Ichigo Hotel Reit Investment Corp. · TSE:3463
Ichigo Hotel Reit Investment — January 2021 fiscal period Earnings Presentation
62 slides from Ichigo Hotel Reit Investment's earnings presentation, Mar 17, 2021
Slide 1: Ichigo Hotel January 2021 Fiscal Period Corporate Presentation
Ichigo Hotel (3463) Ichigo Hotel January 2021 Fiscal Period Corporate Presentation March 17, 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-hotel
Slide 2: Condolences for Fukushima earthquake and Covid
We would like to express our deepest condolences to all those affected by the M7.3 earthquake off the coast of Fukushima in February and by the Covid pandemic globally, and our wishes for the earliest and fullest possible recovery. © Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment
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
January 2021 Results July 2021 and January 2022 Forecasts January 2021 Highlights Market Environment & Forecast Assumptions January 2021 Earnings Breakdown Revision of July 2021 Fiscal Period Forecast Ongoing Covid Impact (Announced in Sep 2020) Nationwide Covid Impact July 2021 Foreca
Slide 7: January 2021 Results
January 2021 Results © Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved. 7
Slide 8: January 2021 Highlights
January 2021 Highlights Dividend +3.5% vs. Forecast Despite Ongoing Covid Impact Results Details JPY 209M Net Income +JPY 7M (+3.5%) vs. forecast • Recorded 4 months variable rent income JPY 2,335 (14 variable rent hotels) • Occupancy: 53.4% (vs. 55.8% forecast) RevPAR -JPY 236 (-9.2%) vs. forecast
Slide 9: January 2021 Earnings Breakdown
January 2021 Earnings Breakdown (JPY million) Jan 2020 Jan 2021 vs. Forecast Forecast (B) Major Variation Factors (vs. Forecast) Actual Actual (A) (A)-(B) Operating Revenue 3,561 1,035 1,037 -1 Increase: +2 (Asagaya, Kurashiki) Variable Rent 564 -3 18 -22 Decrease: -17 (Tenjin, Hommachi, Sapporo Eki
Slide 10: Ongoing Covid Impact
Ongoing Covid Impact Variable Rent Hotels (14 Hotels) Aug 1, 2019 Aug 1, 2020 Change O YOY - Jan 31, 2020 - Jan 31, 2021 Room Revenue (JPY M) 2,538 791 -1,746 -68.8% Total Revenue (JPY M) 2,853 907 -1,946 -68.2% RevPAR (JPY) 6,166 2,335 -3,831 -62.1% Occupancy 84.4% 53.4% -31.0% -36.7% ADR (JPY) 7,3
Slide 11: Nationwide Covid Impact
Nationwide Covid Impact YOY by Region (Aug 2020 – Jan 2021) 20 Hotels (excludes Grandpark-Inn Yokohama, HOTEL EMIT SHIBUYA, and Washington Hotel Plaza Shimonoseki Eki Nishi) RevPAR Occupancy ADR Total Tokai/ Chugoku/ Portfolio Hokkaido Tokyo Chubu Kyoto Osaka Kobe Shikoku Kyushu -13% -12% -19% -19%
Slide 12: Monthly Operational Results Under Year of Covid
Monthly Operational Results Under Year of Covid 8,000 0% RevPAR (left axis, JPY) YOY (right axis) -29% 6,000 -25% 4,899 -52% 4,000 -58% -57% -59% -58% -50% -61% -70% -68% -77% 3,292 2,000 -80% 2,568 2,683 -75% 2,481 -85% 2,353 2,220 2,077 2,054 1,378 1,511 1,031 0 -100% Feb 2020 Mar Apr May Jun Jul
Slide 13: Covid Impact on Hotel Demand
Covid Impact on Hotel Demand Hotel Reservations and Ichigo Hotel RevPAR (vs. previous year) 0% Business Hotels Full-Service Hotels Resort Hotels Japanese Inns Number of Guests Ichigo Hotel RevPAR -20% -40% -60% -80% -100% Feb 2020 Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan 2021 * Calculated by Ichi
Slide 14: Covid Response
Covid 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 Hotels during January 2021 Fiscal Period Hotel Dates Closed Current Status
Slide 15: Sponsor Support Amid the Covid Pandemic
Sponsor Support Amid the Covid Pandemic Investment Corporation Bond Issuance (JPY 500 million) − Allottee: Ichigo (100%) Demonstrating commitment and support as sponsor − Objective: To further strengthen Ichigo Hotel’s financial base amid an uncertain market environment Hakata Hotels (Ichigo’s who
Slide 16: Hotel Industry Support: Shareholder Hotel Discount Program
Hotel Industry Support: 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
Slide 17: 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 listed solar power producer that it manages, in its shareholder program (67,000 shareholders tota
Slide 18: 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. 18
Slide 19: Sustainability Initiatives
Sustainability Initiatives Minimizing Environmental Impact of Ichigo Hotel-Owned Assets GRESB Real Estate Assessment − Preparing to participate in assessment − Applying for various environmental certifications Shifting to Renewable Energy Ichigo RE Target: Sourcing 100% Renewable Electricity Across
