Japan Hotel REIT Investment Corporation (TSE: 8985)
Financial Results
FY12/2019 (20th Period) February 20, 2020
Japan Hotel REIT Investment Corporation Japan Hotel REIT Advisors Co., Ltd.
http://www.jhrth.co.jp/en/
Table of Contents
- Settlement of Accounts for FY12/2019 - Highlights 1. FY12/2019 Highlights
- Summary of Settlement of Accounts and Revenue Forecast for the Full Fiscal Year
- Results for FY12/2019
- Revenue Forecast for FY12/2020
- Balance Sheet
- External Growth
- Successive External Growth
- Two New Properties Acquired in 2019
- Portfolio
- Portfolio
- Portfolio Diversification
- Internal Growth
- Rent Structures
- Performance of the 20 Hotels with Variable Rent, etc.
- RevPAR Variance to Previous Year by Region of the 20 Hotels with Variable Rent, etc. for 2020
- Active Asset Management
- Capital Expenditure and Depreciation
- Financial Conditions 1. Financial Conditions
- Market Environment 1. Market Environment
Appendix 1 JHR's Characteristics and Strategy | |||
3 | 1. | JHR's Investment Targets | 34 |
2. | Simultaneous Pursuit of Stability and Upside Potential | 35 | |
3. | External Growth Strategy | 36 | |
6 | 4. | Internal Growth Strategy | 37 |
5. | Financial Strategy | 38 | |
7 | |||
6. | Sustainability Initiatives | 39 | |
8 | |||
7. | Benefits Program for Unitholders | 41 | |
10 Appendix 2 Information on Properties
11 | 1. | Property List | 43 |
2. | Summary of Lease Contracts | 45 | |
13 | 3. | Major CAPEX Ⅲ by Hotels | 47 |
4. | The Five HMJ Hotels - Highlights | 48 | |
14 | |||
5. | Portfolio Map | 49 | |
16 | Appendix 3 Investors Composition and Investment Unit Price | ||
1. | Major Unitholders and Classification of Unitholders | 51 | |
17 | |||
2. | Changes in Investment Unit Price and Market Capitalization | 52 | |
18 Appendix 4 Summary of the Asset Management Company
19 | 1. | Summary of the Asset Management Company | 54 |
22 | 2. | Features and Governance of the Asset Management Company | 55 |
24
29
1
Ⅰ. Settlement of Accounts for FY12/2019 - Highlights
1. FY12/2019 Highlights
1. External Growth(*1)
- Strategic property replacement
End of FY12/2016 | 41 properties/JPY286.8Bn | |||||||
◆Public Offering in June | Acquisition in 2017 | |||||||
2017 | Acquired | Total Acquisition | Total Funds | |||||
3 properties/ | Price | Raised through | ||||||
Public Offerings | ||||||||
JPY32.6Bn | JPY | Bn | JPY | Bn | ||||
32.6 | 18.6 | |||||||
End of FY12/2017 | 44 properties/JPY319.4Bn | |||||||
◆Sale of Properties in August | Sale in 2018 | |||||||
2018 | Sold 3 properties/ | Total Book Value | Total Sales Price of | |||||
of Sold Properties | Sold Properties | |||||||
-JPY10.1Bn(*1) | ||||||||
JPY10.1Bn | JPY12.1Bn | |||||||
Total gain on sale: | ||||||||
JPY1.9Bn | ||||||||
End of FY12/2018 | 41 properties/JPY309.3Bn | |||||||
◆Public Offering in January | Acquisition in 2019 | |||||||
Acquired | Total Acquisition | Total Funds | ||||||
Raised through | ||||||||
2 properties/ | Price | Public Offerings | ||||||
JPY65.1Bn | JPY33.3Bn | |||||||
2019 | JPY65.1Bn | |||||||
Hotel Oriental Express | ||||||||
Hilton Tokyo Odaiba | Osaka Shinsaibashi | |||||||
End of FY12/2019 43 properties/JPY374.5Bn
2. Internal Growth(*2,3) | 3. Strengthening of Financial Base | |||||||||||||||
▶ Improvement in hotel performance and | ▶ Conservative financial management | |||||||||||||||
increase of rent through Active Asset | (as of the end of December 2019) | |||||||||||||||
Management | LTV | Costs for | ||||||||||||||
Interest-bearingAverage Life of | ||||||||||||||||
Track Record | Debt | Debt | ||||||||||||||
40.6% | 1.0% | 5.2 years | ||||||||||||||
The 21 Hotels with Variable Rent, etc. | ||||||||||||||||
Status of Credit Rating | ||||||||||||||||
2018 | 2019 | Variance | ||||||||||||||
JCR | R&I | |||||||||||||||
RevPAR (JPY) | 13,833 | 13,444 | (2.8%) | |||||||||||||
A+ (stable) | A (positive) | |||||||||||||||
First Half | 12,817 | 12,765 | (0.4%) | |||||||||||||
※ The rating outlook of R&I changed to positive | ||||||||||||||||
from stable in October 2019 | ||||||||||||||||
Second Half | 14,831 | 14,113 | (4.8%) | |||||||||||||
Reinforcement of Lender Formation | ||||||||||||||||
GOP (JPY MM) | 17,911 | 17,270 | (3.6%) | • Increased borrowings from Development Bank of | ||||||||||||
Japan Inc. | ||||||||||||||||
⇒ 3.4% as of the end of December 2019 | ||||||||||||||||
Forecast for FY12/2020 | (Increased by 0.6% from the end of December | |||||||||||||||
2018) | ||||||||||||||||
The 20 Hotels with Variable Rent, etc. | ||||||||||||||||
Diversified Funding Methods by Issuance of | ||||||||||||||||
2019 | 2020 | Variance | Investment Corporation Bonds | |||||||||||||
(forecast) | • Issuance of investment corporation bonds for | |||||||||||||||
RevPAR (JPY) | 13,272 | 14,061 | +5.9% | individual investors (the fourth time) | ||||||||||||
(June 2019): Total JPY8.0Bn | ||||||||||||||||
First Half | 12,491 | 12,506 | +0.1% | • Issuance of investment corporation bonds (Green | ||||||||||||
Bonds) (the first time as J-REITs specializing in | ||||||||||||||||
hotels) (July 2019): Total JPY2.0Bn | ||||||||||||||||
Second Half | 14,041 | 15,600 | +11.1% | ⇒ The proceeds were allocated to the funds for | ||||||||||||
repayment of loans procured for renovation of | ||||||||||||||||
GOP (JPY MM) | 15,722 | 16,345 | +4.0% | Oriental Hotel Fukuoka Hakata Station and will | ||||||||||||
be allocated for the funds for construction for | ||||||||||||||||
renovation, etc. of other hotels | ||||||||||||||||
(*1) Stating total amount of the acquisition price. | ||||||||||||||||
(*2) The 21 Hotels with Variable Rent, etc. are the 11 HMJ Hotels plus ibis Tokyo Shinjuku, ibis Styles Kyoto Station, ibis Styles Sapporo, |
Mercure Sapporo, Mercure Okinawa Naha, Mercure Yokosuka, the b ikebukuro, the b hachioji, the b hakata and the b suidobashi.
The 11 HMJ Hotels are Kobe Meriken Park Oriental Hotel, Oriental Hotel tokyo bay, Namba Oriental Hotel, Hotel Nikko Alivila, Oriental Hotel Hiroshima, Okinawa Marriott Resort & Spa, ACTIVE-INTER CITY HIROSHIMA (Sheraton Grand Hiroshima Hotel), Holiday Inn Osaka Namba, Hilton Tokyo Narita Airport, International Garden Hotel Narita and Hotel Nikko Nara. The same shall apply hereinafter.
(*3) The 20 Hotels with Variable Rent, etc. are 20 hotels excluding Namba Oriental Hotel, which is planning to implement large-scale renovation from November 2020 from The 21 Hotels with Variable Rent, etc. The same shall apply hereinafter.
3
1. FY12/2019 Highlights (cont.)
Dividends per Unit Growth
(JPY)
4,000
3,500
3,000
2,500
2,000
1,500
The amount of sales effect(*) | 3,683 | 3,890 | (5.1%) | 3,690 | 3,750 | ||||||||||||||||||||||||||
3,420 | +5.6% | 204 | |||||||||||||||||||||||||||||
2,975 | +7.7% | +0.1% | +1.6% | ||||||||||||||||||||||||||||
+15.0% | |||||||||||||||||||||||||||||||
98 | 3,686 | ||||||||||||||||||||||||||||||
2,877 | (excluding the | ||||||||||||||||||||||||||||||
amount of sales effect) | |||||||||||||||||||||||||||||||
(excluding the | |||||||||||||||||||||||||||||||
amount of sales effect) | |||||||||||||||||||||||||||||||
FY12/2015 | FY12/2016 | FY12/2017 | FY12/2018 | FY12/2019 | FY12/2020 | ||||||||||||||||||||||||||
(16th Period) | (17th Period) | (18th Period) | (19th Period) | (20th Period) | (21st Period (forecast)) |
NAV per Unit Growth | |||||||
(JPY) | 77,129 | 79,407 | 83,286 | ||||
80,000 | 75,209 | ||||||
+2.6% | +3.0% | +4.9% | |||||
70,000 | 63,385 | ||||||
+18.7% | |||||||
60,000 | |||||||
50,000
40,000
30,000
FY12/2015 | FY12/2016 | FY12/2017 | FY12/2018 | FY12/2019 |
(16th Period) | (17th Period) | (18th Period) | (19th Period) | (20th Period) |
(*) The amount of sales effect represents dividends per unit which increased due to sales of properties.
4
Ⅱ. Summary of Settlement of Accounts and
Revenue Forecast for the Full Fiscal Year
1. Results for FY12/2019
(Unit: JPY MM)
FY12/2018 | FY12/2019 | Variance | Breakdown of Variance | ||||||
(19th Period) | (20th Period) | ||||||||
Three | Oriental Hotel | ||||||||
Actual | Actual(*1) | Property | Existing | ||||||
(B)-(A) | % | Properties | Fukuoka | ||||||
(A) | (B) | Acquired in | Sold in | Hakata | Properties | (*6) | |||
2019 | (*3) | ||||||||
2018(*4) | Station(*5) |
Major Causes of Variance of
Existing Properties
Fixed rent, etc. |
Proper ties | No. of Properties | 41 | 43 | ||||
Acquisition Price | 309,370 | 374,508 | |||||
Operating Revenue | 28,253 | 28,278 | |||||
Real Estate Operating | 26,318 | 28,278 | |||||
Revenue | |||||||
Fixed Rent, etc. | 56.2% | 14,788 | 60.5% | 17,101 | |||
Variable Rent | 43.8% | 11,529 | 39.5% | 11,176 | |||
Gain on Sale of | 1,934 | - | |||||
Properties, etc. | |||||||
Loss | NOI(*2) | 22,104 | 24,087 | ||||
NOI Yield | 7.1% | 6.4% | |||||
Depreciation | 4,091 | 4,557 | |||||
and | |||||||
Asset Retirement | 2 | 2 | |||||
Profit | Obligations Expenses | ||||||
Loss on Retirement of | 35 | 246 | |||||
Noncurrent Assets | |||||||
NOI after | 17,974 | 19,281 | |||||
Depreciation(*2) | |||||||
NOI Yield after Depreciation | 5.8% | 5.1% | |||||
Other Operating | 1,916 | 2,132 | |||||
Expenses | |||||||
Operating Income | 17,993 | 17,148 | |||||
Ordinary Income | 16,211 | 15,291 | |||||
Net Income | 16,210 | 15,290 | |||||
Use of Negative Goodwill | 563 | 1,176 | |||||
Dividend | Reserve for Special | (1,174) | - | ||||
Advanced Depreciation | |||||||
Total Dividends | 15,602 | 16,466 | |||||
Number of Units Issued | 4,010,847 | 4,462,347 | |||||
(Unit) | |||||||
Dividend per Unit (JPY) | 3,890 | 3,690 | |||||
[3,686](*7) | |||||||
2 | 2 | - | - | ||
65,138 | 21.1% | 65,138 | - | - | |
24 | 0.1% | 2,374 | (2,214) | 150 | (286) |
1,959 | 7.4% | 2,374 | (279) | 150 | (286) |
2,312 | 15.6% | 2,367 | (199) | 0 | 144 |
(353) | (3.1%) | 7 | (79) | 150 | (430) |
(1,934) | - | - | (1,934) | 0 | - |
1,983 | 9.0% | 2,368 | (251) | 151 | (284) |
(0.7%) | |||||
465 | 197 | (34) | 130 | 171 | |
0 | - | - | - | 0 | |
210 | - | - | 205 | 5 | |
1,306 | 7.3% | 2,170 | (216) | (185) | (461) |
(0.7%) | |||||
216 | - |
- (4.7%)
- (5.7%)
- (5.7%)
-
108.8%
1,174 -
- 5.5%
451,500 11.3%
(200) (5.1%)
• Increase in fixed-rent | JPY124MM | ||
• Increase in rent from office and | |||
commercial tenants, etc. | JPY27MM | ||
• Utilities income, etc. | (JPY7MM) | ||
Total | JPY144MM | ||
Variable rent | |||
• Variable rent from the 21 Hotels | |||
with Variable Rent, etc. | (JPY569MM) | ||
• Revenue sharing, etc. | JPY138MM | ||
Total | (JPY430MM) |
Use of Negative Goodwill(*8)
<FY12/2018> | ||
50-year amortization amount | JPY262MM | |
Correspondence to large-scale renovation work | ||
JPY265MM | ||
Loss on retirement of noncurrent assets | JPY35MM | |
Total | JPY563MM | |
<FY12/2019> | ||
50-year amortization amount | JPY262MM | |
Correspondence to dilution, etc. | JPY310MM | |
Correspondence to large-scale renovation work | ||
JPY357MM | ||
Loss on retirement of noncurrent assets | JPY246MM |
Total JPY1,176MM
(*1) | For detail, please refer to Financial Report for the Fiscal Year Ended December 31, 2019 (January 1, 2019-December 31, 2019) dated February 20, 2020. |
(*2) | Each figure is calculated by the following formula: |
NOI (Net Operating Income) = Real estate operating revenue − Real estate operating costs + Depreciation + Loss on retirement of noncurrent assets + Asset retirement obligations expenses | |
NOI after depreciation = Real estate operating revenue − Real estate operating costs | |
(*3) | Representing Hilton Tokyo Odaiba and Hotel Oriental Express Osaka Shinsaibashi, which JHR acquired in FY12/2019 (20th Period). The same shall apply hereinafter. |
(*4) | Representing R&B Hotel Higashi-nihonbashi, the b akasaka-mitsuke and the b Ochanomizu, which JHR sold in FY12/2018 (19th Period). |
(*5) | Large-scale renovation works causing the suspension of hotel operation were implemented at Oriental Hotel Fukuoka Hakata Station from October 1, 2018 to April 8, 2019. Stating the amount of impact of the renovation. The same shall apply hereinafter. |
(*6) | "The existing properties" above refers to 40 properties which excludes properties acquired in 2019 and Oriental Hotel Fukuoka Hakata Station from 43 properties owned by JHR as of February 20, 2020. The same shall apply hereinafter. |
(*7) | [ ] represents the amount of dividend per unit excluding the amount of sales effect (reference). |
(*8) | Please refer to P.26 for the use of negative goodwill (reserve for temporary difference adjustment). |
6 |
2. Revenue Forecast for FY12/2020
(Unit: JPY MM)
FY12/2019 | FY12/2020 | Comparison with Previous Period | |||||
(20th Period) | (21st Period) | ||||||
Actual | Forecast(*1) | (B)-(A) | Property | Oriental Hotel | Existing | ||
(A) | (B) | Variance | Acquired in | Fukuoka | |||
Properties | |||||||
2019 | Hakata Station |
Major Causes of Variance of
Existing Properties
Fixed rent | |
• Fixed-rent increase | JPY29MM |
Proper ties | No. of Properties | 43 | 43 | |||
Acquisition Price | 374,508 | 374,508 | ||||
Operating Revenue | 28,278 | 29,971 | ||||
Real Estate Operating | 28,278 | 29,971 | ||||
Revenue | ||||||
Fixed Rent, etc. | 60.5% 17,101 | 60.0% | 17,987 | |||
Variable Rent | 39.5% 11,176 | 40.0% | 11,984 | |||
NOI | 24,087 | 25,273 | ||||
Loss | NOI Yield | 6.4% | 6.7% | |||
Depreciation | 4,557 | 4,859 | ||||
and | Asset Retirement | 2 | 2 | |||
Obligations Expenses | ||||||
Profit | Loss on Retirement of | 246 | 18 | |||
Noncurrent Assets | ||||||
NOI after Depreciation | 19,281 | 20,392 | ||||
NOI Yield after Depreciation | 5.1% | 5.4% | ||||
Other Operating | 2,132 | 2,264 | ||||
Expenses | ||||||
Operating Income | 17,148 | 18,128 | ||||
Ordinary Income | 15,291 | 16,239 | ||||
Net Income | 15,290 | 16,238 | ||||
Dividend | Use of Negative Goodwill | 1,176 | 496 | |||
Total Dividends | 16,466 | 16,733 | ||||
Number of Units Issued | 4,462,347 | 4,462,347 | ||||
(Unit) | ||||||
Dividend per Unit (JPY) | 3,690 | 3,750 |
-
-
1,692 | 6.0% | 950 | 480 | 261 |
1,692 | 6.0% | 950 | 480 | 261 |
885 | 5.2% | 842 | 25 | 18 |
807 | 7.2% | 108 | 455 | 243 |
1,185 | 4.9% | 670 | 471 | 43 |
0.3% | ||||
302 | 139 | 55 | 108 | |
0 | - | (0) | (0) | |
(228) | - | (205) | (23) | |
1,111 | 5.8% | 531 | 621 | (41) |
0.3% |
- -
- 5.7%
- 6.2%
- 6.2%
(679) | (57.8%) |
267 | 1.6% |
- | - |
60 | 1.6% |
• Utilities income, etc. | (JPY11MM) | |
Total | JPY18MM | |
Variable rent | ||
• The 20 Hotels with Variable Rent, etc. | JPY589MM |
- Variable rent of Namba Oriental Hotel
(planned to implement the large-scale renovation) (JPY320MM)
• Revenue sharing, etc. | (JPY25MM) | ||
Total | JPY243MM |
Use of Negative Goodwill(*2)
<FY12/2019> | ||
50-year negative goodwill amortization | JPY262MM | |
Adjustment for dilution | JPY310MM | |
Correspondence to large-scale renovation work | JPY357MM | |
Loss on retirement of noncurrent assets | JPY246MM | |
Total JPY1,176MM | ||
<FY12/2020 (plan)> | ||
50-year negative goodwill amortization | JPY262MM | |
Correspondence to large-scale renovation work | JPY216MM | |
Loss on retirement of noncurrent assets | JPY18MM | |
Total | JPY496MM |
(*1) For detail, please refer to Financial Report for the Fiscal Year Ended December 31, 2019 (January 1, 2019-December 31, 2019) dated February 20, 2020.
