Ichigo Hotel Reit Investment Corp. · TSE:3463

Ichigo Hotel Reit Investment — January 2017 Earnings Presentation

51 slides from Ichigo Hotel Reit Investment's earnings presentation, Mar 15, 2017

  1. Slide 1: Ichigo Hotel REIT January 2017 Fiscal Period Corporate Presentation

    Ichigo Hotel REIT （3463） Ichigo Hotel REIT January 2017 Fiscal Period Corporate Presentation March 15, 2017 Ichigo Hotel REIT Investment Corporation (3463) Ichigo Investment Advisors Co., Ltd. © 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved. w

  2. Slide 2: Ichigo Preserves and Improves Real Estate

    Ichigo Preserves and Improves Real Estate © 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

  3. Slide 3: © 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights

    © 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

  4. Slide 4: Contents

    January 2017 Financial Results July 2017 and January 2018 Forecasts  Financial Highlights  July 2017 Fiscal Period Forecast  Ichigo Hotel REIT Growth  January 2018 Fiscal Period Forecast  January 2017 Earnings Breakdown  Continued Dividend Growth  January 2017 YOY (Aug-Jan, 6 Months) Portfoli

  5. Slide 5: January 2017 Results

    January 2017 Results © 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved. 5

  6. Slide 6: Financial Highlights

    Financial Highlights Jan 2017 Results Drivers RevPAR JPY 8,020 (Variable Rent Hotels) Variable rent hotels = major driver of earnings due Organic +JPY 17 (+0.2%) year-on-year to Ichigo Hotel REIT participation in operating results Growth JPY 1.46B 10 new assets driving higher NOI NOI +JPY 759M (+108

  7. Slide 7: Ichigo Hotel REIT Growth

    Ichigo Hotel REIT Growth  Portfolio Growth to JPY 47.6B vs. JPY 20.4B at IPO (+133.6%) via 10 Hotel Acquisitions in Aug 2016  Value-Add Capex Supporting Higher Dividend Portfolio Dividend JPY 1.49B1 JPY 3,137 491億円 JPY 47.6B JPY 2,825 （20物件） (19 Assets) JPY 20.4B JPY 20.4B (9 Assets) (9 Assets) JP

  8. Slide 8: January 2017 Earnings Breakdown

    January 2017 Earnings Breakdown (JPY million) vs. Initial July 2016 Jan 2017 Initial Forecast Major Variation Factors (vs. Forecast) Forecast Operating Revenue 774 1,560 1,547 +13 Variable Rent 351 681 663 +18 Increase: 7 Hotels; Decrease: 4 Hotels Fixed Rent 387 823 823 – Other 35 54 60 -6 Decrease

  9. Slide 9: January 2017 YOY (Aug-Jan, 6 Months)

    January 2017 YOY (Aug-Jan, 6 Months) Variable Rent Hotel Revenue and RevPAR +0.2% Variable Rent Hotels (12 Hotels) Total Portfolio (19 Hotels) vs. vs. Jan 16 Jan 17 Jan 16 Jan 17 Jan 16 Jan 16 Revenue (JPY M) 3,116 3,123 +0.2% 4,476 4,418 -1.3% RevPAR (JPY) 8,003 8,020 +0.2% 7,216 7,095 -1.7% Occupa

  10. Slide 10: January 2017 YOY (Feb-Jan, 12 Months)

    January 2017 YOY (Feb-Jan, 12 Months) Variable Rent Hotel Revenue +6.2% Variable Rent Hotels (12 Hotels) Total Portfolio (19 Hotels) Feb 2015 - Feb 2016 - Feb 2015 - Feb 2016 - YOY YOY Jan 2016 Jan 2017 Jan 2016 Jan 2017 Revenue (JPY M) 5,768 6,126 +6.2% 8,429 8,666 +2.8% RevPAR (JPY) 7,690 7,913 +2

  11. Slide 11: Major Value-Add Capex

    Major Value-Add Capex Value-Add Capex Increasing Variable Rents & Hotel Competitiveness Major Capex During Jan 2017 Period Hotel Wing International Nagoya Smile Hotel Kyoto Shijo Nest Hotel Sapporo Odori Renovated all guest rooms, hallways, and Converted storage rooms into Split up suite room into D

  12. Slide 12: Value-Add Capex – Hotel Wing International Nagoya

    Value-Add Capex – Hotel Wing International Nagoya Renovated Guest Rooms, Hallways, and Lobby (JPY 20.6M)  Renovation period: May 2016 to Oct 2016  Post-renovation performance (all guest rooms, Nov 2016 to Jan 2017) ADR: JPY 6,287 (+9.5% vs. previous period)  Forecast return: Annual Rent +JPY 4.9M