Slide 20: Operator Change to Generate Higher Earnings
Operator Change to Generate Higher Earnings Chisun Inn Osaka Hommachi − Hotel operator change from third-party operator to Ichigo-owned Hakata Hotels − Scheduled to rebrand and reopen as The OneFive Osaka Sakaisuji in July 2021 − Deploying Ichigo’s PROPERA, an AI-based hotel revenue management syste
Slide 21: Achieving Organic Rent Growth at Contract Renewals
Achieving Organic Rent Growth at Contract Renewals 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 International Kobe Shin Variable+Fixed • Increased fixed rent Mar 2019 Re
Slide 22: July 2021 and January 2022 Forecasts
July 2021 and January 2022 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 forecast to gradually recover on the back of vaccine rollout, but will likely take up to one year to significantly recover Occupancy and ADR Forecasts for 14 Variable Hotels − Forecasting Occupancy at -20~-40%
Slide 24: Revision of July 2021 Fiscal Period Forecast
Revision of July 2021 Fiscal Period Forecast (Announced in Sep 2020) − Operating revenue -0.4%, DPS -23.0% vs. previous forecast − Recorded Covid-related reserve on the back of requests for rent forgiveness/deferral − Will carefully respond to rent forgiveness/deferral requests and work to minimize
Slide 25: July 2021 Forecast
July 2021 Forecast Dividend JPY 678, +1.2% YOY (JPY million) July 2021 July 2021 July 2020 Previous Revised (B) - (A) Major Factors for Variation Actual (A) Forecast Forecast (B) (Sep 2020) Operating Revenue 953 1,041 1,037 +84 Increase due to nonoccurrence of adjustments of variable rent +36 Variab
Slide 26: January 2022 Forecast
January 2022 Forecast Dividend JPY 719, -12.6% YOY (JPY million) January 2021 January 2022 (B) - (A) Major Factors for Variation Actual (A) Forecast (B) Operating Revenue 1,035 1,058 +23 Increase in variable rent +80 (Yokohama, Kumamoto, Nagoya, Matsuyama, Kurashiki, Variable Rent -3 81 +85 Valie Hi
Slide 27: Ichigo's Commitment to ESG
Ichigo’s Commitment to ESG © Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved. 27
Slide 28: 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 29: 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 158,586,005 kWh Demolition Equivalent to annual energy consumption of 52,862 households ‒ Lengthen useful life of real estate The
Slide 30: 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’
Slide 31: Ichigo ESG – Governance
Ichigo ESG – Governance First J-REIT 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 management of
Slide 32: Appendix: Portfolio Details
Appendix: Portfolio Details © Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved. 32
Slide 33: 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 Kush
Slide 34: Portfolio Growth
Portfolio Growth IPO Jan 2017 July 2017 through Jan 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 JPY 20.4B JPY 27.2B JPY 1.4B JPY 1.8B J
Slide 35: Portfolio Lease Details
Portfolio Lease Details Operator Diversification Driving Earnings Stability (as of Jan 31, 2021) Lease Terms Fixed Rent Fixed + Variable Rent Total Form of Contract Lease Lease Lease – Fixed Rent Yes Yes Yes – Fixed Portion of Revenue Fixed Portion of Hotel Variable Rent – – Upside GOP Rental Income
Slide 36: Individual Hotel Summary
Individual Hotel Summary (as of Jan 31, 2021) Jan 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 Sapporo
Slide 37: January 2021 Fiscal Period Individual Hotel Operating Results
January 2021 Fiscal Period Individual Hotel Operating Results (year-on-year) No. of January 2021 (August 2020 - January 2021) 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
Slide 38: 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-2 G-3 Nest Nest Smile Comfort Hotel Smile The Total Comfort HOTEL Comfort Comfort Chisun Inn Nest Hotel The Court Hotel Hotel Hotel Central Hotel Nest Hotel Valie Hotel OneFive Nest Hotel Nes
Slide 39: Fixed/Variable Rent, RevPAR, ADR, & Occupancy Trends
Fixed/Variable Rent, RevPAR, ADR, & Occupancy Trends Fixed/Variable Rent (JPY thousand) Jan 2020 Jul 2020 Jan 2021 Rent Ratio Rent Ratio Rent Ratio Fixed Rent 1,032,448 63.9% 963,173 – 1,023,281 – Fixed Rent from Operators 993,479 61.5% 935,606 – 993,875 – Rent Other (Rent from Retail Tenants) 38,96
Slide 40: Variable Rent Hotel Details