(*2) Please refer to P.26 for the use of negative goodwill (reserve for temporary difference adjustment).
7
3. Balance Sheet
(Unit: JPY MM) | |||||||||||||
FY12/2018 | FY12/2019 | FY12/2018 | FY12/2019 | ||||||||||
End of | End of | End of | End of | ||||||||||
Fiscal Year | Fiscal Year | Variance | Fiscal Year | Fiscal Year | Variance | ||||||||
(as of) December 31, December 31, | (as of) | December 31, | December 31, | ||||||||||
2018 | 2019 | 2018 | 2019 | ||||||||||
ASSETS | LIABILITIES | ||||||||||||
Current Assets | 40,266 | 37,762 | (2,503) | Current Liabilities | 17,020 | 16,627 | (393) | ||||||
Cash and Deposits(*1) | 37,184 | 34,343 | (2,840) | Operating Accounts Payable | 1,941 | 1,485 | (455) | ||||||
Operating Accounts | 2,474 | 2,779 | 305 | Current Portion of Investment Corporate | 2,000 | - | (2,000) | ||||||
Receivables | Bonds Payable | ||||||||||||
Others | 607 | 638 | 31 | Current Portion of Long-term Loans Payable | 11,117 | 12,782 | 1,665 | ||||||
Noncurrent Assets | 309,993 | 377,608 | 67,614 | Accounts Payable | 1,028 | 1,313 | 285 | ||||||
Net Property and | 272,889 | 340,522 | 67,633 | Advances Received | 882 | 909 | 27 | ||||||
Equipment | Others | 52 | 137 | 84 | |||||||||
Buildings in Trust(*2) | 107,874 | 118,128 | 10,254 | ||||||||||
Long-term Liabilities | 130,163 | 162,572 | 32,408 | ||||||||||
Land in Trust | 163,151 | 219,901 | 56,749 | ||||||||||
Investment Corporation Bonds | 31,600 | 41,600 | 10,000 | ||||||||||
Others(*3) | 1,864 | 2,493 | 629 | ||||||||||
Long-term Loans Payable | 91,954 | 114,372 | 22,418 | ||||||||||
Intangible Assets | 33,915 | 33,804 | (110) | ||||||||||
Tenant Leasehold and Security Deposits | 5,634 | 5,722 | 87 | ||||||||||
Other Assets | 3,188 | 3,280 | 92 | ||||||||||
Derivative Liabilities | 514 | 416 | (97) | ||||||||||
Leasehold and | 162 | 162 | - | ||||||||||
Others | 460 | 461 | 1 | ||||||||||
Security Deposits | |||||||||||||
Others | 3,025 | 3,117 | 92 | TOTAL LIABILITIES | 147,184 | 179,200 | 32,015 | ||||||
Deferred Assets | 296 | 351 | 55 | NET ASSETS | |||||||||
Unitholders' Capital | 153,516 | 186,894 | 33,378 | ||||||||||
Capital Surplus | 21,746 | 21,746 | - | ||||||||||
Reserve for Temporary Difference | 12,357 | 11,794 | (563) | ||||||||||
Adjustment | |||||||||||||
Reserve for Special Account for Tax Purpose | - | 1,174 | 1,174 | ||||||||||
Reduction Entry | |||||||||||||
Unappropriated Retained Earnings | 16,213 | 15,290 | (923) | ||||||||||
Others | (461) | (377) | 84 | ||||||||||
TOTAL NET ASSETS | 203,372 | 236,522 | 33,150 | ||||||||||
TOTAL ASSETS | 350,556 | 415,722 | 65,165 | ||||||||||
TOTAL LIABILITIES AND NET ASSETS | 350,556 | 415,722 | 65,165 | ||||||||||
(*1) Cash and deposits in trust is included.
(*2) The sum of buildings in trust, structures in trust, machinery and equipment in trust, tools, furniture and fixtures in trust, and construction in progress in trust.
(*3) The sum of machinery and equipment, tools, furniture and fixtures.
8
Ⅲ. External Growth
1. Successive External Growth
- Improvement of the quality of JHR's portfolio and successive external growth through strategic asset replacement
Growth in Asset Size(*1), etc. (JPY MM) | +21.1% | |||||||||||||||||||
+11.4% | (3.2%) | |||||||||||||||||||
+27.1% | ||||||||||||||||||||
+30.2% | ||||||||||||||||||||
+7.0% | +21.4% | +9.1% | 374,508 | |||||||||||||||||
319,474 | 309,370 | |||||||||||||||||||
286,801 | ||||||||||||||||||||
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 | ||||||||||||||||||
(merger) | (13th Period) | (14th Period) | (15th Period) | (16th Period) | (17th Period) | (18th Period) | (19th Period) | (20th Period) | ||||||||||||
NOI Yield(*2) | - | 6.2% | 6.2% | 6.3% | 6.6% | 6.6% | 6.7% | 7.1% | 6.4% | |||||||||||
NOI Yield after | - | 4.5% | 4.8% | 5.0% | 5.3% | 5.4% | 5.5% | 5.8% | 5.1% | |||||||||||
Depreciation(*2) | ||||||||||||||||||||
NAV per Unit | - | JPY32,321 | JPY36,074 | JPY46,272 | JPY63,385 | JPY75,209 | JPY77,129 | JPY79,407 | JPY83,286 | |||||||||||
No. of Properties | 28 | 28 | 28 | 30 | 36 | 41 | 44 | 41 | 43 | |||||||||||
No. of Acquisition | 2 | 2 | 3 | 9 | 5 | 3 | 2 | |||||||||||||
Acquisition Price | JPY10.8Bn | JPY32.6Bn | JPY15.7Bn | JPY57.0Bn | JPY61.0Bn | JPY32.6Bn | JPY65.1Bn | |||||||||||||
No. of Dispositions | 2 | 2 | 1 | 3 | 3 | |||||||||||||||
Sale Price | JPY0.8Bn | JPY2.6Bn | JPY0.7Bn | JPY4.8Bn | JPY12.1Bn | |||||||||||||||
Aim for Successive Growth
(*1) Asset size is based on the aggregate acquisition price of the properties at the end of each fiscal period. The same shall apply hereinafter.
(*2) NOI yield for FY12/2012 is hypothetical annualized based on actual NOI after merger.
10
2. Two New Properties Acquired in 2019
- An acquisition of largest(*1) asset in our portfolio and trophy asset for JHR
- Scarce large-scalefull-service hotel in the middle of Tokyo
- Located in "Osaka Minami" area, one of Kansai's foremost tourist destinations
- Can accommodate two or more person in all guest rooms
Hilton Tokyo Odaiba | Hotel Oriental Express Osaka Shinsaibashi |
Changes in Major Indicators(*2) | Changes in Major Indicators(*3) | ||||||||||||||||
(JPY) | ADR (left axis) | RevPAR (left axis) | Occupancy Rates (right axis) | (JPY) | ADR (left axis) | RevPAR (left axis) | Occupancy Rates (right axis) | ||||||||||
40,860 | 100% | 100% | |||||||||||||||
40,000 | 34,969 | 31,085 | 12,000 | 9,927 | 9,293 | 9,331 | 9,611 | 9,275 | 8,967 | 9,385 | |||||||
30,108 | 30,202 | 29,263 | 29,488 | 75% | |||||||||||||
30,000 | 9,000 | 75% | |||||||||||||||
33,981 | |||||||||||||||||
8,868 | |||||||||||||||||
30,336 | 50% | 8,632 | 8,407 | 8,535 | 8,414 | 8,654 | |||||||||||
20,000 | 28,309 | 26,558 | 25,135 | 26,650 | 27,957 | 6,000 | 7,954 | 50% | |||||||||
10,000 | 94.0% | 87.9% | 86.8% | 85.9% | 90.4% | 89.9% | 83.2% | 25% | 3,000 | 87.0% | 90.5% | 91.5% | 92.3% | 90.7% | 88.7% | 92.2% | 25% |
0 | 0% | 0 | 0% | ||||||||||||||
2018 | 2019 | 2020 (F) | 2019 | 2020 (F) | 2019 | 2020 (F) | 2018 | 2019 | 2020 (F) | 2019 | 2020 (F) | 2019 | 2020 (F) | ||||
GOP (JPY MM) | 3,097 | 2,644 | 3,423 | First Half | Second Half | GOP (JPY MM) | 104 | 156 | 151 | First Half | Second Half | ||||||
% of Inbound | 54.0% 50.3% | ー | % of Inbound | 94.4% 97.1% | ー | ||||||||||||
Visitors(*4) | Visitors(*5) |
(*1) Based on the acquisition price.
(*2) Hilton Tokyo Odaiba is planning to implement large-scale renovation works from September 2020 through December 2020.
(*3) Hotel Oriental Express Osaka Shinsaibashi opened in April 2018, the figures for 2018 state the figures from April to December 2018.
(*4) Based on numbers of guest rooms sold.
(*5) Based on room sales.
11
Ⅳ. Portfolio
1. Portfolio
- Portfolio consisting of competitive hotels in areas with strong leisure lodging demand
- Selectively invest in locations with high growth potential of leisure demand such as Strategic Investment Areas
Portfolio Summary | Strategic Investment Areas and Locations of Properties | |
Total Assets
JPY374.5Bn
Properties acquired in 2019 Existing properties Strategic Investment Areas
Hokkaido Area | |
No. of Hotels | Okinawa Area |
43 Hotels
(34 in Strategic Investment Areas)
No. of Guest Rooms | Fukuoka | Tokyo & the Bay Area(*1) |
11,705 Rooms | Area | |
Osaka/Kyoto Area(*2) | ||
(*1) Bay Area includes the coastal area of Tokyo Bay in Kanagawa and Chiba prefectures. | Tokyo 23 wards | |
(*2) Osaka/Kyoto Area refers to Osaka and Kyoto prefectures. | 13 | |
2. Portfolio Diversification
- Widely diversified and high-quality portfolio
- Appeal to inbound visitors by international brands
By Area and Rent(*1)
(V) (F) | (V) | |
(F) | 4.5% | |
0.7% | (F) | |
3.2% | ||
(V) 1.6% | 16.7% | |
2.2% | ||
(F) | Hokkaido | |
4.3% |
By Hotel Brand(*2) | ||
Others | Oriental Hotel | |
Dormy Inn, etc. | 14% | |
16% | ||
(Kyoritsu Maintenance) | ||
4% the b | Hotel Nikko | |
3% | 8% |
(V) | 5.2% | (V) |
Chubu |
ibis/Mercure (Accor)
Holiday Inn (IHG)
3.1% | Chugoku | 4.9% | Tokyo | 4.0% |
6.5% | 20.7% |
8%
7%
(F) | Kyushu | ||||||
5.2% | (excluding Okinawa) | ||||||
8.3% | |||||||
Okinawa | Kanto | (F) | |||||
(V) | (excluding Tokyo) | ||||||
13.6% | 13.8% | ||||||
22.5% | |||||||
7.5% | |||||||
Kansai | |||||||
(excluding Osaka) | |||||||
8.0% | Osaka | ||||||
(F) | 10.3% | ||||||
6.2% | (V) | ||||||
(V) | |||||||
8.7% | |||||||
3.9% | (F) | (V) | (F) | ||||
4.0% | |||||||
3.3% | 7.0% | ||||||
Fixed Rent (F) | Variable Rent (V) | ||||||
59.5%40.5%
(*1) Based on the annualized rent in revenue forecast of FY12/2020
(*2) Based on the acquisition price
Sheraton
5%
HiltonMariott
31%4%
International Brand: 55%
By Grade(*2) | By Hotel Type(*2) | |||
Economy | ||||
5% | ||||
Luxury | Resort | Limited- | ||
21% | 21% | |||
service | ||||
Mid-price | ||||
33% | ||||
42% | Upper- | |||
Full-service | ||||
middle | ||||
33% | 47% |
14
Ⅴ. Internal Growth
1. Rent Structures
Stability | Upside | ||||||||||||||
(FY12/2020 forecast) | |||||||||||||||
Rent Structure(*1) | Fixed rent | Fixed rent + | Fixed rent + Variable rent | Variable rent | Management contract | Total | |||||||||
Revenue sharing | |||||||||||||||
Type of Contract | Lease contract | Lease contract | Lease contract | Lease contract | Management contract | ||||||||||
Type of | Fixed | ○ | ○ | ○ | - | - | - | ||||||||
A certain percentage of sales | A certain percentage of | A certain percentage of hotel | |||||||||||||
Rent | Variable | - | Hotel GOP | - | |||||||||||
exceeding the threshold | hotel GOP | revenue or hotel GOP | |||||||||||||
Real Estate Operating | JPY2,832MM | JPY3,927MM | JPY18,479MM | JPY1,894MM | JPY3,080MM | JPY30,214MM | |||||||||
Revenue (%) | |||||||||||||||
(annualized forecast for | (9.4%) | (13.0%) | (61.2%) | (6.3%) | (10.2%) | (100.0%) | |||||||||
FY12/2020) | |||||||||||||||
(breakdown) | (%) | - | (1.8%) | (25.4%) | (4.5%) | (8.7%) | (40.5%) | ||||||||
Fixed Rent, | JPY2,832MM | JPY3,382MM | JPY10,796MM | JPY536MM | JPY439MM | JPY17,987MM | |||||||||
etc.(*2) (%) | (9.4%) | (11.2%) | (35.7%) | (1.8%) | (1.5%) | (59.5%) | |||||||||
Variable Rent | JPY545MM | JPY7,682MM | JPY1,358MM | JPY2,641MM | JPY12,227MM | ||||||||||
Involvement in | Low | Low | High | High | High | - | |||||||||
Hotel Operation | |||||||||||||||
1) | Renewal of building | 1) | Renewal of building and | 1) | Renewal of building and | 1) | Renewal of building and | ||||||||
CAPEX Paid by JHR | 1) Renewal of building | facilities | facilities | facilities | |||||||||||
and facilities | - | ||||||||||||||
and facilities | 2) | Fixtures and equipment | 2) | Fixtures and equipment | 2) | Fixtures and equipment | |||||||||
<3) | Strategic investment> | ||||||||||||||
3) | Strategic investment | 3) | Strategic investment | 3) | Strategic investment | ||||||||||
No. of Properties | 11 | 6 | 18 | 3 | 5 | 43 | |||||||||
Acquisition Price | JPY37,300MM | JPY44,216MM | JPY245,628MM | JPY17,723MM | JPY29,640MM | JPY374,508MM | |||||||||
(%) | (10.0%) | (11.8%) | (65.6%) | (4.7%) | (7.9%) | (100.0%) | |||||||||
The Beach Tower Okinawa | Hilton Tokyo Bay | The Twelve HMJ Hotels(*3) | Hilton Nagoya | ibis Tokyo Shinjuku | |||||||||||
Hotel Francs | Hotel Keihan Universal City | the b ikebukuro | Mercure Yokosuka | ibis Styles Kyoto Station | |||||||||||
CANDEO HOTELS | Sotetsu Fresa Inn Shimbashi- | the b hachioji | Chisun Inn Kamata | ibis Styles Sapporo | |||||||||||
Hotels | UENO-KOEN | Karasumoriguchi | the b hakata | Mercure Sapporo | - | ||||||||||
HOTEL ASCENT FUKUOKA | Smile Hotel | ||||||||||||||
the b suidobashi | Mercure Okinawa Naha | ||||||||||||||
and other hotels | Nihombashi Mitsukoshimae | ||||||||||||||
Hilton Tokyo Odaiba | |||||||||||||||
Hotel Vista Kamata Tokyo | |||||||||||||||
Hotel Oriental Express Osaka | |||||||||||||||
Comfort Hotel Tokyo | |||||||||||||||
Shinsaibashi | |||||||||||||||
Higashi Nihombashi | |||||||||||||||
(*1) Rent structure is categorized according to the rent contract for hotels of each asset owned by JHR. | |||||||||||||||
(*2) Fixed rent includes fixed rent and utility income based on rent contract of non-hotel portion (offices, signage, car parks, retail shops, etc.) of asset owned by JHR. | |||||||||||||||
(*3) | The Twelve HMJ Hotels are the 11 HMJ Hotels plus Oriental Hotel Fukuoka Hakata Station. |