  13. Slide 13: Value-Add Capex – Smile Hotel Kyoto Shijo

    Value-Add Capex – Smile Hotel Kyoto Shijo Converted Storage Rooms Into Two Additional Guest Rooms (JPY 22.0M)  Added twin-bed and triple-bed rooms to cater to increased tourist demand  Renovation period: Dec 2016 to Jan 2017  Forecast return: Annual Rent +JPY 7.3M, ROI 33.2% Before After Converte

  14. Slide 14: Value-Add Capex – Nest Hotel Sapporo Odori

    Value-Add Capex – Nest Hotel Sapporo Odori Split Up Suite into Three Guest Rooms (JPY 25.2M)  Increased revenue by replacing low-occupancy suite  Renovation period: Dec 2016 to Jan 2017  Forecast return: Annual Rent +JPY 4.3M, ROI 17.1% Before After Three twin bed-rooms © 2017 Ichigo Investment A

  15. Slide 15: Stable Financial Base

    Stable Financial Base Fixed-rate loans hedge Low LTV provides room to interest rate risk acquire more assets (%) (%) 80 50 Fixed-Rate Loan Ratio LTV 73.1 +11.3% 70 40 36.8 36.2 36.6 61.8 61.8 60 30 50 20 Jan 31, 2016 Jul 31, 2016 Jan 31, 2017 Jan 31, 2016 Jul 31, 2016 Jan 31, 2017 Jan 31, 2016 Jul 3

  16. Slide 16: Growth Strategy

    Growth Strategy © 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved. 16

  17. Slide 17: Growth Roadmap

    Growth Roadmap Stage I Stage II Continuous Dividend Growth via External Growth, Organic Growth, and a Strong Financial Base • Construct a diversified portfolio to pursue both income • Quickly achieve JPY100B total asset size by taking full stability and earnings growth advantage of Ichigo’s sponsor

  18. Slide 18: Ichigo Hotel REIT and Ichigo Sponsor Synergies

    Ichigo Hotel REIT and Ichigo Sponsor Synergies  Leverage Ichigo’s proprietary sourcing network  Increase asset value through Ichigo’s real estate value-add capabilities  Drive higher returns for Ichigo Hotel REIT shareholders Ichigo’s Value‐Add Business Model Buy Sponsor Support:  Asset Warehous

  19. Slide 19: Completed & Planned Value-Add Capex

    Completed & Planned Value-Add Capex Value-Add Capex Driving Earnings Growth  Increasing revenue and NOI  Increasing hotel competitiveness and guest satisfaction Expected Rental Investment Income Completion Date Hotel Renovation Details Purpose ROI (JPY M) Increase (JPY M per annum) Boost revenue b

  20. Slide 20: March 2017 Grandpark-Inn Yokohama Acquisition

    March 2017 Grandpark-Inn Yokohama Acquisition  Designer capsule hotel located close to Yokohama Station, one of the busiest stations in the Tokyo Metropolitan area  Fixed rent contract to support dividend stability  Added a female guest-only area with special amenities to broaden the range of gue

  21. Slide 21: Portfolio Growth Potential via Ichigo Sponsor Support

    Portfolio Growth Potential via Ichigo Sponsor Support 21 Assets (JPY 48B) in Sponsor Pipeline as of Feb 2017  Locations: Major cities such as Tokyo, Yokohama, Osaka, Nagoya, Fukuoka, Kumamoto, and Naha  Includes new hotel developments Development Development Development Project 1 Project 2 Project

  22. Slide 22: July 2017 and January 2018 Forecasts

    July 2017 and January 2018 Forecasts © 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved. 22

  23. Slide 23: July 2017 Fiscal Period Forecast

    July 2017 Fiscal Period Forecast  Dividend Forecast: JPY 3,043 +JPY 218 (+7.7%) vs. July 2016 (JPY million) July 2016 July 2017 (B) - (A) Major Factors for Variation Actual (A) Forecast (B) Operating Revenue 774 1,692 +918 Expected RevPAR of Variable Rent Hotels: JPY 8,302 (+6.4% vs. July 2016) Inc

  24. Slide 24: January 2018 Fiscal Period Forecast

    January 2018 Fiscal Period Forecast  Dividend Forecast: JPY 3,058 -JPY 79 (-2.5%) vs. Jan 2017  Higher NOI will help offset taxes on 10 newly-acquired hotels (Tax impact on Dividend: -JPY 200) (JPY million) January 2017 January 2018 (B) - (A) Major Factors for Variation Actual (A) Forecast (B) Ope

