Japan Hotel Reit Investment CorporationTSE: 8985

Financial Results Briefing for the Fiscal Year Ended December 31, 2024 (January 1, 2024 - December 31, 2024)

· Issued by Japan Hotel Reit Investment Corporation

Table of Contents

  • Settlement of Accounts - Highlights

1. FY12/2024 Highlights

3

  • Summary of Settlement of Accounts

1.

Results for FY12/2024

5

2.

Operating Forecasts for FY12/2025

6

  • External Growth

1.

Trend of Asset Size

8

2.

Summary of Asset Acquired in 2025

9

3.

Rooms and Facilities of Hilton Fukuoka Sea Hawk

10

4.

Fukuoka Market

11

  • Internal Growth

1. Hotel Performance Forecasts for FY2025

(28 Hotels with Variable Rent, etc.)

13

2.

Renovation Case Studies

14

3.

Rebranding Case Studies

16

4.

Capital Expenditure (CAPEX) and Depreciation

17

5.

Rent Revision

18

6.

ESG Initiatives

19

Ⅴ. Financial Conditions

1.

Financial Conditions

21

  • Market Environment

1.

Status of Domestic Accommodation Demand

25

2.

Status of Inbound Visitors

26

3.

Status of New Supply of Hotels

27

Appendix 1 JHR's Characteristics and Strategy

1.

JHR's Investment Targets

29

2.

Simultaneous Pursuit of Stability and Upside Potential

30

3.

External Growth Strategy

31

4.

Internal Growth Strategy

32

5.

Financial Strategy

33

Appendix 2 Information of Properties

1.

Portfolio Map

35

2.

List of Portfolio

36

3.

Portfolio Diversification

37

4.

Rent Structure

38

5.

Property List

39

6.

Summary of Lease Contracts

41

7.

Balance Sheet

44

Appendix 3 Investors Composition and Investment Unit Price

1.

Major Unitholders and Classifications of Unitholders

46

2.

Changes in Investment Unit Price and Market Capitalization

47

Appendix 4 Summary of the Asset Management Company

1.

Summary of the Asset Management Company

49

2.

Features and Governance of the Asset Management Company

50

1

  • Settlement of Accounts - Highlights

1. FY12/2024 Highlights

  • 1. External Growth

  • Jul. 2024: 4 properties acquired through public offering

3. Financial Management

(as of February 21, 2025)

MIMARU Tokyo

HOTEL AMANEK

OKINAWA

Southern Beach

Shinjuku-

HARBORVIEW

Hotel & Resort

Shinjuku West

Kabukicho.

HOTEL

OKINAWA

Total

Acquisition Price(*1)

JPY56.2Bn

  • 18.6% discount compared to appraisal value at acquisition

Total

JPY269.5Bn

interest-bearing debts

Basic Policy for LTV

Appraisal-based LTV(*6)

36.0%

Fixed interest rate ratio

75.7%

Manage appraisal-based

Average life of

3.6 years

LTV as benchmark, with an

  • Jan. to Feb. 2025: Strategic capital recycling, property acquisition by gearing

interest-bearing debts

upper limit of 40%

Cost for

1.5%

Hilton Fukuoka Sea Hawk

Acquisition 64.35

Price JPY Bn

Appraisal 71.7

Value JPY Bn

* New loan: JPY64.35Bn

Capital

Recycling

Washington Hotel Plaza

Hakata, Nakasu

Sale Price

JPY4.6Bn

Gain on

JPY2.3Bn

Sale

  • Gain on sale: retained earnings (partial distribution)

(as of February 21, 2025)

interest-bearing debts

4. Changes in DPU

(JPY)

+13.3%

• Temporary factor

4,461

4,500

(Gain on sale, etc.)