16
2. Performance of the 20 Hotels with Variable Rent, etc.
Total of the 20 Hotels with Variable Rent, etc. | Total of the 10 HMJ(*) Hotels | |||||
Changes in Major Indicators | Changes in Major Indicators | |||||
(JPY) | Occupancy (right axis) | ADR (left axis) | RevPAR (left axis) | (JPY) | |||||||
100% | 17,999 (2.6%) 17,537 | +5.4%18,490 | 100% | ||||||||
20,000 | 15,592 | 15,391 | 16,077 | 20,000 | |||||||
(1.3%) | +4.5% | 80% | 80% | ||||||||
15,000 | |||||||||||
15,000 | +6.1%16,234 | ||||||||||
15,679 | (2.4%) 15,297 | ||||||||||
13,559 | (2.1%) | 13,272 | +5.9% | 14,061 | 60% | 60% | |||||
10,000 | 10,000 | ||||||||||
40% | 40% | ||||||||||
5,000 | 20% | 5,000 | 20% | ||||||||
87.0% | 86.2% | 87.5% | 87.1% | 87.2% | 87.8% | ||||||
0 | 0% | 0 | 0% | ||||||||
2018 | 2019 | 2020 (forecast) | 2018 | 2019 | 2020 (forecast) | |
Changes in GOP | Changes in GOP | |||||
(JPY MM) | (JPY MM) | |||||
18,000 | 16,345 | 14,000 | ||||
16,101 | 15,722 | |||||
16,000 | 13,000 | |||||
(2.4%) | +4.0% | 12,377 | ||||
12,140 | ||||||
11,966 | ||||||
14,000 | 12,000 | |||||
(1.4%) | +3.4% | |||||
12,000 | 11,000 | |||||
10,000 | 10,000 | |||||
2018 | 2019 | 2020 (forecast) | 2018 | 2019 | 2020 (forecast) |
(*) The 10 HMJ Hotels are 10 hotels excluding Namba Oriental Hotel from the 11 HMJ Hotels.
17
3. RevPAR Variance to Previous Year by Region of the 20 Hotels with Variable Rent, etc. for 2020
- Diverse Portfolio
Total of 20 properties | Properties owned by JHR | |
<2018 vs 2019: -2.1%> | ||
+11.1% | +5.9% | |
+0.1% | ||
First Half of Second Half of | Full Year 2020 | |
2020 (forecast) 2020 (forecast) | (forecast) |
Hokkaido (2 properties) <2018 vs 2019: +1.9%>
+3.6% +12.2% +8.2%
First Half of Second Half of | Full Year 2020 |
2020 (forecast) 2020 (forecast) | (forecast) |
ibis Styles Sapporo Mercure Sapporo
Hiroshima (2 properties) | Narita (2 properties) | |||||||||
<2018 vs 2019: +0.8%> | ||||||||||
<2018 vs 2019: +6.8%> | ||||||||||
+4.5% | +2.8% | |||||||||
Okinawa (3 properties) | +0.9% | +10.0% | +4.1% | |||||||
<2018 vs 2019: -7.3%> | ||||||||||
+13.6% | +9.4% | -2.3% | ||||||||
+3.5% | First Half of | Second Half of | Full Year 2020 | |||||||
First Half of | Second Half of | Full Year 2020 | ||||||||
2020 (forecast) 2020 (forecast) | (forecast) | |||||||||
2020 (forecast) 2020 (forecast) | (forecast) | |||||||||
Oriental Hotel Hiroshima | ||||||||||
First Half of Second Half of | Full Year 2020 | Hilton Tokyo Narita Airport | ||||||||
ACTIVE-INTER CITY HIROSHIMA | ||||||||||
2020 (forecast) 2020 (forecast) | (forecast) | International Garden Hotel Narita | ||||||||
(Sheraton Grand Hiroshima Hotel) | ||||||||||
Hotel Nikko Alivila | ||||||||||
Tokyo and Bay Area (5 properties) | ||||||||||
Okinawa Marriott Resort & Spa | ||||||||||
Mercure Okinawa Naha | <2018 vs 2019: -1.6%> | |||||||||
+15.5% | +6.9% | Oriental Hotel | ||||||||
tokyo bay | ||||||||||
Fukuoka (1 property) | -2.1% | ibis Tokyo Shinjuku | ||||||||
<2018 vs 2019: -4.1%> | the b ikebukuro | |||||||||
Osaka, Kyoto (2 properties) | First Half of | Second Half of | Full Year 2020 | |||||||
+7.3% | the b hachioji | |||||||||
+1.6% | <2018 vs 2019: -10.3%> | 2020 (forecast) 2020 (forecast) | (forecast) | the b suidobashi | ||||||
-3.8% | +5.9% | |||||||||
First Half of Second Half of | Full Year 2020 | -6.1% | -0.3% | |||||||
2020 (forecast) 2020 (forecast) | (forecast) | |||||||||
the b hakata | First Half of Second Half of | Full Year 2020 | Holiday Inn Osaka Namba | |||||||
2020 (forecast) 2020 (forecast) | (forecast) | |||||||||
ibis Styles Kyoto Station |
(*) Stating major hotels in each area out of the 20 Hotels with Variable Rent, etc.
18
4. Active Asset Management
- Implement Active Asset Management at both hotel and REIT sides
- Accelerate internal growth through both revenue enhancement and cost control
Improvement of Hotel | |
Hotels | Revenue |
Reduction of Hotel | |
Operating Costs |
Improvement of Real | |
REIT | Estate Operating Revenue |
Reduction of Real Estate | |
Operating Costs |
Examples of Active Asset Management
- Strategic capital expenditure (e.g., renovation of rooms to increase RevPAR)
- Rebranding according to each hotel's characteristics
- Synergy from sharing guest by hotels located nearby in the same group
- Renewal of a hotel booking system
- Integration of back-office operations at hotels located in nearby area
- Optimization of staffing ● Cost reduction by joint purchasing in the same group
- Reduction of utility costs
Improve GOP
- Rent increase by revision of rent scheme, etc.
-
The Five HMJ Hotels(*), CANDEO HOTELS UENO-KOEN,
Comfort Hotel Tokyo Higashi Nihombashi, HOTEL ASCENT FUKUOKA, Oriental Hotel Fukuoka Hakata Station and rent from non-hotel tenant, etc.
-
The Five HMJ Hotels(*), CANDEO HOTELS UENO-KOEN,
- Reduction of cost for Property Management and Trust, management contract fee, and ground rent, etc.
Improve NOI
Maximize DPU
(*) The Five HMJ Hotels are Kobe Meriken Park Oriental Hotel, Oriental Hotel tokyo bay, Namba Oriental Hotel, Hotel Nikko Alivila and Oriental Hotel Hiroshima.
19
4. Active Asset Management (cont.)
- Promote internal growth through renovation and rebrand, etc.
- Plan to appropriate the negative goodwill in case the operation is suspended due to large-scale renovations
Hilton Tokyo Odaiba | Namba Oriental Hotel | ||
Completed Project | Future Project | Future Project | |
(December 2019 to February 2020) | (September 2020 to December 2020) | (November 2020 to March 2021) |
Summary
Amount invested: JPY92MM
Scope: Banquet hall ("Seaside Banquet Rooms" with Tokyo Bay views)
Summary
Amount to invest: Approximately JPY3.0Bn (plan)
Scope: Guest room, front lobby, exterior pedestrian alley from station, pool
Summary
Amount to invest: Approximately JPY2.6Bn (plan)
Scope: Guest room, front lobby, hotel entrance, tenant area, etc.
Aim | Aim |
※The entire building is expected to close during the renovation period
- Maximize the spectacular ocean view of Rainbow Bridge by removing the window frames
- Creating an open banquet hall with a sense of unity with a wide seaside-facing balcony
- Increase the number of banquets and weddings
- Improve ADR by differentiating itself through renovation taking advantage of one of the world's most spectacular panoramic ocean view
- Provide consistent quality for guest stay and increase value to stay at the hotel
Aim
• | Improve ADR by differentiating itself through |
renovation with a superior design in a | |
favorable location in central Namba | |
• | Add value by renovating the lobby and the |
Renovation of Banquet Halls at Hilton Tokyo Odaiba
<After><After>
garden |
• Improve operating efficiency and reducing |
costs by changing the layout |
<Before>
20
4. Active Asset Management (cont.)
- Promote internal growth through renovation, rebrand, etc.
Oriental Hotel Fukuoka Hakata Station
- Increase rent through revision of rent scheme, etc.
Track Record of Rent Scheme Revision (after Apr. 2014)
Summary
Renovation Term: October 1, 2018 to April 8, 2019
※ Hotel operation was suspended during the renovation period
Investment: Approximately JPY3.1Bn
- Renovated the whole building and rebranded including an increase in the number of guest rooms
- Changed the hotel grade from mid-price to upper-grade hotel
- Sustained DPU level by utilizing the negative goodwill during the suspension of the hotel operation
Occupancy (right axis) | ADR (left axis) | RevPAR (left axis) | ||||||
(JPY) | ||||||||
18,633 | 100% | |||||||
20,000 | ||||||||
13,330 | ||||||||
15,000 | 15,921 | 75% | ||||||
10,000 | 12,597 | 50% | ||||||
5,000 | 94.5% | 85.4% | 25% | |||||
0 | 0% | |||||||
January to September 2018 April to December 2019 | ||||||||
<After> | <After> |
<Before> | <Before> |
21
Apr. 2014
Jul. 2014
Dec. 2014
Jul. 2015
Jul. 2017
Jan. 2018
Jan. 2019
Apr. 2019
Aug. 2019
Oct. 2019
Dec. 2019
- Smile Hotel Nihombashi Mitsukoshimae
Fixed-rent | Fixed and Revenue Sharing |
- Hotel Keihan Universal City
Fixed-rent | Fixed and Revenue Sharing |
- ibis Styles Sapporo
Changed to Management Contract
- the b suidobashi
Fixed-rent | Fixed and Variable-rent |
- CANDEO HOTELS UENO-KOEN
Fixed-rent Increase
- Comfort Hotel Tokyo Higashi Nihombashi
Fixed-rent | Fixed and Revenue Sharing |
- ibis Styles Kyoto Station
Reduction of Management Contract Fee
- Hilton Tokyo Bay
Revision of Rent (Increase)
- HOTEL ASCENT FUKUOKA
Fixed-rent/ | Fixed-rent Increase/ | |
Traditional Lease | Fixed-lease |
- Mercure Yokosuka
Revision of Rent (Effectively increase)
- the b suidobashi
Revision of Rent (Increase)
- Oriental Hotel Fukuoka Hakata Station
Revision of Rent (Increase)
- ibis Styles Sapporo
- Mercure Sapporo
Reduction of Management Contract Fee
5. Capital Expenditures and Depreciation
- Strengthen competitiveness and improve asset value by continuing investment in CAPEX
Clarification of CAPEX | |||||||||||
CAPEX Ⅰ | capital investment related to renewal of buildings, facilities, and equipment which is | ||||||||||
required to maintain proper values of properties | |||||||||||
(JPY MM) | CAPEX Ⅱ | capital investment for fixtures furniture and equipment that are not directly related to building | |||||||||
structures or facilities but necessary for operating hotels | 4,859 | ||||||||||
5,000 | CAPEX Ⅲ | strategic capital investment for renewals of guest rooms, banquet rooms, restaurant | |||||||||
and others in order to maintain or to improve the competitiveness of the hotels | 4,557 | ||||||||||
4,500 | Depreciation | 4,091 | 6,775 | ||||||||
6,766 | |||||||||||
4,000 | Cost for Large-scale Renovation Works | 3,725 | 3,775 | ||||||||
3,619 | Oriental Hotel | ||||||||||
234 | |||||||||||
3,500 | 3,294 | Fukuoka | Hilton | ||||||||
393 | Hakata Station | ||||||||||
3,056 | 3,147 | Tokyo Odaiba | |||||||||
2,898 | 862 | 3,000 | |||||||||
3,000 | 2,772 | ||||||||||
2,619 | |||||||||||
476 | |||||||||||
469 | 999 | ||||||||||
2,500 | |||||||||||
1,690 | |||||||||||
1,811 | 783 | 475 | 781 | ||||||||
2,000 | |||||||||||
2,200 | |||||||||||
36 | |||||||||||
1,500 | 640 | 511 | 2,678 | ||||||||
2,226 | |||||||||||
1,000 | 1,954 | 1,798 | |||||||||
1,324 | 1,456 | ||||||||||
500 | 1,134 | ||||||||||
800 | |||||||||||
0 | |||||||||||
Asset Size | 225,723 | 286,801 | 319,474 | 309,370 | 374,508 | 374,508 | |||||
(JPY MM) | |||||||||||
FY12/2015 | FY12/2016 | FY12/2017 | FY12/2018 | FY12/2019 | FY12/2020 (forecast) |
- The planned amount of large-scale renovation works for the entire property of Namba Oriental Hotel is not included in the capital expenditure for FY12/2020 due to the construction being scheduled for completion in March 2021.
22
Ⅵ. Financial Conditions
1. Financial Conditions
Changes in LTV (total asset base) | Term of Interest-bearing Debt |
50% | |||
45% | 42.8% | 40.6% | |
39.7% | 39.9% | ||
40% | 39.0% | ||
35% |
As of the end of Dec. 2018 | ||
Long-term | 9.6% | |
(scheduled repayment | ||
within one year) | ||
Long-term | ||
(*) Long-term represents debts | 90.4% | |
with original maturity over |
one year.
As of the end of Dec. 2019
7.6%
92.4%
30% | |||||
End of | End of | End of | End of | End of | |
FY12/2015 | FY12/2016 | FY12/2017 | FY12/2018 | FY12/2019 | |
(16th Period) | (17th Period) | (18th Period) | (19th Period) | (20th Period) |
(*) LTV as of the end of each period.
