Ichigo Hotel REIT Investment : Earnings Forecast Revision for the July 2022 Fiscal Period

Make The World

More Sustainable

[Provisional Translation Only]

This English translation of the original Japanese document is provided solely for information purposes. Should there be any discrepancies between this translation and the Japanese original, the latter shall prevail.

July 21, 2022

Issuer

Ichigo Hotel REIT Investment Corporation ("Ichigo Hotel," 3463)

1-1-1 Uchisaiwaicho, Chiyoda-ku, Tokyo

Representative: Osamu Miyashita, Executive Director

www.ichigo-hotel.co.jp/en

Asset Management Company

Ichigo Investment Advisors Co., Ltd.

Representative: Hiroshi Iwai, President

Inquiries: Hidehito Iwasaka, Head of Ichigo Hotel

Tel: [phone]

Earnings Forecast Revision for the July 2022 Fiscal Period

Ichigo Hotel is revising upward its July 2022 fiscal period earnings forecast announced in the March 17, 2022 release "January 2022 Fiscal Period Earnings."

1. July 2022 Earnings Forecast Revision

					(JPY million)
	Operating	Operating	Recurring	Net	Dividend
	per Share
	Revenue	Profit	Profit	Income
	(JPY)
Previous Forecast	1,069	421	214	213	838
(A)
New Forecast	1,197	515	312	311	1,220
(B)
Difference	+127	+93	+97	+97	+382
(B) - (A)
% Change	+12.0%	+22.2%	+45.4%	+45.6%	+45.6%
Reference:	1,117	465	269	268	1,055
July 2021 Actual
Reference: Net Income per Share: JPY 1,220
Period-end number of shares outstanding: 254,974 shares

Note: The new forecast is based on the "Preconditions for the July 2022 Earnings Forecast" on page 3. Actual results may vary due to changes in circumstances, so these forecasts should not be construed as a guarantee of such results. Ichigo Hotel will make a forecast revision should a material discrepancy emerge between this forecast and results.

1

2. July 2022 Earnings Forecast Revision Rationale

Ichigo Hotel is revising up its July 2022 fiscal period earnings forecast (announced on March 17, 2022) on the back of greater than expected variable rent at the Valie Hotel Hiroshima due to Hiroshima Prefecture temporarily leasing all rooms starting in mid- February 2021 and at the Nest Hotel Kumamoto due to Kumamoto Prefecture temporarily leasing all rooms starting on February 1, 2022. Both prefectures will continue the temporary leasing of rooms during the July 2022 fiscal period.

As a result, the forecast for July 2022 operating revenue, operating profit, recurring profit, net income, and dividend per share are expected to increase by JPY 127 million (+12.0%), JPY 93 million (+22.2%), JPY 97 million (+45.4%), JPY 97 million (+45.6%), and JPY 382 (+45.6%) respectively, versus the previous forecast.

Business and leisure demand has been gradually recovering on the back of the lifting of Covid restrictions, and Ichigo Hotel's July 2022 RevPAR based on actual February to May 2022 results for its 15 variable rent hotels is JPY 4,137 (+49.1% YOY).

There is no revision to the January 2023 fiscal period earnings forecast.

Should any further change to the outlook for operating results arise, Ichigo Hotel will promptly disclose the details.

2

		Preconditions for the July 2022 Earnings Forecast
			Preconditions
Period	∙ February 1, 2022 to July 31, 2022 (181 days)
Number of	∙ 24 hotels
Hotels
	Within operating revenue, rental income is forecast based on current lease contracts,
	taking into consideration such factors as hotel and market conditions.1
	Forecast Operating Performance2
			July 2022 Fiscal Period
		Occupancy3	78.1%
		ADR4	JPY 5,084

1. The forecast rental income assumes operators and tenants will fully pay their contractual rents without delay or default.
2. The 16 variable rent hotels are: Smile Hotel Kyoto Shijo, Nest Hotel Sapporo Ekimae, The OneFive Osaka Sakaisuji, Nest Hotel Sapporo Odori, The OneFive Fukuoka Tenjin, Nest Hotel Osaka Shinsaibashi, Smile Hotel Tokyo Asagaya, Nest Hotel Matsuyama, The OneFive Garden Kurashiki, Hotel Wing International Nagoya, Hotel Wing International Kobe Shin Nagata Ekimae, Nest Hotel Kumamoto, Valie Hotel Hiroshima, HOTEL EMIT SHIBUYA, The OneFive Okayama, and Capsule Plus Yokohama. Data for Capsule Plus Yokohama is excluded from the above forecast because the operator did not give consent to disclose forecasts.
3. Occupancy is calculated with the following formula:

Operating		Occupancy = Total number of guest rooms occupied during the period / (total
	number of guest rooms * number of days hotel was in operation during the period)
Revenue
4 ADR or Average Daily Rate is calculated with the following formula:
		ADR = Total sales from accommodation (excluding restaurant charges and other
		service fees) / number of guest rooms occupied during the period
		Details of the July 2022 Rental Income Forecast by Hotel
				(JPY million)
			Fixed Rent/	Variable
		Hotel Name	Minimum	Total
		Guaranteed	Rent
			Rent
		Smile Hotel Kyoto Shijo	30	-	30
		Nest Hotel Sapporo Ekimae	31	13	44
		The OneFive Osaka Sakaisuji	1	1	2
		Comfort Hotel Hamamatsu	55	-	55
		Nest Hotel Sapporo Odori	27	-	27
		The OneFive Fukuoka Tenjin	34	-	34
		Nest Hotel Osaka Shinsaibashi	66	-	66
		Comfort Hotel Central International Airport	151	-	151

3

		Smile Hotel Tokyo Asagaya		61		2		63
		Nest Hotel Matsuyama		36		7		43
		The OneFive Okayama		69		-		69
		Comfort Hotel Kushiro		18		-		18
		Comfort Hotel Suzuka		15		-		15
		The OneFive Garden Kurashiki		-		3		4
		Nest Hotel Kumamoto		25		64		89
		Valie Hotel Hiroshima		17		125		143
		HOTEL EMIT SHIBUYA		47		-		47
		Other1		217		26		243
		Total		908		244		1,152
		1 Figures for Hotel Wing International Nagoya, Hotel Wing International Kobe
		Shin Nagata Ekimae, Hotel Livemax Nihombashi-Hakozaki, Capsule Plus
		Yokohama, Urbain Hiroshima Executive, Washington Hotel Plaza Shimonoseki
		Eki Nishi, and Comfort Hotel Nagano are included in "Other" because the hotel
		operators did not provide consent to disclose hotel-specific data.
	∙ Retail: JPY 29 million of rental income (including utilities income) from retail
		tenants at The OneFive Osaka Sakaisuji, Hotel Wing International Kobe Shin
		Nagata Ekimae, and Smile Hotel Tokyo Asagaya, and from banquet rooms at Nest
		Hotel Kumamoto.
	∙ Depreciation: JPY 361 million. Depreciation has been calculated using the
		straight-line method.
	∙ Property and city planning taxes: JPY 120 million
	∙ Building maintenance and repair expenses are based on what Ichigo Investment
		Advisors, the asset management company of Ichigo Hotel, estimates will be
		necessary for each hotel during the period. However, actual expenses for the
		period could differ significantly from these forecast amounts for reasons including
Operating		the variability of maintenance and repair expenses, one-time costs due to
Expenses		unexpected building damage, etc.
	∙ Rental expenses, Ichigo Hotel's principal operating expense (other than
		depreciation, see above), are calculated based on historical data adjusted for
		anticipated expense variations.
	∙ Actual operating expenses may differ significantly from these assumptions due to
		unforeseeable factors.
	∙ SG&A expenses: JPY 3.1 million for engineering report costs and JPY 0.5 million
		for environmental certification costs.
Non-Operating	∙ Interest expenses and other borrowing-related expenses: JPY 204 million
Expenses
Borrowings	∙ Total borrowings: JPY 26.34 billion as of July 31, 2022, including loans and
	bonds.

4

Number of	∙ 254,974 shares issued and outstanding as of July 21, 2022. The forecast assumes
there will be no additional new issuance of shares and/or cancellation of shares
Shares
through July 31, 2022.

• The dividend forecast assumes that dividends will comply with the dividend distribution policy stipulated in Ichigo Hotel's Articles of Incorporation.

Dividend ∙ The dividend is subject to change due to factors such as sales of portfolio assets, changes in rental income associated with operator turnover, the occurrence of unexpected maintenance and repair costs, and fluctuations in interest rates.

Dividend in

Excess of ∙ Ichigo Hotel does not plan on paying any Dividend in Excess of Earnings. Earnings

• This forecast assumes that there are no material revisions to laws and regulations,

the tax system, accounting standards, listing rules of the Tokyo Stock Exchange,

Other and rules of the Investment Trusts Association, Japan, and no material changes in the state of the economy and real estate market conditions.

• Given ongoing Covid uncertainty, these earnings forecasts are subject to change.

5