4,295

No. of

Total

Total

Unrealized

NAV per Unit(*4)

Properties

Acquisition Price

Appraisal Value(*2)

Gain(*3)

51

JPY515.3Bn

JPY698.1Bn

JPY184.9Bn JPY88,235

  • 2. Internal Growth

  • 2024 Results and 2025 Forecasts (28 Hotels with Variable Rent, etc.(*5))

+30.6%

129

•

Property acquisition

232

250

3,937

in 2025

163

4,000

•

Internal growth of

4,045

3,690

3,890

3,937

existing properties:

(previous

+263

•

Borrowing cost:

3,500

forecast)

-100

3,015

RevPAR (JPY)

Revenues (JPY MM)

GOP (JPY MM)

2024

vs 2023

2025

vs 2024

(Result)

(Forecast)

16,224

+16.5%

17,668

+8.9%

69,708

+15.7%

74,466

+6.8%

25,326

+21.5%

27,256

+7.6%

3,000

0

FY12/2024

FY12/2025

FY12/2019

FY12/2023

Normalized

Result

Result

Result

Forecast

DPU(*7)

(*1) The acquisition price includes land adjacent to OKINAWA HARBORVIEW HOTEL (JPY62MM), acquired on October 2, 2024. For the acquisition price on and after October 2, 2024, the same shall apply hereinafter.

(*2) The figures are calculated by using the appraisal value at the end of December 2024 for the existing properties and the appraisal value at the time of acquisition for the asset acquired in 2025.

(*3) Unrealized gain is calculated by subtracting book value from appraisal value. The unrealized gain for the asset acquired in 2025 is the difference between the appraisal value at the time of acquisition and the acquisition price. The same shall apply hereinafter.

(*4) The figure represents the forecast as of the end of December 2025. For the definition of NAV per Unit, please refer to (*5) on page 21.

(*5) For the definition of "28 Hotels with Variable Rent, etc.," please refer to the footnotes on page 13.

(*6) The appraisal-based LTV is calculated by the following formula: total interest-bearing debts ÷ (total assets + unrealized gains/losses). For the definition of other financial indicators, please refer to footnotes on page 21.

(*7) The normalized DPU refers to an estimated value calculated by excluding the temporary impact of the sales of the trademark rights and Washington Hotel Plaza Hakata, Nakasu from the revenue forecast for the fiscal year ending December 2025. It also assumes that Hilton Fukuoka Sea Hawk is held from the beginning of the period, with the recognition of annualized related fixed taxes and financial costs associated with the new borrowings.

3

  • Summary of Settlement of Accounts

1. Results for FY12/2024

FY12/2023

FY12/2024

Difference from

Breakdown of Variance

(24th Period)

(25th Period)

Previous Year

Actual

Actual

(B)-(A)

Existing

Acquisition

Acquisition

%

in 2023

in 2024

(A)

(B)

Properties

(JPY MM)

(*4)

(*5)

Proper ties

No. of Properties

47

51

4

-

-

-

4

Acquisition Price

396,918

453,171

56,252

14.2%

-

-

56,252

Operating Revenues

26,574

33,481

6,906

26.0%

4,189

1,466

1,250

Real Estate Operating

26,574

33,481

6,906

26.0%

4,189

1,466

1,250

Revenues

Fixed Rent

57.5% 14,658

49.8%

16,134

1,475

10.1%

96

474

904

Variable Rent

42.5% 10,844

50.2%

16,254

5,409

49.9%

4,090

978

340

Other Revenues

1,070

1,091

20

1.9%

2

13

5

and Loss

NOI(*2)

22,344

29,014

6,670

29.9%

4,079

1,348

1,242

Depreciation

5,083

5,617

534

183

129

222

Profit

Noncurrent Assets, etc.

153

238

85

85

-

-

Loss on Retirement of

NOI after Depreciation(*2)

17,108

23,158

6,050

35.4%

3,811

1,219

1,019

SG&A

2,093

2,378

284

Operating Income

15,014

20,779

5,765

38.4%

Ordinary Income

13,135

18,273

5,137

39.1%

Net Income

13,134

18,272

5,137

39.1%

Use of Negative Goodwill

845

1,795

950

112.4%

Dividend

4,637,006

5,097,006

460,000

9.9%

Total Dividends

13,980

20,066

6,086

43.5%

Number of Units Issued

(Unit)

Dividend per Unit (JPY)

3,015

3,937

922

30.6%

5

Main Factors of Difference

Fixed Rent

  • 28 Hotels with Variable Rent, etc.(*3) +JPY440MM

(Acquisition in 2023

+JPY386MM)