Changes in Costs for Interest-bearing Debt(*1) and
Average Life of Debt(*2)
Fixed Interest Rate Ratio
As of the end of | As of the end of |
Dec. 2018 | Dec. 2019 |
97.7% | 97.8% |
Average Life of Debt | Costs for Interest-bearing Debt | (year) | Repayment Schedule of Interest-bearing Debt | ||||||||||||||
2.0% | 6.0 | ||||||||||||||||
5.0 | 5.2 | ||||||||||||||||
1.5% | 4.7 | 4.8 | |||||||||||||||
5.0 | (JPY MM) | (as of the end of December 2019) | |||||||||||||||
1.5% | |||||||||||||||||
3.7 | 1.2% | 1.1% | 1.1% | 4.0 | 30,000 | Loans | Investment Corporation Bonds | 28,000 | |||||||||
1.0% | |||||||||||||||||
25,000 | |||||||||||||||||
1.0% | 3.0 | 21,650 | 10,000 | ||||||||||||||
19,000 | |||||||||||||||||
0.5% | 2.0 | 20,000 | 16,900 | 15,772 | 3,000 | 17,350 | 17,000 | ||||||||||
1.0 | 15,000 | 12,782 12,300 | |||||||||||||||
6,000 | |||||||||||||||||
1,500 | |||||||||||||||||
0.0% | 0.0 | 10,000 | 15,772 18,650 19,000 | 13,100 | 17,000 18,000 | 8,000 | |||||||||||
End of | End of | End of | End of | End of | 5,000 | 10,800 10,900 | |||||||||||
FY12/2015 | FY12/2016 | FY12/2017 | FY12/2018 | FY12/2019 | |||||||||||||
(16th Period) | (17th Period) | (18th Period) | (19th Period) | (20th Period) | 0 | 4,250 | |||||||||||
(*1) Weighted-average costs for interest-bearing debt (including up-front fee, etc.) as of the end of | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 | |||||||
each period. Rounded off to one decimal place. | |||||||||||||||||
(*2) Average life of debt as of the end of each period | 24 | ||||||||||||||||
1. Financial Conditions (cont.)
Lender List for Interest-bearing Debt | Breakdown of Interest-bearing Debt |
(Unit: JPY MM) | ||||||
Balance | Balance | |||||
Lenders/Bond Name | (as of the end of | (as of the end of | Variance | |||
December 2018) | December 2019) | |||||
Balance | % | Balance | % | |||
Sumitomo Mitsui Banking Corporation | 26,431 | 19.3% | 31,901 | 18.9% | 5,470 | |
Shinsei Bank, Ltd. | 15,035 | 11.0% | 19,015 | 11.3% | 3,980 | |
Mizuho Bank, Ltd. | 15,030 | 11.0% | 19,000 | 11.3% | 3,970 | |
Sumitomo Mitsui Trust Bank, Limited | 10,540 | 7.7% | 13,640 | 8.1% | 3,100 | |
Resona Bank, Limited | 9,360 | 6.8% | 10,126 | 6.0% | 766 | |
Development Bank of Japan Inc. | 3,780 | 2.8% | 5,750 | 3.4% | 1,970 | |
Fukuoka Bank, Ltd. | 3,610 | 2.6% | 4,750 | 2.8% | 1,140 | |
The Nomura Trust and Banking Co., Ltd. | 4,190 | 3.1% | 4,660 | 2.8% | 470 | |
MUFG Bank, Ltd. | 4,135 | 3.0% | 4,135 | 2.5% | 0 | |
Aozora Bank, Ltd. | 2,435 | 1.8% | 3,435 | 2.0% | 1,000 | |
The Chiba Bank, Ltd. | 2,670 | 2.0% | 3,100 | 1.8% | 430 | |
Hiroshima Bank, Ltd. | 2,927 | 2.1% | 2,892 | 1.7% | (35) | |
The Nishi-Nippon City Bank, Ltd. | 1,600 | 1.2% | 2,750 | 1.6% | 1,150 | |
Sompo Japan Nipponkoa Insurance Inc. | 828 | 0.6% | 1,500 | 0.9% | 672 | |
The Shizuoka Bank, Ltd. | 500 | 0.4% | 500 | 0.3% | 0 | |
Total of Bank Loans | 103,071 | 75.4% | 127,154 | 75.3% | 24,083 | |
Investment Corporation Bonds | ||||||
(for institutional investors) | ||||||
3rd Investment Corporation Bonds without Collateral | 2,000 | 1.5% | - | - | (2,000) | |
Bonds | 4th Investment Corporation Bonds without Collateral | 1,500 | 1.1% | 1,500 | 0.9% | 0 |
6th Investment Corporation Bonds without Collateral | 3,000 | 2.2% | 3,000 | 1.8% | 0 | |
8th Investment Corporation Bonds without Collateral | 1,100 | 0.8% | 1,100 | 0.7% | 0 | |
Corporation | 9th Investment Corporation Bonds without Collateral | 1,000 | 0.7% | 1,000 | 0.6% | 0 |
12th Investment Corporation Bonds without Collateral | - | - | 2,000 | 1.2% | 2,000 | |
Total of Investment Corporation Bonds | 8,600 | 6.3% | 8,600 | 5.1% | 0 | |
(for institutional investors) | ||||||
Investment | Investment Corporation Bonds | |||||
(for individual investors) | ||||||
5th Investment Corporation Bonds without Collateral | 6,000 | 4.4% | 6,000 | 3.6% | 0 | |
7th Investment Corporation Bonds without Collateral | 9,000 | 6.6% | 9,000 | 5.3% | 0 | |
10th Investment Corporation Bonds without Collateral | 10,000 | 7.3% | 10,000 | 5.9% | 0 | |
11th Investment Corporation Bonds without Collateral | - | - | 8,000 | 4.7% | 8,000 | |
Total of Investment Corporation Bonds | 25,000 | 18.3% | 33,000 | 19.6% | 8,000 | |
(for individual investors) | ||||||
Total of Investment Corporation Bonds | 33,600 | 24.6% | 41,600 | 24.7% | 8,000 | |
Total of Interest-bearing Debt | 136,671 | 100.0% 168,754 | 100.0% | 32,083 |
25
As of the end of Dec. 2018 | As of the end of Dec. 2019 |
Loans
Investment24.6%24.7%
Corporation Bonds
75.4%75.3%
Status of Credit Rating
Japan Credit Rating Agency, Ltd. | A+ (stable) | |
(JCR) | ||
Rating and Investment Information, Inc. | A | (positive) |
(R&I) |
※ The rating outlook of R&I changed to positive from stable in October 2019
Status of Reserve for Special Advanced Depreciation
- A part of gain on sale of three properties sold in 2018 are retained
Reserve for special | JPY1,174MM |
advanced depreciation |
1. Financial Conditions (cont.)
Negative Goodwill | Changes in Appraisal Value (Unrealized Gains) |
1. | Add JPY262 million (50-year amortization amount of | |
negative goodwill) to dividends every period | ||
2. | In addition to above, dividends will be increased in | |
response to the following | ||
• Cope with losses caused by property dispositions | ||
• Cope with loss on retirement of noncurrent assets | ||
• Cope with dilution of dividend per unit | ||
• Cope with inconsistency between tax and accounting treatments | ||
(Amortization of fixed-term leasehold of land, amortization of |
(JPY Bn)
500
400
Book Value
Unrealized Gains
398.7
525.9
439.3 437.5 151.5
122.1 130.7
asset retirement obligations, etc.) |
• Cope with suspension of sales and such due to large-scale |
renovation works with significant impact on revenues |
<Amount used in FY12/2019>
50-year amortization amount on negative goodwill | : | JPY262MM |
Adjustment for dilution | : | JPY310MM |
Cope with large-scale renovation works | : | JPY357MM |
300
200
302.1
78.7
205.4
34.8
113.8
374.3
Cope with loss on retirement of noncurrent assets | : | JPY246MM |
Total amount | : | JPY1,176MM |
Balance of Negative Goodwill | JPY10,617MM | |
after the end of December 2019 | ||
<Amount to be used in FY12/2020>
50-year amortization amount on negative goodwill | : | JPY262MM |
Cope with large-scale renovation works | : | JPY216MM |
100
0
284.9
223.3
170.5
317.2 306.7
Cope with loss on retirement of noncurrent assets | : | JPY18MM |
Total amount | : | JPY496MM |
Balance of Negative Goodwill | JPY10,120MM | |
after the end of December 2020 (forecast) | ||
- The breakdown of the amount used for "cope with large-scale renovation works" in FY12/2019: JPY357MM for Oriental Hotel Fukuoka Hakata Station
The breakdown of the amount to be used for "cope with large-scale renovation works" in FY12/2020: JPY44MM for Hilton Tokyo Odaiba, and JPY172MM for Namba Oriental Hotel
26
Ratio of | 20.4% | 35.2% | 39.9% | 38.5% | 42.6% | 40.5% |
Unrealized | ||||||
Gains | ||||||
FY12/2014 | FY12/2015 | FY12/2016 | FY12/2017 | FY12/2018 | FY12/2019 | |
(15th Period) (16th Period) (17th Period) (18th Period) (19th Period) (20th Period) |
(*) Unrealized gains are calculated by subtracting book value from appraisal value.
Memo
27
Ⅶ. Market Environment
1. Market Environment
The number of inbound visitors continues to increase | While the number of inbound visitors from South Korea | ||
significantly decreased, inbound visitors from China and many | |||
other countries reached a record high | |||
Changes in Number of Inbound Visitors | Changes in Inbound Visitors by Country |
(Thousands) | +2.2% | |||||||
35,000 | Number of Inbound Visitors | |||||||
Tourists | +8.7% | 31,191 31,882 | ||||||
30,000 | 28,691 | |||||||
+19.4% | ||||||||
25,000 | 24,039 | 27,766 | ||||||
+21.8% | ||||||||
25,441 | ||||||||
20,000 | 19,737 | |||||||
+47.1% | 21,049 | |||||||
15,000 | 13,413 | 16,969 | ||||||
10,363 | ||||||||
10,000 | 8,358 | 10,880 | ||||||
5,000 | 7,962 | |||||||
6,041 | ||||||||
0 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 |
(unit: million people)
10 | China | South Korea | |||||
9 | Taiwan | Hong Kong | |||||
Others | |||||||
8 | (Asian countries other than | ||||||
above and Europe, US, etc.) | |||||||
7 | |||||||
6 | |||||||
5 | |||||||
4 | |||||||
3 | |||||||
2 | |||||||
1 | |||||||
0 | |||||||
2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 |
Source: Number of International Visitors to Japan by Japan National Tourism Organization (JNTO)
(*) The numbers for Jan.-Oct. 2019 are provisional numbers, and Nov.-Dec. are estimated numbers.
Source: Visitor Arrivals by Country/Area & Purpose of Visit (provisional figures) by Japan National Tourism Organization (JNTO)
(*) The numbers for Jan.-Oct. 2019 are provisional numbers, and Nov.-Dec. are estimated numbers.
29
1. Market Environment (cont.)
- Lodging demand increased due to inbound visitors
- The number of overnight guests has been solid
- Supply of rooms has been increasing, mainly in Tokyo and Osaka, but the supply after 2021 is expected to decrease
Changes in Number of Overnight Guests in Japan
(Guest nights in millions) | |||||||||||||
600 | No. of Japanese Overnight Guests | +1.3% | |||||||||||
No. of Inbound Overnight Guests | +5.6% | ||||||||||||
545 | |||||||||||||
+6.5% | (2.3%) | +3.5% | 538 | ||||||||||
500 | +6.0% | +1.6% | 504 | 492 | 510 | ||||||||
474 | |||||||||||||
466 | |||||||||||||
439 | |||||||||||||
400 | 444 | 443 | |||||||||||
300 | 430 | ||||||||||||
438 | 423 |
Supply of Rooms in Hotels/Ryokans in Japan
(No. of Rooms) | <Japan> | Actual | Supply Forecast | |||||||||||
80,000 | 53,812 | 59,572 | 63,498 | |||||||||||
60,000 | ||||||||||||||
32,988 | 27,408 | 27,937 | ||||||||||||
40,000 | 16,517 | |||||||||||||
20,000 | 10,219 | |||||||||||||
0 | ||||||||||||||
Ratio of New Supply | +1.1% | +2.1% | +3.4% | +3.6% | +3.7% | +1.5% | +0.6% | +1.5% | ||||||
Excl. Tokyo, Osaka | +0.7% | +1.7% | +2.5% | +2.7% | +2.7% | +1.2% | +0.4% | +1.5% | ||||||
(%: change from the | 2016 | 2017 2018 | 2019 | 2020 2021 | 2022 2023~ | |||||||||
previous year) | ||||||||||||||
(No. of Rooms) | <Tokyo> 17,344 | |||||||||||||
20,000 | ||||||||||||||
11,833 | ||||||||||||||
15,000 | 11,095 | 6,273 | ||||||||||||
10,000 | 6,107 | 5,866 | ||||||||||||
413
432 429
5,000 | 1,348 | 2,267 | |
0 | |||
200 CAGR (Compound Average Growth Rate) of Japanese overnight guests
+1.0% | +18.3%+8.3% | |||||||||||||||
100 | ||||||||||||||||
+46.4%+5.8% +14.8% | ||||||||||||||||
+27.3%+33.8% | 66 | 69 | 80 | 94 | 102 | |||||||||||
26 | 33 | 45 | ||||||||||||||
0 | ||||||||||||||||
2012 2013 2014 2015 2016 2017 2018 2019
Source: Statistics of Overnight Travel by Japan Tourism Agency
-
Rounded off to the nearest millions of people.
Numbers for Jan.-Nov. 2019 are second preliminary figure, numbers for Dec. 2019 are first preliminary figure. The annual revised report, which reflects newly opened hotels in 2019, etc. is schedule to be released on June 30, 2020.
Ratio of New Supply | +4.1% | +3.8% | +7.4% | +6.5% | +9.5% | +3.1% | +0.7% | +1.1% | |
(%: change from the | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023~ | |
previous year) | <Osaka> | ||||||||
(No. of Rooms) | |||||||||
11,003 | |||||||||
12,000 | 8,329 | ||||||||
8,082 | |||||||||
9,000 | |||||||||
5,018 | 4,257 | ||||||||
6,000 | 2,347 | 3,419 | |||||||
1,402 | |||||||||
3,000 | |||||||||
0 | |||||||||
Ratio of New Supply | +1.8% | +6.3% | +9.9% | +11.9% | +7.8% | +3.8% | +2.0% | +2.9% | |
(%: change from the | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023~ | |
previous year) |
Source: Estimated by the Asset Management Company using data from "Public Health Administration Report" by Ministry of Health, Labour and Welfare (MHLW), a weekly hotel & restaurant magazine (HOTERES), and Nikkei Telecom.
- Ratio of new supply is the ratio of new rooms to be supplied in a year to the stock of rooms at the beginning of the year. With regard to the above data, please note that in case the number of rooms are stated as "to be determined" by hotels, the asset management company has used 180, the average number of new supply of hotel rooms, for calculation.
30
1. Market Environment (cont.)
- Many venues are located in Tokyo, where there are many properties owned by JHR
Tokyo 2020 Games
Venue Maps and Properties owned by JHR
the b | the b suidobashi | |||||||||||||
ikebukuro | R&B Hotel Ueno-hirokoji | |||||||||||||
CANDEO HOTELS UENO-KOEN | ||||||||||||||
ibis Tokyo | dormy inn・global cabin Asakusa | |||||||||||||
Shinjuku | ||||||||||||||
Comfort Hotel Tokyo Higashi Nihombashi | ||||||||||||||
Olympic Stadium | ||||||||||||||
Smile Hotel Nihombashi Mitsukoshimae | ||||||||||||||
(Opening and Closing | ★ | |||||||||||||
Ceremonies) | ||||||||||||||
Sotetsu Fresa Inn | ||||||||||||||
Shimbashi-Karasumoriguchi | ||||||||||||||
★ | Oriental Hotel | |||||||||||||
tokyo bay | ||||||||||||||
Hilton | ||||||||||||||
Tokyo Bay | Hotel | |||||||||||||
Francs | ||||||||||||||
Chisun Inn Kamata | ||||||||||||||
Hotel Vista | ||||||||||||||
Kamata Tokyo | ||||||||||||||
Tokyo Aquatics | Yumenoshima | Sapporo | ||||||||||||
Olympic Village Centre | Park Archery | Mercure | ||||||||||||
Field | Odori Park | |||||||||||||
Ariake Arena | Tatsumi Water | Sapporo | ||||||||||||
Ariake Urban | Polo Centre | ibis Styles | Sapporo | |||||||||||
Ariake Gymnastics Centre | ||||||||||||||
Sapporo | ||||||||||||||
Sports Park | Dome | |||||||||||||
Ariake Tennis Park | ||||||||||||||
Hilton Tokyo | ||||||||||||||
Odaiba | Odaiba ★ | IBC/MPC Tokyo | Olympic: | |||||||||||
Marine | International Exhibition Centre | July 24 to | ||||||||||||
Park | ||||||||||||||
Aomi Urban | (Tokyo Big Sight) | August 9 | ||||||||||||
Shiokaze | Sports Park | Paralympic: | ||||||||||||
Park | August 25 to | |||||||||||||
September 6 | ||||||||||||||
Source: Prepared by the Asset Management Company based on the official website by The Tokyo Organising Committee of the Olympic and Paralympic Games
(*) Tokyo 2020 Games represents Tokyo Olympics and Paralympics
: Properties owned by JHR, : Venues for games or facilities related to the Olympics, ★: Places where the cauldrons would be placed
- The number of inbound visitors in past host countries has increased even after the Olympics
Changes in Number of International Tourist Arrivals
after Olympics and Paralympics
(times) | Greece (Athens Olympics in 2004) | |||||||||||||||
1.8 | UK (London Olympics in 2012) | |||||||||||||||
China (Beijing Olympics in 2008) | ||||||||||||||||
Brazil (Rio de Janeiro Olympics in 2016) | ||||||||||||||||
1.7 | ||||||||||||||||
1.6 | ||||||||||||||||
1.5 | ||||||||||||||||
1.4 | ||||||||||||||||
1.3 | ||||||||||||||||
1.2 | ||||||||||||||||
1.1 | ||||||||||||||||
1.0 | ||||||||||||||||
0.9 | city | Six years ago | Five years ago | Four years ago | Three years ago | Two years ago | one year ago | One year | Two years | Three years | Four years | |||||
year | ||||||||||||||||
theas | after | after | after | after | ||||||||||||
Selected | host | Olympic |
Source: Prepared by the Asset Manager based on the data from "International tourism, number of arrivals" by World Bank and "Tourism Highlights 2019 Edition" by UNWTO
(*1) The data were statistics in the past and those will be not guaranteed for the change after Tokyo Olympics and Paralympics.
