend JPY 666, -36.9% YOY (JPY million) Jul 2021 Jul 2022 (B) - (A) Major Factors for Variation Actual (A) Forecast (B) Operating Revenue 1,117 1,024 -93 Increase in variable rent +77 (Kumamoto, Matsuyama, Sapporo Ekimae, Kurashiki, Variable Rent 126 79 -47 Nagoya) Decrease in

  24. Slide 24: Ichigo's Commitment to ESG

    Ichigo’s Commitment to ESG © Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved. 24

  25. Slide 25: 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

  26. Slide 26: Ichigo ESG – Environmental

    Ichigo ESG – Environmental Contributing to a Low-Carbon World Sustainable Real Estate Clean Energy Preserve & Improve Real Estate to End Wasteful Annual Power Generation 186,921,674kWh Demolition Equivalent to annual energy consumption of 62,307 households ‒ Lengthen useful life of real estate The F

  27. Slide 27: Ichigo ESG – Social

    Ichigo ESG – Social Supporting Local Communities Working With Tenants − Ichigo’s Boutique Hotel THE KNOT − Conduct tenant surveys to understand needs to A place where visitors, communities, and the old implement effective value-add and the new can come together − Exclusive investor for Oshii Mamoru’

  28. Slide 28: Ichigo ESG – Governance

    Ichigo ESG – Governance First J-REIT With No Fixed Fee, Best Practice Governance Performance Fee-Only Structure REIT  Performance-linked fee structure to Monitors Asset Management Company support shareholder value creation • All Ichigo Hotel Directors are Independent  Pro-active, dynamic managemen

  29. Slide 29: Appendix: Portfolio Details

    Appendix: Portfolio Details © Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved. 29

  30. Slide 30: 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 Capsule Plus Nest Hotel Nest Hotel Comfort Comfort Hotel Hotel Wing Comfort Hotel Comfort Hotel Tokyo Asagaya Nihombashi- EMIT Yokohama Sapporo Ekimae Sapporo Odori Hotel Kushiro

  31. Slide 31: Portfolio Growth

    Portfolio Growth IPO Jan 2017 July 2017 through July 2021 (Nov 30, 2015) Fiscal Period Fiscal Periods IPO Acquisitions PO Acquisitions July 2017 Jan 2018 Jan 2019 July 2019 Jan 2020 July 2020 Jan 2021 9 hotels 10 hotels 1 hotel 1 hotel 1 hotel 2 hotels 2 hotels July 2021 JPY 20.4B JPY 27.2B JPY 1.4B

  32. Slide 32: Portfolio Lease Details

    Portfolio Lease Details Operator Diversification Driving Earnings Stability (as of July 31, 2021) 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 Variable

  33. Slide 33: Individual Hotel Summary

    Individual Hotel Summary (as of July 31, 2021) Jul 2021 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 Sappor

  34. Slide 34: July 2021 Fiscal Period Individual Hotel Operating Results

    July 2021 Fiscal Period Individual Hotel Operating Results (year-on-year) No. Of July 2021 (February 2021 - July 2021) 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 3,319 (+9.

  35. Slide 35: 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 Nest Nest Comfort Smile The Total Comfort Smile Hotel HOTEL Comfort Comfort Chisun Inn Nest Hotel The Court Hotel Hotel Hotel Central Hotel Nest Hotel Valie Hotel OneFive Nest Hotel Hotel T

  36. Slide 36: Fixed/Variable Rent, RevPAR, ADR, & Occupancy Trends

    Fixed/Variable Rent, RevPAR, ADR, & Occupancy Trends Fixed/Variable Rent (JPY thousand) Jul 2020 Jan 2021 Jul 2021 Rent Ratio Rent Ratio Rent Ratio Fixed Rent 963,173 – 1,023,281 – 976,195 87.3% Fixed Rent from Operators 935,606 – 993,875 – 947,031 84.7% Rent Other (Rent from Retail Tenants) 27,566

  37. Slide 37: Variable Rent Hotel Details

    Variable Rent Hotel Details A-1 Nest Hotel Sapporo Ekimae ADR RevPAR Occupancy Location Sapporo Operating Results (Aug 2020 – Jul 2021) (right) (right) (left) (JPY) 5-minute walk from 100% 7,500 Sapporo Station on Access Sapporo City Metro 80% 6,000 Namboku Line 60% 4,500 Nest Hotel Japan Operator C

  38. Slide 38: 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 * Changed operator and change

  39. Slide 39: Variable Rent Hotel Details

    Variable Rent Hotel Details C-4 HOTEL EMIT SHIBUYA ADR RevPAR Occupancy Location Shibuya-ku, Tokyo Operating Results (Aug 2020 – Jul 2021) (right) (right) (left) (JPY) 6-minute walk from 100% 7,500 Shibuya Station on JR, Access 80% 6,000 Tokyu, Keio, and Tokyo Metro Lines 60% 4,500 40% 3,000 Operato

  40. Slide 40: Variable Rent Hotel Details

    Variable Rent Hotel Details E-1 Smile Hotel Kyoto Shijo Location Kyoto ADR RevPAR Occupancy Operating Results (Aug 2020 – Jul 2021) (right) (right) (left) 5-minute walk from (JPY) Shijo Station on Kyoto 100% 7,500 City Subway Karasuma Access Line and Karasuma 80% 6,000 Station on Hankyu Kyoto Main L