•

Others

+JPY130MM

(Acquisition in 2023

+JPY88MM)

•

Acquisition in 2024

+JPY904MM

(Total)

+JPY1,475MM

Variable Rent

  • 28 Hotels with Variable Rent, etc. +JPY4,136MM

(Acquisition in 2023

+JPY371MM)

•

Others

+JPY932MM

(Acquisition in 2023

+JPY606MM)

•

Acquisition in 2024

+JPY340MM

(Total)

+JPY5,409MM

Breakdown of Negative Goodwill

Dilution from PO

:

JPY1,240MM

50-year amortization amount

:

JPY262MM

Loss on retirement of

:

JPY236MM

noncurrent assets

Amortization of trademark rights :

JPY56MM

Total amount

: JPY1,795MM

(*1) For details, please refer to the Financial Report for FY12/2024 dated February 25, 2025.

(*2) Each is calculated using the following formula:

NOI (Net Operating Income) = Real estate operating revenues − Real estate operating costs + Depreciation + Loss on retirement of noncurrent assets + Asset retirement obligations expenses.

NOI after depreciation = Real estate operating revenues − Real estate operating costs

The same shall apply hereinafter.

(*3) For the definition of "28 Hotels with Variable Rent, etc.," please refer to the note on page 13.

(*4) The figure shown is the impact amount due to the following properties acquired in 2023 (including tenants): UAN kanazawa, Sotetsu Fresa Inn Shimbashi-Karasumoriguchi, La'gent Stay Sapporo Odori, Oriental Hotel Kyoto Rokujo, Hotel Oriental Express Fukuoka Nakasukawabata and Hotel JAL City Kannai Yokohama. The same shall apply hereinafter.

(*5) The figure shown is the impact amount due to the following properties acquired in 2024 (including tenants): MIMARU Tokyo Shinjuku West, HOTEL AMANEK Shinjuku-Kabukicho, OKINAWA HARBORVIEW HOTEL and Southern Beach Hotel & Resort OKINAWA. The same shall apply hereinafter.

2. Operating Forecasts for FY12/2025

FY12/2024

FY12/2025

Difference from

Breakdown of Variance

(25th Period)

(26th Period)

Previous Year

Actual

Forecast

(B)-(A)

Existing

Acquisition

Sale

Acquisition

%

in 2025

in 2025

(A)

(B)

Properties

in 2024

(JPY MM)

(*2)

(*3)

Proper ties

No. of Properties

51

51

-

-

-

-

(1)

1

Acquisition Price

453,171

515,391

62,220

13.7%

-

-

(2,130)

64,350

Operating Revenues

33,481

42,732

9,251

27.6%

1,774

1,649

2,126

3,700

Real Estate Operating

33,481

40,383

6,902

20.6%

1,774

1,649

(222)

3,700

Revenues

Fixed Rent

49.8% 16,134

48.9%

19,246

3,111

19.3%

130

1,323

(221)

1,879

Variable Rent

50.2% 16,254

51.1%

20,140

3,885

23.9%

1,782

320

-

1,782

Other Revenues

1,091

996

(94)

(8.7%)

(139)

6

(0)

38

Loss

Gain on Sales of

-

2,348

2,348

-

-

-

2,348

-

Properties

NOI

29,014

35,751

6,736

23.2%

1,835

1,526

(206)

3,580

and

5,617

6,747

1,129

126

260

(24)

766

Profit

Depreciation

Loss on Retirement of

238

101

(136)

(136)

-

-

-

Noncurrent Assets, etc.

NOI after Depreciation

23,158

28,903

5,744

24.8%

1,846

1,266

(181)

2,813

SG&A

2,378

3,046

668

Operating Income

20,779

28,205

7,425

35.7%

Ordinary Income

18,273

23,806

5,533

30.3%

Net Income

18,272

24,195

5,923

32.4%

Use of Negative Goodwill

1,795

362

(1,432)

(79.8%)

Amount of Reserve for

-

(1,818)

(1,818)

-

Dividend

Tax Purpose Reduction

Entry

Total Dividends

20,066

22,737

2,670

13.3%

Number of Units Issued

5,097,006

5,097,006

-

-

(Unit)