(*2) Figures for two years after in Brazil are preliminary figures.
31
1. Market Environment (cont.)
- Various international events, conferences and infrastructure improvements are scheduled in and after 2020. Further growth of the tourism industry is expected
- Major domestic airports are expected to attract more inbound visitors by increasing the number of the international flights
- Haneda and Narita Airports in Tokyo metropolitan area are expected to reach 1 million fights per year as total
Coming Major Events Related to Tourism, etc. in Japan
International Events, | Others | |
Conferences, etc. | ||
2020 | • Tokyo Olympics and | • "Large-scale Development at Tokyo Disneyland", |
Paralympics Games | new areas and facilities are planned to open | |
(nationwide) | (Beauty and the Beast, etc. is themed) | |
(July 24 to August 9, | • New area is planned to open in Universal Studio | |
August 25 to September 6) | Japan (Nintendo-themed) | |
• Tokyo International Cruise Terminal is planned to | ||
open in Odaiba (July) | ||
2021 | • World Masters Games 2021 | |
Kansai (May 14 to May 30) | ||
• 19th FINA World Aquatics | ||
Championships 2021 Fukuoka | ||
(July to August) | ||
2022 | • Badminton World | • New Shinkansen route opens in Kyushu |
Championships (Tokyo) | (Takeo Onsen~Nagasaki) | |
• Extension of Hokuriku Shinkansen | ||
(Kanazawa and Tsuruga) | ||
• Tokyo BRT (Bus Rapid Transit) service starts | ||
(Tokyo city center~Seaside "Rinkai" area) | ||
2023 | • "Large-scale expansion project at Tokyo Disney | |
Sea", new theme port is planned to open | ||
("Fantasy Springs") | ||
2024 | • Mixed-use infrastructure development including a | |
convention center in Rinku Central Park | ||
(Izumisano-City, Osaka) | ||
• Openings of Yumeshima Station of Osaka Metro | ||
Line and tower building at Yumeshima Station | ||
2025 | • World EXPO 2025 | • Integrated Resorts start their operations |
in Osaka, Kansai (184 days) | (Undecided) | |
(April 13 to October 13) | ||
2027 | • Linear Chuo Shinkansen line commences operation | |
2029 | • Open of Haneda Airport Access Line | |
2031 | • Extension of the Hokkaido Shinkansen line to | |
Sapporo (Shin Hakodate Hokuto~Sapporo) |
(*) As events are those scheduled as of January 31, 2020 and may be changed.
Future Airport Development Plan for Major Domestic Airport
Haneda Airport | Narita International Airport | ||||||||||||||||
March 29, 2020 | 2029 | ||||||||||||||||
Setting up new flight and increase | Construction of a new runway and | ||||||||||||||||
the number of flights to cities in | extension of the existing runways | ||||||||||||||||
North America, Europe, Australia | |||||||||||||||||
and Asia, etc. | |||||||||||||||||
Number of international flights | Number of flights | ||||||||||||||||
(10,000 | 99,000 | (10,000 | |||||||||||||||
times) | times) | 500,000 | |||||||||||||||
12 | times/year | 60 | |||||||||||||||
60,000 | (130 flights/day) | times/year | |||||||||||||||
8 | times/year | 40 | 256,000 | ||||||||||||||
(80 flights/day) | times/year | ||||||||||||||||
Approximately | |||||||||||||||||
4 | 20 | Approximately | |||||||||||||||
1.7 times | |||||||||||||||||
2.0 times | |||||||||||||||||
0 | 0 | ||||||||||||||||
Current | Plan | Current | Plan | ||||||||||||||
※<Reference> London Area Airports: 1,210,000 times/year New York Area Airports: 1,320,000 times/year
Other Airport Development Plan
Naha Airport | March 26, 2020 | • | Operating of the second runway |
around July 2020 | • | Expand the CIQ (Customs, Immigration, | |
and Quarantine) | |||
Kansai | 2021 to 2025 | • | Large-scale renovation is planned for the |
International | first time since its opening in 1994 | ||
Airport | • | Renovation of Terminal 1 | |
Fukuoka Airport | March 2025 | • | Operating of the second runway |
32
Appendix 1
JHR's Characteristics and Strategy
1. JHR's Investment Targets
Aim to increase dividend for mid to long term
Strong | High |
capability in | |
ability in | |
achieving | |
acquiring | |
internal | |
properties | |
growth | |
Stable | |
financing | |
capability |
Strong ability in acquiring properties
- Highly recognized as Japan's largest J-REIT specializing in hotels
- High presence and credibility in the property market by continuously acquiring properties
- Capability to propose various acquisition schemes and to execute acquisitions
High capability in achieving internal growth
- Management approach through active asset management strategies that achieves a good balance between stability and upside potential
- Increase in hotel revenue through collaboration with high- quality operators
- Attract inbound demand through enhanced international brand portfolio
- Strengthen and maintain competitiveness by investing in appropriate capital expenditures
Stable financing capability
- Secure sound and stable finance
- Diversify financing methods
34
2. Simultaneous Pursuit of Stability and Upside Potential
- JHR pursues both stability and upside potential by steadily implementing growth strategies
Ensure Stable Revenue
Fixed rent structure
- Appropriate monitoring of hotel operation
- Capital expenditures to maintain competitiveness and asset value
Maintain and improve rent-paying capacity of tenants, etc.
Pursue Upside
Management | Variable rent | Revenue sharing |
contract structure | structure | structure |
Active Asset Management Strategies
- Change in rent structures and rebranding
- Strategic capital expenditures, etc.
Increase in rental income, etc. through improvement in hotels' performance
Proportion of Rental Income
(Annualized effect of forecast for FY12/2020)
Fixed rent | Variable rent(*) |
59.5% | 40.5% |
- Variable rent, Rent from revenue sharing and Income from management contracts
35
Proportion of Rent Structures
(as of February 20, 2020)
Fixed rent only
11 properties
Variable rent, etc.(*)
32 properties
-
Fixed rent + variable rent structure Fixed rent + revenue sharing structure
Variable rent structure and management contract structure
3. External Growth Strategy
Recognition of External
Environment
Trend of the Hotel
Investment Market
- Amid gradually recovering economy, domestic leisure demand remained firm. However, hotel revenue in some area showed a sluggish growth due to factors such as a declined in inbound visitors to Japan in some regions by the political issue between Japan and South Korea, and natural disasters, etc.
- However, following the last year's Rugby World Cup 2019 in Japan, the Tokyo Olympic and Paralympic Games are scheduled to be held this year, and hotel assets continue to attract strong attention as an investment target. In addition, competition for acquisitions in the hotel investment market is severe, due to the decline in yields on other asset classes and the increase in the number of players in hotel investment and hotel development, including new private funds.
- As inbound visitors have trended upward, new hotel supply continues to increase at a certain volume, and the competitiveness of the hotel is becoming clearer depending on the hotel's specifications, locations, and the capabilities of the hotel operators, making it important to differentiate each hotel from its competitors.
Basic Policies
- Acquire highly competitive hotel real estate, etc. in areas that have potential to attract "demand by both domestic and inbound leisure customers" in the medium to long-term
- Improve profitability, stability, and quality of the overall portfolio
Key Measures
- Emphasize the superiority of buildings and facilities (infrastructure), operations (services), and locations of hotel real estate, etc.
- The prime investment targets are "full-service hotels" and "resort hotels" that have high barriers to entry due to operation and management know-how, capital outlay and locations
- In the case of "limited-service hotels," the creditworthiness of the hotel lessee, the age of the building, location, guest room composition and profitability are important
- For limited-service hotels specialized in selling single rooms, consider acquisition individually, taking into account the hotel specifications and the possibility of achieving the upside.
- Especially, proactively review the purchase of hotels that have potential for internal growth by implementing active asset management or the possibility of synergy effect with the existing properties
- Strategic investment areas
- Hokkaido area, Tokyo and bay area, Osaka/Kyoto area, Fukuoka area, and Okinawa area
- Investigation and planning of the internal growth strategy upon property acquisition
- Investigate the appropriate rent level and rent structure upon renewal, etc., cost reduction possibilities, and possibilities to improve buildings and facilities
- Particularly, if the hotel pays variable rent, etc., promote internal growth through collaboration with lessees and/or operators
36
4. Internal Growth Strategy
Recognition of External
Environment
Hotel Market Environment
- In addition to stable domestic leisure demand, due to the government policy to promote tourism nation, the number of inbound tourists, mainly from Asian countries, is continuing to rise. Amid such growth expectation for Japan's tourism and hotel industries, although there are needs to carefully monitor some impact by supply of new hotels and Minpaku (private lodging for a fee), demand for accommodation is expected to stay firm.
Basic Policies
- Pursue both stability and upside potential by steadily implementing active asset management strategies
Key Measures
- Planning and execution of the active asset management in order to realize pursuit in upside revenue
- Make strategic CAPEX which will improve profitability and strengthen competitiveness mainly at hotels with high growth potential
- Raise rent and change to rent structures that can achieve upside revenue
- Reduction of management contract fee of properties under management contract
- Attract inbound demand through rebranding to international brands
- Make proactive proposals to build effective hotel operating structures which aim to maximize GOP, from the perspective of both hotel sales and expenses
- Increase hotel revenue through collaboration with high-quality operators
- Planning and execution of strategic CAPEX which secure steady revenue, and monitoring of lessees
- Analyze the creditworthiness of hotel lessees, understand hotel income and expenditures, closely observe and improve rent-paying capacity
- Maintain and improve rent-paying capacity of tenants, etc. through capital expenditures, which lead to maintain and improve competitiveness and asset value
37
5. Financial Strategy
Recognition of External
Environment
Trend of Financing Environment
and Interest Rates
- In 2019, both the number of public offerings (including IPOs) and the amount of fund procured by J-REIT were below the previous year's level, but the Tokyo Stock Exchange REIT Index remained firm and conditions remained favorable.
- As for investment corporation bonds, issuance of green bonds increased. Long-term interest rates continued to be low and interest rate for bonds remained low.
- There is no particular change in the lending attitude of financial institutions. Both short-term and long-term interest rates remain at low levels. Although drastic change may not happen in the financial environment, some attention should be paid to fluctuations in long-term interest rates mainly due to international factors.
Basic Policies
- Ensure healthy and stable finance
- Strengthen lender formation and relationships with financial institutions
- Diversify financing methods
Key Measures
- Maintain LTV level at a maximum of 50% (total asset base) for the time being
- Diversify financing methods such as public offerings and issuance of investment corporation bonds including green bonds
- Improve financial stability by extending and diversifying repayment periods and fixing interest rates, etc.
- Optimize borrowing costs
38
6. Sustainability Initiatives
Aiming for achieving a mid to long-term growth that coexists with society and environment and enhancing sustainability through appropriate actions for ESG issues
Sustainability Policy | Acquisition of BELS Certification(*1) |
- JHR and JHRA stipulated "Sustainability Policy", which defines material issues and initiatives for sustainability in our business
Sustainability Policy
- Monitoring and improvement of environmental performance in our portfolio
- Promotion of comfortable, healthy, secure and safe hotels
- Promotion of ESG in value chains
- Consideration for and contribution to local communities
- Initiatives for our officers and employees
- Compliance as corporate citizens
- Improvement of transparency and engagement with our stakeholders
- JHR obtained a BELS certification for two properties, Hotel Nikko Alivila and Mercure Okinawa Naha, for the first among J-REIT owned hotels
Hotel Nikko Alivila | Mercure Okinawa Naha |
GRESB Real Estate Assessment(*2)
- JHR received a "Green Star" designation. It was highly evaluated in both "Management & Policy" and "Implementation & Measurement" areas with regards to initiatives for environmental considerations
and sustainability (September 2019) - Highest ranking
Acquired Green Star - "GRESB Rating" Acquired 3-star
- Highest ranking
SMBC Environment Assessment Loan(*3)
- Acquisition of "A" grade
-
SMBC Environmental Assessment Loan evaluated JHR's excellent initiatives for environmental considerations in asset management
(March 2018)
-
SMBC Environmental Assessment Loan evaluated JHR's excellent initiatives for environmental considerations in asset management
Issuance of Green Bonds
- Issuance of unsecured investment corporation bonds as Green Bonds for the first among J-REITs specializing in hotels (July 2019)
- Amount: JPY2.0Bn
- Duration: 5 years
- Usage of the Green Bonds proceeds
- For refinance of loans for renovation of Oriental Hotel Fukuoka Hakata Station
- To fund construction works, etc. for renovation etc. of the other hotels
(*1) BELS (Building-HousingEnergy-Efficiency Labeling System) is a display system of energy conservation performance of a building set by Ministry of Land, Infrastructure, Transport and Tourism.
(*2) The GRESB is an annual benchmarking program to evaluate ESG considerations of property companies and real estate funds. The GRESB Real Estate Assessment is distinguished by its comprehensive evaluation of initiatives for sustainability of property companies, REITs and real estate funds, not of individual properties. GRESB rating is a relative evaluation based on comprehensive scores and the highest being "5-stars".
(*3) "SMBC Environmental Assessment Loan" assesses status of corporate initiatives for environmental considerations, on loan execution and establishment of lending conditions, based on environmental assessment criteria developed independently by Sumitomo Mitsui Banking Corp. and the Japan Research Institute, Limited.
39
6. Sustainability Initiatives (cont.)
Energy-saving Work for Restaurant Renovations
For Okinawa Marriott Resort & Spa
- Renovation for All-Day Dining (July 2019)
- Introduced highly energy-efficient equipment for kitchen and air-conditioning, etc.
- Enhancing customer satisfaction as well as considering the environment
- Introduction of LED lightings
- 75% reduction of CO2 emissions after the renovation
- Replacement of air conditionings
- 46% reduction of CO2 emissions after the renovation
- Upgrade of washing and sterilizing equipment
- 45% reduction of CO2 emissions figures after the renovation
<Entrance>
<Interior>
- These figures related to the CO2 emissions are estimated by the Asset Management Company based on expert reports.
Energy-saving Work for Large-scale Renovations
For Oriental Hotel Fukuoka Hakata Station
- Rebranded and Reopened (April 2019)
- Changed from central air conditioning to individual air conditioning
- Changed all lightings to LEDs
- Replaced plumbing installation to improve water efficiency
⇒ 16% reduction of CO2 emissions after renovation of the entire building
<After>
<Before>
Initiatives for smoking ban for all rooms
- The 21 Hotels with Variable Rent, etc.
- JHR has been successively implementing to convert all hotel rooms into non-smoking rooms at all owned hotels
- Non-smokingroom ratio (based on the room numbers):
89% (the beginning of 2018) ⇒ 97% (the end of December 2019)
⇒ Promote to provide a healthy and comfortable environment for both hotel guests and hotel staff
40
7. Benefits Program for Unitholders
JHR implemented benefits program for unitholders to obtain a better understanding, improve their satisfaction and expand the investor base. JHR also expanded the benefits program in 2019 by adding two newly acquired hotels, aggregated coverage to 20 hotels.