  41. Slide 41: Variable Rent Hotel Details

    Variable Rent Hotel Details E-4 Hotel Wing International Kobe Shin Nagata Ekimae Location Kobe ADR RevPAR Occupancy Operating Results (Aug 2020 – Jul 2021) (right) (right) (left) (JPY) 2-minute walk from 100% 10,000 Shin Nagata Station Access 80% 8,000 on JR Kobe Line and JR Sanyo Honsen Line 60% 6,

  42. Slide 42: Variable Rent Hotel Details

    Variable Rent Hotel Details F-1 The OneFive Okayama Location Okayama ADR RevPAR Occupancy Operating Results (Aug 2020 – Jul 2021) (right) (right) (left) (JPY) 15-minute walk from 100% 7,500 Okayama Station on Access Sanyo Shinkansen, 80% 6,000 Sanyo Main Line, Uno Line 60% 4,500 40% 3,000 Operator H

  43. Slide 43: Variable Rent Hotel Details

    Variable Rent Hotel Details F-4 Court Hotel Kurashiki Location Kurashiki, Okayama ADR RevPAR Occupancy Operating Results (Aug 2020 – Jul 2021) (right) (right) (left) (JPY) 100% 10,000 8-minute walk from Access Kurashiki Station on 80% 8,000 JR Sanyo Main Line 60% 6,000 Operator The Court Co., Ltd. 4

  44. Slide 44: Variable Rent Hotel Details

    Variable Rent Hotel Details G-1 The OneFive Fukuoka Tenjin ADR RevPAR Occupancy Location Fukuoka Operating Results (Aug 2020 – Jul 2021) (right) (right) (left) (JPY) 6-minute walk from 100% 7,500 Tenjin Station on Access 80% 6,000 Fukuoka City Subway Kuko Line 60% 4,500 Operator Hakata Hotels Inc. 4

  45. Slide 45: Fixed Rent Hotel Details

    Fixed Rent Hotel Details A-3 Comfort Hotel Kushiro C-3 Hotel Livemax Nihombashi-Hakozaki Location Kushiro, Hokkaido Location Chuo-ku, Tokyo 3-minute walk from 2-minute walk from Suitengumae Station Access Kushiro Station on JR Access on Tokyo Metro Nemuro Main Line Hanzomon Line Operator Greens Co.,

  46. Slide 46: Fixed Rent Hotel Details

    Fixed Rent Hotel Details D-4 Comfort Hotel Suzuka F-3 Urbain Hiroshima Executive Location Suzuka, Mie Location Hiroshima 6-minute walk from 3-minute walk from Hiroshima Station on Access Shirako Station on Access JR Sanyo Shinkansen Kintetsu Nagoya Line and Sanyo Main Line Operator Greens Co., Ltd.

  47. Slide 47: Appendix: Loan Details & Shareholder Composition

    Appendix: Loan Details & Shareholder Composition © Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved. 47

  48. Slide 48: Stable Financial Base

    Stable Financial Base Outstanding Loan Balance Jul 31, 2019 Jan 31, 2020 Jul 31, 2020 Jan 31, 2021 Jul 31, 2021 Amount JPY 25.47B JPY 25.47B JPY 25.47B JPY 25.47B JPY 25.47B Long-Term Loan Ratio 100% 100% 93.1% 72.5% 70.7% Fixed Rate Ratio 83.5% 83.5% 91.4% 70.7% 70.7% Average Interest Rate 0.86% 0.

  49. Slide 49: Loan Details

    Loan Details (as of July 31, 2021) Amount Floating/ Interest Rate Loan Lender Borrowing Date Maturity (JPY million) Fixed (%) SMBC, Mizuho, Shinsei, Resona, Fukuoka, Term Loan 4 Nishi-Nippon City 4,500 Fixed 0.90750% August 17, 2016 February 28, 2023 Lender Composition SMBC, Mizuho, Shinsei, Resona,

  50. Slide 50: Shareholder Composition

    Shareholder Composition Major Shareholders (as of July 31, 2021) By Number of Shares Held Foreign Corporations & Individuals Domestic Financial Institutions No. Of Name Share Non-Financial Domestic Corporations Domestic Individuals Shares (Shares) Custody Bank of Japan, Ltd., 34,316 1 24,741 9.7% 38

  51. Slide 51: 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. 51

  52. Slide 52: 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 s

  53. Slide 53: 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 stability and ear

  54. Slide 54: 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

  55. Slide 55: 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

  56. Slide 56: Hakata Hotels & PROPERA

    Hakata Hotels & PROPERA − Hakata Hotels, a consolidated subsidiary of Ichigo, is a hotel operator operating 12 hotels across Japan with many located in the Hakata (Fukuoka) area − Hakata Hotels is deploying PROPERA, an AI-based revenue management system developed by Ichigo, to maximize earnings and

  57. Slide 57: Portfolio Growth Opportunity via Ichigo Sponsor Support

    Portfolio Growth Opportunity via Ichigo Sponsor Support 20 Hotels (JPY 64B) in Ichigo Sponsor Pipeline as of May 31, 2021 − Lodging-focused hotels across Japan − Locations: Major cities such as Hokkaido, Tokyo, Yokohama, Osaka, and Fukuoka Hokkaido Fukuoka Hiroshima Tokyo Fukuoka Yokohama Osaka © Ic

  58. 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

  59. 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

Ichigo Hotel REIT Investment — July 2021 Fiscal Period Earnings Presentation on 6ix