Dividend per Unit (JPY)

3,937

4,461

524

13.3%

6

Main Factors of Difference

Fixed Rent

•

28 Hotels with Variable Rent, etc.

+JPY76MM

•

Others

+JPY1,155MM

(Acquisition in 2024

+JPY1,323MM)

(Sale in 2025

-JPY221MM)

•

Acquisition in 2025

+JPY1,879MM

(Total)

+JPY3,111MM

Variable Rent

  • 28 Hotels with Variable Rent, etc. +JPY1,661MM

•

Others

+JPY441MM

(Acquisition in 2024

+JPY320MM)

•

Acquisition in 2025

+JPY1,782MM

(Total)

+JPY3,885MM

Breakdown of Negative Goodwill

50-year amortization amount

: JPY262MM

Loss on retirement of noncurrent : JPY100MM assets

Total amount

: JPY362MM

(*1) For details, please refer to the Financial Report for FY12/2024 dated February 25, 2025.

(*2) The figure shown is the impact amount (including tenants) due to Washington Hotel Plaza Hakata, Nakasu, which was sold in 2025. The same shall apply hereinafter.

(*3) The figure shown is the impact amount (including tenants) due to Hilton Fukuoka Sea Hawk, which was acquired in 2025. The same shall apply hereinafter.

  • External Growth

1. Trend of Asset Size

  • With the continuous external growth, the total appraisal value reached approx. JPY700 billion after capital recycling in 2025. The asset size on appraisal basis has grown by approx. 6 times since the merger

Trend of Asset Size (Acquisition Price and Appraisal Value)(*1)(JPY MM)

631,040

698,130

Appraisal Value

Acquisition Price

398,770

439,390

437,510

525,910

493,330

485,480

483,110

525,740

515,391

453,171

302,110

396,918

374,508

370,031

363,542

363,542

205,408

319,474

309,370

166,237

286,801

117,706

131,227

225,723

158,902

173,429

122,285

130,883

April 2012

FY12/2012

FY12/2013

FY12/2014

FY12/2015

FY12/2016

FY12/2017

FY12/2018

FY12/2019

FY12/2020

FY12/2021

FY12/2022

FY12/2023

FY12/2024

as of

February 21,

(merger)

(*4)

2025

No. of Properties

28

28

28

30

36

41

44

41

43

42

41

41

47

51

51

No. of

－

2

2

3

9

5

3

－

2

－

－

－

6

4

1

Acquisition

Acquisition

－

10,800

32,650

15,797

57,025

61,077

32,673

－

65,138

－

753(*3)

－

33,376

56,252(*5)

64,350

Price

(*2)

(12,480)

(36,140)

(15,910)

(59,230)

(63,680)

(34,030)

(68,850)

(763)

(39,340)

(69,065)

(71,700)

(Appraisal Value)

No. of

－

2

2

1

3

－

－

3

－

1

1

－

－

－

1

Disposition

Sale Price(*2)

842

2,680

700

4,890

－

－

12,150

－

8,000

11,300

－

－

－

4,610

(Appraisal Value)

(1,170)

(3,497)

(1,090)

(4,644)

(10,460)

(8,950)

(9,900)

(4,610)

July 2024: Acquisition of 4 Properties(*6)

MIMARU Tokyo Shinjuku West

HOTEL AMANEK

OKINAWA HARBORVIEW

Southern Beach Hotel &

Shinjuku-Kabukicho.

HOTEL

Resort OKINAWA

(Limited-service)

(Limited-service)

(Full-service)

(Resort)

Acquisition Price

Acquisition Price

Acquisition Price

Acquisition Price

JPY9.6Bn

JPY8.8Bn

JPY21.5Bn

JPY16.2Bn

Appraisal Value

Appraisal Value

Appraisal Value

Appraisal Value

JPY12.8Bn

JPY12.9Bn

JPY24.2Bn

JPY20.3Bn

January to February 2025: Capital Recycling

Acquisition

Sale

Hilton Fukuoka Sea Hawk

Washington Hotel Plaza

Hakata, Nakasu

(Full-service)

(Limited-service)

Acquisition Price

Sales Price

JPY64.35Bn

JPY4.6Bn

Appraisal Value

Gain on Sale

JPY

Bn

JPY2.3Bn

71.7

(*1) The asset size refers to the sum of acquisition price and the sum of appraisal value at the end of each fiscal period. The same shall apply hereinafter.