Eligible recipients of complimentary coupons | Details of the benefits program |
Complimentary coupons will be sent to those who hold ten or more JHR units | Five complimentary coupons for accommodations and five |
at the end of June every year (end of the midterm settlement) | complimentary coupons for restaurants(*) |
10% discount from the best rate for accommodation by each | |
Eligible unitholders: 12,120 | hotel and 10% discount for restaurants |
Valid period: One year between October 1, 2019 to September 30, 2020 | (*) Complimentary coupons for restaurants are only available at selected hotels. |
Hotels that offer the Benefits Program | |
The 14 HMJ Hotels | The Six Accor Hotels |
Kobe Meriken Park | Oriental Hotel | Namba | Oriental Hotel | Hotel Nikko Alivila | Okinawa Marriott | ibis Tokyo Shinjuku | ibis Styles Kyoto Station |
Oriental Hotel | tokyo bay | Oriental Hotel | Hiroshima | Resort & Spa | |||
ACTIVE-INTER CITY | Oriental Hotel Fukuoka | Holiday Inn | Hilton Tokyo | International Garden Hotel Narita | ||
HIROSHIMA (Sheraton | Hakata Station | Osaka Namba | Narita Airport | |||
Grand Hiroshima Hotel) | ||||||
Hotel Nikko Nara | Newly Added | Hotel Oriental Express Osaka Shinsaibashi |
Hilton Tokyo Odaiba |
41
Mercure Sapporo | ibis Styles Sapporo |
Mercure Okinawa Naha | Mercure Yokosuka |
Appendix 2
Information on Properties
1. Property List (1/2)
(as of the end of December 2019)
Appraisal Value | Revenue from | P/L from | |||||||||||||||
Acquisition | 20th Period | 20th Period | |||||||||||||||
Hotel Type | Grade | No. of | Age | Book Value | Real Estate | NOI | Real Estate | NOI Yield | |||||||||
No. | Property Name | Price | (as of June 30, 2019) | (as of December 31, 2019) | Investment | ||||||||||||
Guest | Location | (JPY MM) | Operation | (JPY1,000) | Operation | (actual) | |||||||||||
(*1) | (*2) | (*3) | (JPY MM) | Appraisal | Appraisal | Ratio | |||||||||||
Rooms | (*5) | (JPY1,000) | (*7) | (JPY1,000) | (*8) | ||||||||||||
(*4) | (*6) | ||||||||||||||||
Value | CAP Rate | Value | CAP Rate | (*7) | (*7) | ||||||||||||
(JPY MM) | (JPY MM) | ||||||||||||||||
1 | Kobe Meriken Park Oriental Hotel (*9) | Full-service | Upper-middle | 323 | Hyogo | 24.5 | 10,900 | 9,888 | 16,200 | 5.1% | 16,200 | 4.8% | 2.9% | 1,256,795 | 1,003,298 | 669,037 | 9.2% |
2 | Oriental Hotel tokyo bay | Full-service | Mid-price | 511 | Chiba | 24.7 | 19,900 | 17,699 | 34,900 | 4.4% | 37,800 | 4.4% | 5.3% | 1,883,870 | 1,765,658 | 1,357,731 | 8.9% |
3 | Namba Oriental Hotel | Limited-service | Mid-price | 258 | Osaka | 23.8 | 15,000 | 14,640 | 32,900 | 4.1% | 32,900 | 4.1% | 4.0% | 1,406,836 | 1,299,612 | 1,139,547 | 8.7% |
4 | Oriental Hotel Hiroshima | Full-service | Upper-middle | 227 | Hiroshima | 26.3 | 4,100 | 4,171 | 4,370 | 7.5% | 4,400 | 4.9% | 1.1% | 472,555 | 428,306 | 340,288 | 10.4% |
5 | Hotel Nikko Alivila | Resort | Luxury | 397 | Okinawa | 25.8 | 18,900 | 18,168 | 32,900 | 4.8% | 32,900 | 4.8% | 5.0% | 1,977,644 | 1,829,606 | 1,512,840 | 9.7% |
6 | The Beach Tower Okinawa | Resort | Mid-price | 280 | Okinawa | 15.8 | 7,610 | 6,587 | 10,000 | 4.4% | 10,100 | 4.4% | 2.0% | 511,028 | 468,191 | 335,312 | 6.2% |
7 | Hakone Setsugetsuka | Resort | Mid-price | 158 | Kanagawa | 13.3 | 4,070 | 3,696 | 5,300 | 4.9% | 5,310 | 4.9% | 1.1% | 294,957 | 271,037 | 177,854 | 6.7% |
8 | Dormy Inn Kumamoto | Limited-service | Mid-price | 291 | Kumamoto | 11.9 | 2,334 | 2,139 | 3,060 | 5.6% | 3,060 | 5.6% | 0.6% | 194,460 | 173,568 | 130,770 | 7.4% |
9 | the b suidobashi | Limited-service | Mid-price | 99 | Tokyo | 33.4 | 1,120 | 1,213 | 1,940 | 4.1% | 2,440 | 4.1% | 0.3% | 103,848 | 89,840 | 61,793 | 8.0% |
10 | dormy inn・global cabin Asakusa (*10) | Limited-service | Economy | 75 | Tokyo | 22.8 | 999 | 941 | 1,330 | 3.9% | 1,330 | 3.9% | 0.3% | 63,995 | 54,899 | 41,359 | 5.5% |
11 | Hakata Nakasu Washington Hotel Plaza | Limited-service | Mid-price | 247 | Fukuoka | 24.8 | 2,130 | 2,022 | 4,520 | 4.4% | 4,520 | 4.4% | 0.6% | 240,000 | 224,000 | 198,000 | 10.5% |
12 | Nara Washington Hotel Plaza | Limited-service | Mid-price | 204 | Nara | 19.8 | 2,050 | 1,800 | 2,440 | 5.0% | 2,440 | 5.0% | 0.5% | 151,000 | 134,000 | 97,000 | 6.6% |
13 | R&B Hotel Ueno-hirokoji | Limited-service | Economy | 187 | Tokyo | 17.8 | 1,720 | 1,822 | 2,010 | 3.9% | 2,010 | 3.9% | 0.5% | 97,292 | 83,017 | 66,694 | 4.8% |
Comfort Hotel Tokyo Higashi | |||||||||||||||||
14 | Limited-service | Economy | 259 | Tokyo | 11.9 | 3,746 | 3,527 | 5,830 | 4.3% | 5,830 | 4.3% | 1.0% | 287,814 | 256,887 | 220,539 | 6.9% | |
Nihombashi | |||||||||||||||||
15 | Smile Hotel Nihombashi Mitsukoshimae | Limited-service | Economy | 164 | Tokyo | 22.8 | 2,108 | 2,022 | 3,160 | 4.0% | 3,160 | 4.0% | 0.6% | 154,623 | 138,482 | 118,017 | 6.6% |
16 | Toyoko Inn Hakata-guchi Ekimae | Limited-service | Economy | 257 | Fukuoka | 18.3 | 1,652 | 1,419 | 2,780 | 4.5% | 2,750 | 4.5% | 0.4% | 141,039 | 127,703 | 109,484 | 7.7% |
17 | Hotel Keihan Universal City | Resort | Mid-price | 330 | Osaka | 18.5 | 6,000 | 5,905 | 13,900 | 4.9% | 13,900 | 4.9% | 1.6% | 746,118 | 668,997 | 583,302 | 11.1% |
18 | Chisun Inn Kamata | Limited-service | Economy | 70 | Tokyo | 16.7 | 823 | 772 | 1,450 | 4.5% | 1,430 | 4.5% | 0.2% | 80,876 | 73,891 | 62,713 | 9.0% |
19 | Hotel Vista Kamata Tokyo | Limited-service | Economy | 105 | Tokyo | 27.9 | 1,512 | 1,453 | 2,040 | 4.5% | 1,990 | 4.5% | 0.4% | 112,476 | 98,166 | 72,951 | 6.5% |
Sotetsu Fresa Inn Shimbashi- | |||||||||||||||||
20 | Limited-service | Mid-price | 220 | Tokyo | 11.8 | 4,800 | 4,802 | 8,970 | 3.9% | 8,950 | 3.9% | 1.3% | 446,477 | 383,039 | 361,093 | 8.0% | |
Karasumoriguchi (*11) | |||||||||||||||||
21 | Hilton Tokyo Bay | Resort | Luxury | 828 | Chiba | 31.5 | 26,050 | 26,422 | 40,400 | 4.3% | 40,500 | 4.3% | 7.0% | 2,220,187 | 1,938,334 | 1,765,290 | 7.4% |
22 | ibis Tokyo Shinjuku | Limited-service | Mid-price | 206 | Tokyo | 39.3 | 7,243 | 8,013 | 10,200 | 4.0% | 10,200 | 4.0% | 1.9% | 704,537 | 497,729 | 385,256 | 6.9% |
23 | ibis Styles Kyoto Station | Limited-service | Mid-price | 215 | Kyoto | 10.8 | 6,600 | 6,675 | 11,600 | 4.3% | 10,900 | 4.3% | 1.8% | 459,002 | 412,032 | 373,486 | 6.2% |
24 | ibis Styles Sapporo | Limited-service | Mid-price | 278 | Hokkaido | 9.4 | 6,797 | 6,601 | 11,200 | 4.7% | 11,200 | 4.7% | 1.8% | 661,063 | 525,459 | 442,798 | 7.7% |
43
1. Property List (2/2)
(as of the end of December 2019)
Appraisal Value | Revenue from | P/L from | |||||||||||||||
Acquisition | 20th Period | 20th Period | |||||||||||||||
Hotel Type | Grade | No. of | Age | Book Value | Real Estate | NOI | Real Estate | NOI Yield | |||||||||
No. | Property Name | Price | (as of June 30, 2019) | (as of December 31, 2019) | Investment | ||||||||||||
Guest | Location | (JPY MM) | Operation | (JPY1,000) | Operation | (actual) | |||||||||||
(*1) | (*2) | (*3) | (JPY MM) | Appraisal | Appraisal | Ratio | |||||||||||
Rooms | (*5) | (JPY1,000) | (*7) | (JPY1,000) | (*8) | ||||||||||||
(*4) | (*6) | ||||||||||||||||
Value | CAP Rate | Value | CAP Rate | (*7) | (*7) | ||||||||||||
(JPY MM) | (JPY MM) | ||||||||||||||||
25 | Mercure Sapporo | Limited-service | Mid-price | 285 | Hokkaido | 10.7 | 6,000 | 5,857 | 11,000 | 4.6% | 11,000 | 4.6% | 1.6% | 797,832 | 523,042 | 430,996 | 8.7% |
26 | Mercure Okinawa Naha | Limited-service | Mid-price | 260 | Okinawa | 10.4 | 3,000 | 2,887 | 7,760 | 4.6% | 7,190 | 4.6% | 0.8% | 342,013 | 270,481 | 209,569 | 9.0% |
27 | the b ikebukuro | Limited-service | Mid-price | 175 | Tokyo | 37.5 | 6,520 | 6,608 | 7,350 | 4.2% | 7,350 | 4.2% | 1.7% | 356,173 | 328,770 | 296,705 | 5.0% |
28 | the b hachioji | Limited-service | Mid-price | 196 | Tokyo | 33.4 | 2,610 | 2,699 | 2,790 | 5.1% | 2,790 | 5.1% | 0.7% | 185,672 | 160,629 | 129,084 | 6.2% |
29 | the b hakata | Limited-service | Mid-price | 175 | Fukuoka | 22.3 | 2,300 | 2,361 | 4,710 | 4.3% | 4,610 | 4.3% | 0.6% | 228,379 | 215,725 | 194,131 | 9.4% |
30 | Hotel Francs | Full-service | Mid-price | 222 | Chiba | 28.4 | 3,105 | 3,178 | 4,090 | 4.6% | 4,140 | 4.6% | 0.8% | 300,000 | 237,023 | 193,824 | 7.6% |
31 | Mercure Yokosuka | Full-service | Mid-price | 160 | Kanagawa | 26.2 | 1,650 | 1,658 | 3,000 | 4.6% | 3,590 | 4.6% | 0.4% | 360,970 | 250,373 | 212,998 | 15.2% |
32 | Okinawa Marriott Resort & Spa | Resort | Upper-middle | 361 | Okinawa | 14.9 | 14,950 | 15,106 | 18,700 | 4.9% | 17,900 | 4.9% | 4.0% | 937,465 | 853,261 | 569,108 | 5.7% |
ACTIVE-INTER CITY HIROSHIMA | |||||||||||||||||
33 | Full-service | Luxury | 238 | Hiroshima | 9.3 | 17,320 | 17,436 | 21,700 | 4.5% | 21,900 | 4.5% | 4.6% | 1,624,836 | 1,182,632 | 966,133 | 6.8% | |
(Sheraton Grand Hiroshima Hotel) | |||||||||||||||||
34 | CANDEO HOTELS UENO-KOEN | Limited-service | Mid-price | 268 | Tokyo | 10.0 | 6,705 | 6,652 | 7,630 | 4.0% | 7,650 | 4.0% | 1.8% | 349,975 | 323,962 | 283,942 | 4.8% |
Oriental Hotel Fukuoka Hakata Station | |||||||||||||||||
35 | Full-service | Upper-middle | 221 | Fukuoka | 34.5 | 7,197 | 9,847 | 14,000 | 4.6% | 15,300 | 4.6% | 1.9% | 740,062 | 494,731 | (65,231) | 6.9% | |
(*12) | |||||||||||||||||
36 | Holiday Inn Osaka Namba | Limited-service | Mid-price | 314 | Osaka | 11.4 | 27,000 | 27,126 | 27,200 | 4.3% | 27,200 | 4.3% | 7.2% | 967,957 | 920,119 | 728,343 | 3.4% |
37 | HOTEL ASCENT FUKUOKA | Limited-service | Economy | 263 | Fukuoka | 20.7 | 4,925 | 5,161 | 6,630 | 4.8% | 6,620 | 4.8% | 1.3% | 447,198 | 302,154 | 266,423 | 6.1% |
38 | Hilton Nagoya | Full-service | Luxury | 460 | Aichi | 30.9 | 15,250 | 15,651 | 16,000 | 4.2% | 15,700 | 4.2% | 4.1% | 1,452,768 | 746,661 | 591,860 | 4.9% |
39 | Hilton Tokyo Narita Airport | Full-service | Upper-middle | 548 | Chiba | 26.4 | 13,175 | 13,499 | 13,700 | 4.6% | 13,700 | 4.6% | 3.5% | 912,491 | 826,763 | 621,261 | 6.3% |
40 | International Garden Hotel Narita | Full-service | Mid-price | 463 | Chiba | 23.6 | 9,125 | 9,245 | 9,650 | 4.8% | 9,660 | 4.8% | 2.4% | 604,422 | 560,153 | 422,311 | 6.1% |
41 | Hotel Nikko Nara | Full-service | Upper-middle | 330 | Nara | 21.8 | 10,373 | 10,442 | 11,200 | 4.8% | 10,900 | 4.8% | 2.8% | 625,869 | 576,007 | 434,069 | 5.6% |
Hotel Oriental Express Osaka | |||||||||||||||||
42 | Limited-service | Mid-price | 124 | Osaka | 1.9 | 2,738 | 2,829 | 3,050 | 4.6% | 2,990 | 4.6% | 0.7% | 109,991 | 107,162 | 95,381 | - | |
Shinsaibashi | |||||||||||||||||
43 | Hilton Tokyo Odaiba | Full-service | Upper-middle | 453 | Tokyo | 24.0 | 62,400 | 63,652 | 69,400 | 3.7% | 69,500 | 3.7% | 16.7% | 2,264,830 | 2,261,016 | 2,075,257 | - |
Total or Average (43 properties) | - | - | 11,705 | - | 21.8 | 374,508 | 374,314 | 522,960 | 4.5% | 525,910 | 4.5% | 100.0% | 28,278,550 | 24,087,502 | 19,281,141 | 6.4% | |
(*1) Under the category of Hotel Type, "Full-service" is full-service hotel, "Resort" is resort hotel, and "Limited-service" is limited-service hotel.
(*2) Mainly based on ADR, etc., JHR has classified the hotels into four categories as "luxury," "upper-middle,""mid-price," and "economy."
(*3) Average age: Weighted average calculated as follows. The sum of (acquisition price of each property x property age)/total acquisition price.
(*4) The acquisition price in the Purchase & Sale Agreement for the Beneficial Interest in Trust, etc. is indicated. (Consumption tax, amount equivalent to consumption tax, brokerage fee, and other purchase-related costs are excluded.)
(*5) Book value as of the end of December 2019.
(*6) Investment ratio indicate percentage of the acquisition price of each asset to the total acquisition price. Numbers beyond one decimal place is rounded off.
(*7) Actual for one year from January to December 2019. Since the lessees did not agree to disclose numbers in units of JPY1,000 for No. 11 and 12, amounts are rounded down to the nearest JPY million. Since No.42 and 43 were acquired during the period, numbers after acquisition is indicated.
(*8) NOI yield for the portfolio is calculated as follows: Total NOI for FY12/2019 (actual) ÷ total acquisition price of properties held as of the end of FY12/2019. As No. 42 and 43 were acquired during the period, NOI yield (actual) is not calculated.
(*9) The number of guest rooms at Kobe Meriken Park Oriental Hotel was changed from 319 to 323 on December 30, 2019.
(*10) The name of the hotel was changed from Dormy Inn EXPRESS Asakusa on August 4, 2019.
(*11) The name of the hotel was changed from Hotel Sunroute Shinbashi on April 23, 2019.