Variable Rent Hotel Details A-1 Nest Hotel Sapporo Ekimae ADR RevPAR Occupancy Location Sapporo Operating Results (Feb 2020 – Jan 2021) (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
Slide 41: Variable Rent Hotel Details
Variable Rent Hotel Details C-1 Smile Hotel Tokyo Asagaya ADR RevPAR Occupancy Location Suginami-ku, Tokyo Operating Results (Feb 2020 – Jan 2021) (right) (left) (right) (JPY) 1-minute walk from 100% 10,000 Access Asagaya Station on JR Chuo/Sobu Line 80% 8,000 60% 6,000 K.K. Hospitality Operator Ope
Slide 42: Variable Rent Hotel Details
Variable Rent Hotel Details D-2 Hotel Wing International Nagoya ADR RevPAR Occupancy Location Nagoya Operating Results (Feb 2020 – Jan 2021) (right) (right) (left) (JPY) 2-minute walk from 100% 7,500 Marunouchi Station on both Nagoya Subway 80% 6,000 Access Network Sakuradori Line and Tsurumai 60% 4
Slide 43: Variable Rent Hotel Details
Variable Rent Hotel Details E-3 Chisun Inn Osaka Hommachi Location Osaka ADR RevPAR Occupancy Operating Results (Feb 2020 – Jan 2021) (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 44: Variable Rent Hotel Details
Variable Rent Hotel Details E-5 Nest Hotel Osaka Shinsaibashi Location Osaka ADR RevPAR Occupancy Operating Results (Feb 2020 – Jan 2021) (right) (right) (left) (JPY) 1-minute walk from 100% 7,500 Nagahoribashi Station Access on Osaka Municipal 80% 6,000 Subway Sakaisuji Line 60% 4,500 Nest Hotel Ja
Slide 45: Variable Rent Hotel Details
Variable Rent Hotel Details F-2 Nest Hotel Matsuyama Location Matsuyama, Ehime Operating Results (Feb 2020 – Jan 2021) ADR RevPAR Occupancy (right) (right) (left) 25-minute drive from (JPY) Matsuyama Airport, 100% 7,500 3-minute walk from Access Katsuyamacho Station 80% 6,000 on Iyo Railway Jonan Li
Slide 46: Variable Rent Hotel Details
Variable Rent Hotel Details F-5 Valie Hotel Hiroshima Location Hiroshima Operating Results (Feb 2020 – Jan 2021) ADR RevPAR Occupancy (right) (right) (left) (JPY) 100% 7,500 3-minute walk from Access Jogakuin-mae Station 80% 6,000 on Hiroden Tram Line 60% 4,500 Operator The Court Co., Ltd. 40% 3,000
Slide 47: Variable Rent Hotel Details
Variable Rent Hotel Details G-3 Nest Hotel Kumamoto Location Kumamoto Operating Results (Feb 2020 – Jan 2021) ADR RevPAR Occupancy (right) (right) (left) (JPY) 2-minute walk from 100% 7,500 Nishikarashimacho Access 80% 6,000 Station on Kumamoto City Tram Line 60% 4,500 Nest Hotel Japan Operator 40%
Slide 48: 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 49: 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 50: Appendix: Loan Details & Shareholder Composition
Appendix: Loan Details & Shareholder Composition © Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved. 50
Slide 51: Stable Financial Base
Stable Financial Base Outstanding Loan Balance Jan 31, 2019 Jul 31, 2019 Jan 31, 2020 Jul 31, 2020 Jan 31, 2021 Amount JPY 21.75B JPY 25.47B JPY 25.47B JPY 25.47B JPY 25.47B Long-Term Loan Ratio 100% 100% 100% 93.1% 72.5% Fixed Rate Ratio 80.7% 83.5% 83.5% 91.4% 70.7% Average Interest Rate 0.91% 0.8
Slide 52: Loan Details
Loan Details (as of January 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, Reso
Slide 53: Shareholder Composition
Shareholder Composition Major Shareholders (as of January 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) 25,161 34,316 38,334 The Master Trust Bank of Jap
Slide 54: 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. 54
Slide 55: 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
Slide 56: 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
Slide 57: 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 58: 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 59: Hakata Hotels & PROPERA
Hakata Hotels & PROPERA − Hakata Hotels, a consolidated subsidiary of Ichigo, is a hotel operator operating 13 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
Slide 60: Portfolio Growth Opportunity via Ichigo Sponsor Support
Portfolio Growth Opportunity via Ichigo Sponsor Support 20 Hotels (JPY 64B) in Ichigo Sponsor Pipeline as of November 30, 2020 − Lodging-focused hotels across Japan − Locations: Major cities such as Hokkaido, Tokyo, Yokohama, Osaka, and Fukuoka Hokkaido Fukuoka Hiroshima Tokyo Fukuoka Yokohama Osaka
Slide 61: 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 62: 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 — January 2021 fiscal period Earnings Presentation on 6ix