  25. Slide 25: Continued Dividend Growth

    Continued Dividend Growth +2.3% +3.8% JPY 6,101 JPY 5,962 JPY 5,742 January January 2017 2018 January 2017 Actual Forecast Initial Forecast JPY JPY JPY 3,137 3,058 2,917 July 2017 July 2016 July 2016 Forecast Actual Actual JPY JPY JPY 3,043 2,825 2,825 © 2017 Ichigo Investment Advisors Co., Ltd. Ich

  26. Slide 26: Portfolio Details

    Portfolio Details © 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved. 26

  27. Slide 27: Hotel Map

    Hotel Map Acquired at IPO Acquired in Aug 2016 Mar 2017 Acquisition © 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved. 27

  28. Slide 28: Cash Flow Stability via Diversification

    Cash Flow Stability via Diversification Portfolio Characteristics (As of January 31, 2017) Location Hotel Type Chugoku/ Ky ushu/ Shikoku Okinawa Toky o 5.9% 10.8% 15.1% Hokuriku/ Ky oto/ Tokai Osaka/ 20.6% Kobe 39.4% Stay-Only Hokkaido Hotels 8.2% 100.0% Portfolio Concentration Fixed vs. Variable Re

  29. Slide 29: Hotel Summary (as of January 31, 2017)

    Hotel Summary (as of January 31, 2017) Acquisition Book Value Jan 2017 Appraisal Unrealized Leasable Hotel No. Hotel Name Contract Location Price (JPY M) Value Cap rate Gains (JPY M) Area (m 2) (JPY M) (A) (JPY M) (B) (%) (B)-(A) Variable + A-1 004 Nest Hotel Sapporo Ekimae Sapporo, Hokkaido 5,734.9

  30. Slide 30: Hotel-Specific Operating Results

    Hotel-Specific Operating Results (vs. previous period in parentheses) No. of January 2017 (August 2016 - January 2017) Hotel No. Hotel Name Location Guest Rooms RevPAR (JPY) Occupancy (% ) ADR (JPY) Revenue (JPY M) A-1 004 Nest Hotel Sapporo Ekimae Hokkaido 162 8,298 (+13.9%) 96.7 (+8.1%) 8,580 (+5.

  31. Slide 31: Individual Hotel Financials

    Individual Hotel Financialsは当初予想より9.4%上昇 (JPY thousand) No. A-1 A-2 A-3 C-1 C-2 D-1 D-3 D-4 E-1 E-2 E-3 E-5 F-1 F-2 G-1 G-2 Comfort Hotel Total Nest Hotel Nest Hotel Comfort Smile Hotel Comfort Comfort Hotel Vista Chisun Inn Nest Hotel Comfort Other Smile Hotel Central Smile Hotel Nest Hotel Valie H

  32. Slide 32: Fixed/Variable Rent, RevPAR, ADR, & Occupancy Trends

    Fixed/Variable Rent, RevPAR, ADR, & Occupancy Trends Fixed/Variable Rent (Revenue Basis) (JPY thousand) Jan 2016 Jul 2016 Jan 2017 Revenue Ratio Revenue Ratio Revenue Ratio Fixed Rent 131,079 66.2% 423,063 54.6% 878,775 56.3% Fixed Rent from Each Operator 119,616 60.4% 387,253 50.0% 823,979 52.8% Ot

  33. Slide 33: Individual Hotel Details (Variable Rent Hotels)

    Individual Hotel Details (Variable Rent Hotels) A-1 Nest Hotel Sapporo Ekimae Sapporo City, Location ADR RevPAR Occupancy (left, %) Hokkaido (right, yen) (right, yen) 5-minute walk from Sapporo Station on 100% 12,500 Transportation Sapporo City Metro Namboku Line 80% 10,000 Nest Hotel Japan Operator

  34. Slide 34: Individual Hotel Details (Variable Rent Hotels)

    Individual Hotel Details (Variable Rent Hotels) C-1 Smile Hotel Tokyo Asagaya Location Suginami-ku, Tokyo ADR RevPAR Occupancy (left, %) (right, yen) (right, yen) 1-minute walk from Transportation Asagaya Station on 100% 12,500 JR Chuo/Sobu Line K.K. Hospitality 80% 10,000 Operator Operations 60% 7,

  35. Slide 35: Individual Hotel Details (Variable Rent Hotels)

    Individual Hotel Details (Variable Rent Hotels) D-2 Hotel Wing International Nagoya Location Nagoya City, Aichi ADR RevPAR Occupancy (left, %) 2-minute walk from (right, yen) (right, yen) Marunouchi Station 100% 12,500 on both Nagoya Transportation Subway Network 80% 10,000 Sakuradori Line and Tsuru