(*12) The name of the hotel was changed from Hotel Centraza Hakata on April 9, 2019. The hotel grade was changed from "Mid-price" to "Upper-middle."
44
2. Summary of Lease Contracts (1/2)
(as of the end of December 2019)
Lease | Rent | Hotel Operator/ | Lease/ | Expiration | Contractual Rent | Rent Modification Summary | Rent Modification Schedule | ||||||
No. | Property Name | Structure | Lessee | Hotel Consulting and | MC | Date of | Rent Modification Summary | (After acquisition) | (2020 to 2021) | ||||
Type | (*2) | ||||||||||||
(*1) | Management Company | Term | Contract | Timing | Condition | 2020 | 2021 | ||||||
1 | Kobe Meriken Park Oriental Hotel | ||||||||||||
2 | Oriental Hotel tokyo bay | Hotel Management Japan Co., Ltd. | (Fixed rent) JPY3,221MM/year + | ||||||||||
3 | Namba Oriental Hotel | Fixed- | Fixed + Variable | 15 | Dec. 2034 | (Variable rent) When the total GOP of The | In principle, the same rent will be | ||||||
Five HMJ Hotels exceeds GOP base | applied until expiration of the | Jan. 2020 | Same | Renewed | - | ||||||||
4 | Oriental Hotel Hiroshima | lease | amount (JPY3,351MM), the excess x 85% | contract. | |||||||||
is paid | |||||||||||||
5 | Hotel Nikko Alivila | Okura Nikko Hotel | |||||||||||
Management Co., Ltd. | |||||||||||||
6 | The Beach Tower Okinawa | Fixed- | Fixed | 20 | Jun. 2026 | JPY42MM/month | The same rent will be applied until | - | - | - | - | ||
lease | expiration of the contract. | ||||||||||||
7 | Hakone Setsugetsuka | Fixed- | Fixed | 20 | Oct. 2026 | JPY24MM/month | The same rent will be applied until | - | - | - | - | ||
lease | expiration of the contract. | ||||||||||||
Kyoritsu Maintenance Co., Ltd. | |||||||||||||
8 | Dormy Inn Kumamoto | Fixed- | Fixed | 12 | Mar. 2023 | JPY16MM/month | Rent can be modified through mutual | Apr. 2017 | Same | Under | - | ||
discussion | |||||||||||||
lease | agreement every three years. | (Apr.) | |||||||||||
9 | dormy inn・global cabin Asakusa | Lease | Fixed | 20 | Mar. 2020 | JPY5MM/month | Rent can be modified through mutual | Apr. 2017 | Same | To be expired | - | ||
Hakata Nakasu Washington Hotel | agreement every three years. | (Mar.) | |||||||||||
10 | Lease | Fixed | 3 | Mar. 2021 | JPY20MM/month | Rent can be modified through mutual | Apr. 2018 | Same | - | To be expired | |||
Plaza | agreement. | (Mar.) | |||||||||||
11 | Nara Washington Hotel Plaza | Lease | Fixed | Washington Hotel K.K. | 20 | Mar. 2020 | JPY11MM/month | Rent can be modified through mutual | - | - | To be expired | - | |
agreement. | (Mar.) | ||||||||||||
12 | R&B Hotel Ueno-hirokoji | Lease | Fixed | 20 | Apr. 2022 | JPY8MM/month | Rent can be modified through mutual | Apr. 2011 | Increased | - | - | ||
agreement. | (+3.0%) | ||||||||||||
13 | Comfort Hotel Tokyo Higashi | Fixed- | Fixed + Revenue | Rent can be modified through mutual | Same | ||||||||
Greens Co., Ltd. | 20 | Jan. 2028 | JPY21MM/month + Revenue sharing | Apr. 2018 | (Introduced | - | - | ||||||
Nihombashi | lease | sharing | agreement every five years. | revenue sharing) | |||||||||
14 | Smile Hotel Nihombashi | Lease | Fixed + Revenue | THE KAMOGAWA GRAND HOTEL, LTD | 20 | Mar. 2020 | JPY11MM/month + Revenue sharing | Rent can be modified through mutual | Apr. 2017 | Same | To be expired | - | |
Mitsukoshimae | sharing | agreement. | (Mar.) | ||||||||||
15 | Toyoko Inn Hakata-guchi Ekimae | Lease | Fixed | Toyoko Inn Co., Ltd. | 30 | Sep. 2031 | JPY11MM/month | No rule has been stipulated. | Oct. 2007 | Increased | - | - | |
(+9.4%) | |||||||||||||
16 | Hotel Keihan Universal City | Lease | Fixed + Revenue | K.K. Hotel Keihan | 20 | Jun. 2021 | Nondisclosure(*4) | Nondisclosure(*4) | Jul. 2014 | Modified Structure | - | To be expired | |
sharing | (Jun.) | ||||||||||||
Fixed- | Solare Hotels & | Hotel GOP x 86% | |||||||||||
17 | Chisun Inn Kamata | Variable | SHR Hotels, Co., Ltd. | 7 | Dec. 2026 | (If the amount is below zero, it will be | - | Jan. 2020 | Same | Renewed | - | ||
lease | Resorts Co., Ltd. | ||||||||||||
JPY0) | |||||||||||||
18 | Hotel Vista Kamata Tokyo | Lease | Fixed + Revenue | In principle, the same rent will be | To be expired | ||||||||
Vista Hotel Management Co., Ltd. | 4 | Dec. 2021 | JPY7MM/month + Revenue sharing | applied until expiration of the | Jul. 2015 | Modified Structure | - | ||||||
sharing | contract. | (Dec.) | |||||||||||
19 | Sotetsu Fresa Inn Shimbashi- | Fixed- | Fixed + Revenue | Sotetsu Hotel Development Co., Ltd.(*3) | 15 | Mar. 2023 | JPY18MM/month + Revenue sharing | No rule has been stipulated. | - | - | - | - | |
Karasumoriguchi | lease | sharing | |||||||||||
20 | Hilton Tokyo Bay | Fixed- | Fixed + Revenue | THE DAI-ICHI | Hilton International | 4 | Dec. 2022 | JPY163MM/month + Revenue sharing | Rent can be modified through | Jan. 2019 | Renewed | - | - |
lease | sharing | BUILDING CO., LTD. | Company | mutual agreement. | (Increased) | ||||||||
21 | ibis Tokyo Shinjuku | - | Management | 12 | Jun. 2024 | Amount equivalent to hotel GOP | - | Jul. 2012 | Modified Structure | - | - | ||
contract | |||||||||||||
22 | ibis Styles Kyoto Station | - | Management | 5 | Dec. 2024 | Amount equivalent to hotel GOP | - | - | - | - | - | ||
contract | |||||||||||||
23 | ibis Styles Sapporo | - | Management | - | AAPC Japan K.K. | 5 | Dec. 2024 | Amount equivalent to hotel GOP | - | - | - | - | - |
contract | |||||||||||||
24 | Mercure Sapporo | - | Management | 15 | Sep. 2029 | Amount equivalent to hotel GOP | - | - | - | - | - | ||
contract | |||||||||||||
25 | Mercure Okinawa Naha | - | Management | 10 | Apr. 2024 | Amount equivalent to hotel GOP | - | - | - | - | - | ||
contract | |||||||||||||
26 | Mercure Yokosuka | Fixed- | Variable | AAPC Japan K.K. | 5 | Aug. 2024 | Linked to hotel GOP | The same rent will be applied until | Aug. 2019 | Renewed | - | - | |
lease | expiration of the contract. | (Effectively increased) | |||||||||||
27 | the b ikebukuro | Fixed- | Fixed + Variable | Ishin Ikebukuro Operations K.K. | 7 | Jan. 2022 | JPY163MM/year + Linked to hotel GOP | The same rent will be applied until | - | - | - | - | |
lease | expiration of the contract. | ||||||||||||
28 | the b hachioji | Fixed- | Fixed + Variable | Ishin Hachioji Operations, Y.K. | 7 | Jan. 2022 | JPY98MM/year + Linked to hotel GOP | The same rent will be applied until | - | - | - | - | |
lease | expiration of the contract. | ||||||||||||
29 | the b hakata | Fixed- | Fixed + Variable | Ishin Hakata Operations K.K. | 7 | Jan. 2022 | JPY82MM/year + Linked to hotel GOP | The same rent will be applied until | - | - | - | - | |
lease | expiration of the contract. | ||||||||||||
30 | the b suidobashi | Fixed- | Fixed + Variable | Ishin Suidobashi Operations K.K. | 7 | Dec. 2026 | JPY85MM/year + Linked to hotel GOP | The same rent will be applied until | Jan. 2020 | Conditions changed | Renewed | - | |
lease | expiration of the contract. | (Increased) |
45
2. Summary of Lease Contracts (2/2)
(as of the end of December 2019)
Lease | Rent | Hotel Operator/ | Lease/ | Expiration | Contractual Rent | Rent Modification Summary | Rent Modification Schedule | ||||||
No. | Property Name | Structure | Lessee | Hotel Consulting and | MC | Date of | Rent Modification Summary | (After acquisition) | (2020 to 2021) | ||||
Type | (*2) | ||||||||||||
(*1) | Management Company | Term | Contract | Timing | Condition | 2020 | 2021 | ||||||
31 | Hotel Francs | Fixed- | Fixed | K.K. Bridal Produce | 19 | Oct. 2024 | JPY25MM/month | The same rent will be applied until | - | - | - | - | |
lease | expiration of the contract. | ||||||||||||
Fixed- | (Fixed rent) JPY550MM/year + | In principle, the same rent will be | To be expired | ||||||||||
32 Okinawa Marriott Resort & Spa | Fixed + Variable | Lagoon resort Nago Co., Ltd. | 5 | Dec. 2020 | (Variable rent) When the total GOP | - | |||||||
applied until expiration of the | - | - | |||||||||||
lease | exceeds GOP base amount (JPY700MM), | (Dec.) | |||||||||||
the excess x 90% is paid | contract. | ||||||||||||
Fixed- | K.K. A.I.C Hiroshima | Luxury Hotels | (Fixed rent) JPY348MM/year + | In principle, the same rent will be | |||||||||
ACTIVE-INTER CITY HIROSHIMA | Fixed + Variable | (Variable rent) When the total GOP | |||||||||||
33 | International of Hong | 11 | Dec. 2026 | applied until expiration of the | - | - | - | - | |||||
(Sheraton Grand Hiroshima Hotel) | lease | Management | Kong Limited | exceeds GOP base amount (JPY468MM), | contract. | ||||||||
the excess x 82.5% is paid | |||||||||||||
34 | CANDEO HOTELS UENO-KOEN | Fixed- | Fixed | Candeo Hospitality Management, Inc. | 20 | Feb. 2030 | Nondisclosure(*4) | Rent can be modified through mutual | Jul. 2016 | Nondisclosure(*4) | - | - | |
lease | agreement every three years. | ||||||||||||
Oriental Hotel Fukuoka | Fixed- | (Fixed rent) JPY425MM/year + | In principle, the same rent will be | ||||||||||
35 | Fixed + Variable | Hotel Centraza Co., Ltd. | 15 | Dec. 2034 | (Variable rent) When the total GOP | Conditions changed | |||||||
applied until expiration of the | Jan. 2020 | Renewed | - | ||||||||||
Hakata Station | lease | exceeds GOP base amount (JPY442MM), | (Increased) | ||||||||||
the excess x 98% is paid | contract. | ||||||||||||
Fixed- | (Fixed rent) JPY576MM/year + | In principle, the same rent will be | |||||||||||
36 | Holiday Inn Osaka Namba | Fixed + Variable | OW Hotel Operations KK | 15 | Oct. 2031 | (Variable rent) When the total GOP | |||||||
applied until expiration of the | - | - | - | - | |||||||||
lease | exceeds GOP base amount (JPY650MM), | ||||||||||||
the excess x 92.5% is paid | contract. | ||||||||||||
(Fixed rent) ① JPY17MM per month from | |||||||||||||
37 | HOTEL ASCENT FUKUOKA | Fixed- | Fixed | K.K.ASCENT. | 7 | Mar. 2026 | April 1, 2019 to April 30, 2019, | Rent can be modified through mutual | Apr. 2019 | Renewed | - | - | |
② JPY20MM per month from May 1, 2019 | |||||||||||||
lease | agreement every three years. | (Increased) | |||||||||||
to March 30, 2020, ③ JPY22MM per month | |||||||||||||
from April 1, 2020 to March 31, 2026 | |||||||||||||
38 | Hilton Nagoya | Lease | Variable | Nagoya Hilton Co., | Hilton International | 41 | Dec. 2029 | Nondisclosure(*4) | Rent can be modified through mutual | - | - | - | - |
Ltd. | Company | agreement. | |||||||||||
Hilton Tokyo Narita | Fixed- | (Fixed rent) JPY444MM/year + | In principle, the same rent will be | ||||||||||
39 | Fixed + Variable | KK NaritaKosuge Operations | 20 | Jun. 2037 | (Variable rent) When the total GOP | ||||||||
applied until expiration of the | - | - | - | - | |||||||||
Airport | lease | exceeds GOP base amount (JPY550MM), | |||||||||||
the excess x 86.5% is paid | contract. | ||||||||||||
Fixed- | (Fixed rent) JPY336MM/year + | In principle, the same rent will be | |||||||||||
40 International Garden Hotel Narita | Fixed + Variable | KK NaritaYoshikura Operations | 10 | Jun. 2027 | (Variable rent) When the total GOP | ||||||||
applied until expiration of the | - | - | - | - | |||||||||
lease | exceeds GOP base amount (JPY360MM), | ||||||||||||
the excess x 98% is paid | contract. | ||||||||||||
Fixed- | Hotel Management | Okura Nikko Hotel | (Fixed rent) JPY420MM/year + | In principle, the same rent will be | To be expired | ||||||||
41 | Hotel Nikko Nara | Fixed + Variable | 3 | Dec. 2020 | (Variable rent) When the total GOP | - | |||||||
applied until expiration of the | - | - | |||||||||||
lease | Co., Ltd. | Management Co., Ltd. | exceeds GOP base amount (JPY470MM), | (Dec.) | |||||||||
the excess x 91.5% is paid | contract. | ||||||||||||
Hotel Oriental Express Osaka | Fixed- | (Fixed rent) JPY110MM/year + | In principle, the same rent will be | ||||||||||
42 | Fixed + Variable | K.K. HOTEL ORIENTAL EXPRESS | 10 | Mar. 2028 | (Variable rent) When the total GOP | ||||||||
applied until expiration of the | - | - | - | - | |||||||||
Shinsaibashi | lease | exceeds GOP base amount (JPY128MM), | |||||||||||
the excess x 91% is paid | contract. | ||||||||||||
(Fixed rent) JPY3,100MM/year, JPY1,600MM/year on and after January 1, 2022
(Variable rent)
- Until December 31, 2019: When AGOP(*5)
Fixed- | exceeds AGOP base amount | In principle, the same rent will be | |||||||
43 Hilton Tokyo Odaiba | Fixed + Variable | Tokyo Humania Enterprise Inc. | 11 Dec. 2029 (JPY2,450MM), the excess x 30% is paid | applied until expiration of the | - | - | - | - | |
lease | • On and after January 1, 2020: When | contract. | |||||||
AGOP exceeds AGOP base amount | |||||||||
(JPY2,970MM), the excess x 30% is paid | |||||||||
• On and after January 1, 2022: When | |||||||||
AGOP exceeds AGOP base amount | |||||||||
(JPY1,660MM), the excess x 98% is paid |
(*1) Rent structure is as follows: | (*2) | Amount including car park and CAM without tax |
Fixed: Fixed rent | (*3) | The lessee is changed to Sotetsu Hotel Management CO., LTD. on May 1, 2019. |
Variable: Variable rent | (*4) | The detailed content of the contract is not disclosed as consent on disclosure has not been obtained from the lessee. |
Management contract: Management contract | (*5) | AGOP (adjusted GOP) is the amount calculated by subtracting certain fees and other items from GOP. |
Fixed + Variable: Property paying both fixed and variable rent | (*6) | The conditions of the new contracts are stated for the following properties which contracts were expired on and |