(*2) The total acquisition price of properties acquired during each period (with the total appraisal value at time of acquisition shown in parentheses below) or the total sale price of properties sold (with the total appraisal value at time of sale shown in parentheses below) is indicated.

(*3) JHR acquired the land that is part of the site of Oriental Hotel Universal City for JPY753 million on July 30, 2021.

(*4) The appraisal value of Washington Hotel Plaza Hakata, Nakasu (transferred on January 30, 2025) is based on the transfer price.

(*5) The figure shown includes the acquisition price of JPY62 million (appraisal value of JPY65 million) for the land adjacent to OKINAWA HARBORVIEW HOTEL, acquired on October 4, 2024.

(*6) The appraisal values are as of the end of December 2024.

8

2. Summary of Asset Acquired in 2025

Hilton Fukuoka Sea Hawk

  • Large-scale,full-service hotel under international "Hilton" brand in Fukuoka city, the business and tourism center of Kyushu
  • Easy access from Fukuoka Airport, only 20 minutes by car. Located next to the dome facility "Mizuho PayPay Dome FUKUOKA" and the entertainment complex
  • Designed to resemble a luxury cruise liner, the hotel has 35 floors above ground and 1,052 guest rooms. All rooms have ocean views and appeal to a wide range of customers with a variety of room types and price ranges
  • With 30 meeting and banquet rooms, including a large banquet hall with a capacity of 3,500 people, the hotel can meet the demand for large MICE(*1) events such as international conventions, as well as a variety of banquet types

Property Overview

Anticipated

JPY64,350MM

Acquisition Price

Appraisal Value

JPY71,700MM

Hotel Type

Full-service

Grade

Upper-middle

Location

2-2-3, Jigyohama, Chuo-ku,

Fukuoka city, Fukuoka

Acreage of Land

29,036.35㎡

Total Floor Space(*2)

140,958.90㎡

Structure and Stories

SRC with flat roof; 35 stories above

ground with 2 stories below ground

Completion

March 1995

No. of Guest Rooms

1,052 rooms

Rent Structure

Fixed Rent＋Variable Rent(*3)

Hotel Consulting and

Hilton Worldwide Manage Ltd.

Management Company

Hotel Lessee

Hawks Town Corporation

(100％ subsidiary of HMJ)

2025 Forecast

On Appraisal

(annualized)

Basis

NOI Yield

5.7%

6.0%

NOI Yield after

4.4%

4.7%

Depreciation

Changes in KPI

Changes in Revenues

(Result and Forecast)

(Result and Forecast)

(JPY)

30,000

20,000

10,000

0

Occupancy

ADR

RevPAR

(right axis)

(left axis)

(left axis)

100%

(JPY MM)

24,221

24,667

25,400

14,000

12,000

19,712

10,000

18,796

50%

8,000

15,462

16,968

6,000

15,078

4,000

76.5%

63.8%

68.8%

74.0%

2,000

2019

2024

2025

On Appraisal

0%

0

(Result)

(Result)

(Forecast)

Basis

Rooms Dept. F&B Dept. Others

10,857

11,274

12,305

10,664

400

365

352

413

4,688

4,394

4,710

4,297

7,217

5,795

5,953

6,515

2019

2024

2025

On Appraisal

(Result)

(Result)

(Forecast)

Basis

(*1) MICE is an acronym for Meetings (e.g. corporate meetings), Incentive travel (e.g. corporate incentive travel and training trips), Conventions (e.g. international conferences organized by international organizations, groups, academic societies, etc.), and Exhibitions/Events (e.g. exhibitions, trade fairs, and events), and is a general term for business events.

(*2) It is a total of the exclusive areas of the building and the floor space of attached buildings taken from the certified copy of real estate registry.

(*3) The annual fixed rent will be JPY2,040 million. The variable rent is calculated as follows: when hotel AGOP exceeds JPY2,100 million, the excess x 95% is paid.

9

Company analysis