  36. Slide 36: Individual Hotel Details (Variable Rent Hotels)

    Individual Hotel Details (Variable Rent Hotels) E-2 Hotel Vista Premio Kyoto Location Kyoto City, Kyoto ADR RevPAR Occupancy (left, %) 5-minute walk from (right, yen) (right, yen) Kyoto Shiyakusho- Transportation mae Station on Kyoto 100% 25,000 City Subway Tozai 80% 20,000 Line Vista Hotel 60% 15,0

  37. Slide 37: Individual Hotel Details (Variable Rent Hotels)

    Individual Hotel Details (Variable Rent Hotels) E-5 Nest Hotel Osaka Shinsaibashi Location Osaka City, Osaka ADR RevPAR Occupancy (left, %) 1-minute walk from (right, yen) (right, yen) Nagahoribashi 100% 12,500 Station on Osaka Transportation Municipal Subway 80% 10,000 Sakaisuji Line and Nagahorits

  38. Slide 38: Individual Hotel Details (Variable Rent Hotels)

    Individual Hotel Details (Variable Rent Hotels) G-1 Valie Hotel Tenjin Fukuoka City, Location ADR RevPAR Occupancy (left, %) Fukuoka (right, yen) (right, yen) 6-minute walk from Tenjin Station on 100% 12,500 Transportation Fukuoka City Subway Kuko Line 80% 10,000 Operator The Court Co., Ltd. 60% 7,5

  39. Slide 39: Individual Hotel Details (Fixed Rent Hotels)

    Individual Hotel Details (Fixed Rent Hotels) A-3 Comfort Hotel Kushiro C-3 Hotel Livemax Nihombashi-Hakozaki Kushiro City, Location Chuo-ku, Tokyo Location Hokkaido 2-minute walk from 3-minute walk from Kushiro Station on Suitengu Station on Transportation Transportation JR Nemuro Main Tokyo Metro L

  40. Slide 40: Individual Hotel Details (Fixed Rent Hotels)

    Individual Hotel Details (Fixed Rent Hotels) D-4 Comfort Hotel Suzuka E-4 Hotel Suave Kobe Asuta Location Suzuka City, Mie Location Kobe City, Hyogo 3-minute walk from 2-minute walk from Shirako Station on Shinnagata Station Transportation Transportation Kintetsu Nagoya on JR Kobe Line Line (Sanyo M

  41. Slide 41: Hotel Market Environment

    Hotel Market Environment © 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved. 41

  42. Slide 42: Hotel Market Environment (1)

    Hotel Market Environment (1) Trends in Number of Inbound Guests per Region (1,000 persons) Tokyo (1,000 persons) Osaka (1,000 persons) (1,000 persons) Kyoto Hokkaido 10,000 10,000 10,000 10,000 8,013 8,035 8,000 8,000 8,000 8,000 6,221 5,755 6,000 6,000 5,173 6,000 6,000 4,399 3,784 3,976 4,000 4,00

  43. Slide 43: Hotel Market Environment (2)

    Hotel Market Environment (2) Record 24M Inbound Tourists Visited Japan in 2016, +21.8% vs. 2015 No. of Guests Staying At Japanese Hotels No. of Inbound Tourists (million persons) (million persons) 500 ■ Government Target 60 60 450 420 414 396 400 382 40 360 40 350 339 24 20 300 20 10 13 250 6 8 200

  44. Slide 44: Appendices

    Appendices © 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved. 44

  45. Slide 45: Loan Details

    Loan Details Loan Balances Balance Borrowing Lenders Borrowing Rate Drawdown Date Maturity Date (JPY B) Term Loan I SMBC, Mizuho, Shinsei, Resona 3.25 0.63000% November 30, 2015 November 30, 2018 Term Loan II SMBC, Mizuho, Shinsei, Resona 5.25 1.08000% November 30, 2015 November 30, 2020 SMBC, Mizuh

  46. Slide 46: Shareholder Composition (as of January 31, 2017)

    Shareholder Composition (as of January 31, 2017) Major Shareholders Number of Shares by Shareholder Type Name Shares % Domestic Individuals & Others Financial Institutions (including securities companies) Other Domestic Corporations Foreign Corporations & Individuals 1 Japan Trustee Services Bank, L

  47. Slide 47: Ichigo Hotel REIT Overview

    Ichigo Hotel REIT Overview Investment Corporation 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 Compa

  48. Slide 48: MEMO

    MEMO © 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved. 48

  49. Slide 49: MEMO

    MEMO © 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved. 49

  50. Slide 50: MEMO

    MEMO © 2017 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved. 50

  51. Slide 51: 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. These materials may contain forward-looking statements regarding the int

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