Fixed + Revenue sharing: When the sales of the hotel exceed pre-determined amount, additional rent is paid | before December 31, 2019 and the new contracts were signed or renewed, and started from January 1, 2020: | |
No.1-5, 17, 30, 35 | ||
46 |
3. Major CAPEX Ⅲ by Hotels
* (Numbers in parentheses are CAPEX amounts: JPY MM)
FY12/2012 | FY12/2013 | FY12/2014 | FY12/2015 | FY12/2016 | FY12/2017 | FY12/2018 | FY12/2019 | FY12/2020 Plan | |
Guest rooms on 7F | Private rooms at | Restaurant (30) | Conversion of space | ||||||
Kobe Meriken | (50) | ||||||||
restaurant and | Conversion of brides' | of backyard to | |||||||
Park Oriental | - | - | - | Chapel (36) | Balconies on each | Bridal salon (76) | |||
balcony, etc. on 3F | room to guest | guest rooms | |||||||
Hotel | floor (62) | (19) | rooms (40) | (120) | |||||
Bar (85) | |||||||||
Oriental Hotel | |||||||||
- | Restaurant | - | - | Guest rooms on 4F | - | Guest rooms on 11F | - | - | |
tokyo bay | (45) | (101) | to 12F (140) | ||||||
Namba Oriental | Corner rooms | Guest rooms on 9F | Guest rooms on | Guest rooms on 6F | |||||
- | on 5F to 8F | - | - | - | - | ||||
Hotel | (91) | 7F (77) | (78) | ||||||
(10) | |||||||||
Guest rooms on 3F to | Guest rooms on 9F | Guest rooms on 1F, | |||||||
Hotel Nikko | 8F of North building | ||||||||
- | - | - | (55) | - | etc. | - | - | ||
Alivila | and 3F to 5F of | ||||||||
Restaurant (31) | (16) | ||||||||
central building (333) | |||||||||
Oriental Hotel | Banquet room on 23F | Guest rooms on | Guest rooms on 13F | Guest rooms on | |||||
- | - | - | 7F to 10F (43) | - | Chapel (10) | 17F to 18F (14) | |||
Hiroshima | (10) | Banquet room on 4F | to 14F (14) | Increase number of | |||||
(38) | seats in café (8.5) | ||||||||
Ibis Tokyo | Lobby and | Guest rooms on | Guest rooms on | ||||||
restaurant on 2F, | - | - | - | - | - | - | |||
Shinjuku | and guest rooms | 3F to 10F (192) | 3F to 10F (312) | ||||||
on 3,5,7,9F (170) | |||||||||
Holiday Inn | Guest rooms on | Guest rooms on | |||||||
- | - | - | - | - | - | 10F to 11F (72) | - | ||
Osaka Namba | 4,6,7,12F (115) | Guest rooms on | |||||||
ibis Styles | 8F to 9F (72) | ||||||||
- | - | - | - | - | - | Vacant space on 1F | - | - | |
Sapporo | (28) | ||||||||
Mercure Hotel | - | - | - | - | - | - | Banquet room (15) | - | - |
Sapporo | |||||||||
the b Ikebukuro | - | - | - | - | - | - | Guest rooms on | - | - |
3F to 10F, etc. (18) | |||||||||
Okinawa Marriott | |||||||||
- | - | - | - | - | - | - | Restaurant (142) | - | |
Resort & Spa | |||||||||
Oriental Hotel | - | - | - | - | - | - | - | Large-scale | - |
Fukuoka | renovation works | ||||||||
Hakata Station | (1,690) | ||||||||
Hilton Tokyo | Banquet room (92) | ||||||||
- | - | - | - | - | - | - | - | Large-scale | |
Odaiba | renovation works | ||||||||
(3,000) |
47
4. The Five HMJ Hotels - Highlights
Change in GOP and GOP ratio
(JPY MM) | GOP | GOP ratio | ||||||||||||
10,000 | 45% | |||||||||||||
7,765 | 8,033 | |||||||||||||
8,000 | 6,941 | 7,591 | 7,793 | 7,546 | ||||||||||
6,296 | 6,155 | 6,302 | ||||||||||||
6,000 | 5,136 | 5,696 | 5,158 | 5,645 | 35% | |||||||||
34.2% | 33.7% | |||||||||||||
4,000 | 31.8% | 32.8% | 32.2% | |||||||||||
29.9% | ||||||||||||||
GOP | 27.0% | 26.6% | 26.5% | 28.0% | 28.3% | 25%ratioGOP | ||||||||
2,000 | 25.5% | |||||||||||||
24.3% | ||||||||||||||
0 | CY2008 | CY2009 | CY2010 | CY2011 | CY2012 | CY2013 | CY2014 | CY2015 | CY2016 | CY2017 | CY2018 | CY2019 | 15% | |
CY2020 | ||||||||||||||
(forecast) |
Change in KPI
(JPY) | ADR | RevPAR | OCC | 87.7% | 88.4% | 91.0% | 89.9% | 90.5% | 88.8% | 100% | |||||||
25,000 | 77.9% | 77.8% | 80.4% | 76.7% | 82.7% | 86.1% | 86.9% | ||||||||||
73.8% | 21,067 | ||||||||||||||||
ADR・RevPAR | 20,153 | 19,856 | 80% | ||||||||||||||
19,212 | 22,197 | 22,135 | |||||||||||||||
20,000 | 17,970 | 18,463 | 17,551 | 60% | |||||||||||||
17,197 | 17,297 | 19,954 | OCC | ||||||||||||||
15,980 | 16,200 | 19,066 | 19,664 | ||||||||||||||
15,846 | 17,807 | 18,060 | 40% | ||||||||||||||
15,000 | 16,843 | ||||||||||||||||
14,367 | 14,886 | 15,245 | 20% | ||||||||||||||
13,999 | 13,400 | ||||||||||||||||
12,696 | 12,845 | 12,160 | |||||||||||||||
10,000 | 0% | ||||||||||||||||
CY2007 | CY2008 | CY2009 | CY2010 | CY2011 | CY2012 | CY2013 | CY2014 | CY2015 | CY2016 | CY2017 | CY2018 | CY2019 | CY2020 | ||||
(forecast) |
- Namba Oriental Hotel is planned to close the entire building and suspend its hotel operation due to the large-scale renovation from November 2020 through March 2021. Stating the figures reflecting the impact of the suspension of hotel sales for the fiscal year ending December 2020.
48
5. Portfolio Map
Total Assets
Limited-service hotel
JPY374.5Bn | Full-service hotel | ||
Resort hotel | |||
No. of Hotels |
(as of February 20, 2020)
1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
43 Hotels
No. of
Guest Rooms
11,705 Rooms
3 17 36 42
11 16
29 35 37
8
1
4 33
5
32 6
26
24 25
23
28
2 30
7 39 40
3121
38 | |
12 41 | Tokyo 23 wards |
27 | 13 | 34 | ||||||||||||||||||||||
10 | ||||||||||||||||||||||||
9 | ||||||||||||||||||||||||
22 | 14 | |||||||||||||||||||||||
15 | ||||||||||||||||||||||||
20 | ||||||||||||||||||||||||
43 | ||||||||||||||||||||||||
18
19
Kobe Meriken Park | Oriental Hotel | Namba | Oriental Hotel Hotel Nikko Alivila | The Beach | Hakone | Dormy Inn | |||||||||||||||||
Oriental Hotel | tokyo bay | Oriental Hotel Hiroshima | Tower Okinawa | Setsugetsuka | Kumamoto | ||||||||||||||||||
9 | 10 | 11 | 12 | 13 | 14 | 15 | 16 | 17 | 18 |
the b | dormy inn・ | Hakata Nakasu Nara Washington R&B Hotel | Comfort Hotel | Smile Hotel | Toyoko Inn | Hotel Keihan | Chisun Inn | ||||||||||||||
suidobashi | global cabin | Washington | Hotel Plaza | Ueno-hirokoji Tokyo Higashi | Nihombashi | Hakata-guchi | Universal City | Kamata | |||||||||||||
Asakusa | Hotel Plaza | Nihombashi | Mitsukoshimae | Ekimae | |||||||||||||||||
19 | 20 | 21 | 22 | 23 | 24 | 25 | 26 | 27 | |||||||||||||
Hotel Vista | Sotetsu Fresa | Hilton Tokyo Bay | ibis Tokyo | ibis Styles | ibis Styles | Mercure | Mercure | the b ikebukuro | ||||||||||||
Kamata Tokyo | Inn Shimbashi- | Shinjuku | Kyoto Station | Sapporo | Sapporo | Okinawa Naha | ||||||||||||||
Karasumoriguchi | ||||||||||||||||||||
28 | 29 | 30 | 31 | 32 | 33 | 34 | 35 |
the b hachioji | the b hakata | Hotel Francs | Mercure | Okinawa Marriott | ACTIVE-INTER CITY | CANDEO | Oriental Hotel | ||||||||||
Yokosuka | Resort & Spa | HIROSHIMA (Sheraton | HOTELS | Fukuoka | |||||||||||||
Grand Hiroshima Hotel) | UENO-KOEN | Hakata Station | |||||||||||||||
Acquisition in 2019 | |||||||||||||||||
36 | 37 | 38 | 39 | 40 | 41 | 42 | 43 |
Holiday Inn | HOTEL ASCENT | Hilton Nagoya Hilton Tokyo | International | Hotel Nikko Nara Hotel Oriental Hilton Tokyo Odaiba |
Osaka Namba | FUKUOKA | Narita Airport | Garden Hotel | Express Osaka |
Narita | Shinsaibashi |
49
Appendix 3
Investors Composition and Investment Unit Price
1. Major Unitholders and Classifications of Unitholders
Top 10 Major Unitholders | |
As of the end of June 2019 | As of the end of December 2019 |
Rank | Name | No. of Units | %(*) |
1 | The Master Trust Bank of Japan, Ltd. (Trust) | 721,861 | 16.17 |
2 | Japan Trustee Service Bank, Ltd. (Trust) | 531,521 | 11.91 |
3 | J.P. Morgan Bank Luxembourg S.A. 384500 | 337,322 | 7.55 |
4 | The Nomura Trust and Banking Co., Ltd. (Investment Trust) | 195,422 | 4.37 |
5 | Trust and Custody Services Bank, Ltd. | 131,797 | 2.95 |
(Securities Investment Trust) | |||
122,142 | 2.73 | ||
6 | BNYM AS AGT Clients 10 PERCENT | ||
7 | State Street Bank and Trust Company 505223 | 64,452 | 1.44 |
8 | State Street Bank West Client-Treaty 505234 | 64,127 | 1.43 |
9 | Shikoku Railway Company | 56,989 | 1.27 |
10 | CBNY DFA International Real Estate Securities Portfolio | 54,823 | 1.22 |
Total | 2,280,456 | 51.10 | |
Rank | Name | No. of Units | %(*) |
1 | The Master Trust Bank of Japan, Ltd. (Trust) | 697,102 | 15.62 |
2 | Japan Trustee Service Bank, Ltd. (Trust) | 526,839 | 11.80 |
3 | J.P. Morgan Bank Luxembourg S.A. 384500 | 334,947 | 7.50 |
4 | The Nomura Trust and Banking Co., Ltd. (Investment Trust) | 213,302 | 4.78 |
5 | BNYM AS AGT Clients 10 PERCENT | 140,401 | 3.14 |
6 | Trust and Custody Services Bank, Ltd. | 134,779 | 3.02 |
(Securities Investment Trust) | |||
59,918 | 1.34 | ||
7 | State Street Bank West Client-Treaty 505234 | ||
8 | Shikoku Railway Company | 56,989 | 1.27 |
9 | JPMorgan Securities Japan Co., Ltd. | 52,951 | 1.18 |
10 | Japan Securities Finance Co., Ltd. | 46,600 | 1.04 |
Total | 2,263,828 | 50.73 | |
(*) The total units held by each investor to the total units issued by JHR as of the end of June 2019 and the end of December 2019 respectively. (Rounded off to two decimal places.)
Owners of the Investment Units
As of the end of June 2019 | As of the end of December 2019 | |||||||||||||||
Owners | No. of | No. of | No. of Investors | No. of Units | Owners | No. of | No. of | No. of Investors | No. of Units | |||||||
Investors | Units | 0.4% | 1.2% | 8.0% | Investors | Units | 0.5% | 1.1% | 9.1% | |||||||
Individuals & Others | 28,383 | 358,329 | 1.2% | Individuals & Others | 29,670 | 406,900 | 1.2% | |||||||||
Financial Institutions | 138 | 1,930,626 | Financial Institutions | 155 | 2,090,477 | |||||||||||
(Incl. Securities Firms) | (Incl. Securities Firms) | |||||||||||||||
46.1% | 41.4% | |||||||||||||||
Other Domestic Firms | 352 | 113,176 | 43.2% | Other Domestic Firms | 357 | 113,795 | ||||||||||
Foreign Firms & | Foreign Firms & | 46.8% | ||||||||||||||
370 | 2,060,216 | 392 | 1,851,175 | |||||||||||||
Individuals | 97.0% | Individuals | 97.0% | |||||||||||||
Total | 29,243 | 4,462,347 | 2.5% | Total | 30,574 | 4,462,347 | 2.5% | |||||||||
Individuals & | Financial Institutions | Other Domestic | Foreign Firms & | |||||||||||||
Others | (Incl. Securities Firms) | Firms | Individuals | |||||||||||||
- Percentage of investors is percentage of owners in each segment to the total number of investors in JHR, and percentage of investment units is percentage of investment units owned by each segment to the total investment units issued as of respective date (both rounded off to one decimal place).
51
2. Changes in Investment Unit Price and Market Capitalization
Changes in the investment unit price | ||||||||||||||||||||||||||||||||
and market capitalization | ||||||||||||||||||||||||||||||||
Jun. 2015 | Jan. 2016 | Jun. 2017 | Jan. 2019 | |||||||||||||||||||||||||||||
(Based on the closing price) | ||||||||||||||||||||||||||||||||
Market Capitalization | PO(*2) JPY10.7Bn | PO(*2) JPY14.6Bn | PO(*2) JPY18.6Bn | PO(*2) JPY33.3Bn | ||||||||||||||||||||||||||||
Price of the investment unit: | (JPY) | (JPY MM) | ||||||||||||||||||||||||||||||
Investment Unit Price of JHR | Jan. 2015 | Jul. 2016 | ||||||||||||||||||||||||||||||
JPY73,100 | 120,000 | PO | PO | 450,000 | ||||||||||||||||||||||||||||
(*2) | (*2) | |||||||||||||||||||||||||||||||
Total market capitalization: | JPY15.6Bn | JPY34.7Bn | ||||||||||||||||||||||||||||||
100,000 | ||||||||||||||||||||||||||||||||
JPY326.1Bn | Apr. 2013 | Sep. 2014 | ||||||||||||||||||||||||||||||
(Based on the closing price of January 31, 2020) | 80,000 | PO JPY20.5Bn | PO JPY10.1Bn | 300,000 | ||||||||||||||||||||||||||||
(*1) | Price of the real estate investment securities | |||||||||||||||||||||||||||||||
Sep. 2012 | ||||||||||||||||||||||||||||||||
may fall depending on the fluctuations of | 60,000 | PO(*2) JPY5.0Bn | ||||||||||||||||||||||||||||||
price of the real estate under management | ||||||||||||||||||||||||||||||||
or profitability, etc., and investors may | 40,000 | 150,000 | ||||||||||||||||||||||||||||||
suffer losses. Investors may also suffer | ||||||||||||||||||||||||||||||||
losses through the bankruptcy or | ||||||||||||||||||||||||||||||||
deteriorated financial condition of the issuer. | 20,000 | |||||||||||||||||||||||||||||||
With reference to the risk of investment in | ||||||||||||||||||||||||||||||||
JHR units, please see Securities Report | ||||||||||||||||||||||||||||||||
dated March 20, 2019 and Midterm | 0 | 0 | ||||||||||||||||||||||||||||||
Securities Report dated September 18, 2019. | ||||||||||||||||||||||||||||||||
(*2) | Including OA | |||||||||||||||||||||||||||||||
Comparison with | 600 | Investment Unit Price of JHR | TSE REIT Index | TOPIX | ||||||||||||||||||||||||||||
REIT Index and TOPIX of 500 | ||||||||||||||||||||||||||||||||
Tokyo Stock Exchange | ||||||||||||||||||||||||||||||||
(TSE) | 400 | |||||||||||||||||||||||||||||||
(*) | 100 is the closing price of JHR unit, REIT | |||||||||||||||||||||||||||||||
index and TOPIX at TSE dated April 2, 2012. | 300 | |||||||||||||||||||||||||||||||
REIT Index of TSE is an index of a weighted | ||||||||||||||||||||||||||||||||
average of the market capitalization of all | ||||||||||||||||||||||||||||||||
REITs listed on TSE. | 200 | |||||||||||||||||||||||||||||||
100
0
52
Appendix 4
Summary of the Asset Management Company
1. Summary of the Asset Management Company
Company | Japan Hotel REIT Advisors Co., Ltd. |
Location | Ebisu Neonato 4F, 4-1-18 Ebisu, Shibuya-ku, Tokyo 150-0013 |
Establishment | August 10, 2004 |
Capital | JPY300MM as of December 31, 2019 |
Shareholders | Rockrise Sdn Bhd, Kyoritsu Maintenance Co., Ltd., ORIX Corporation |
Representative Director | Hisashi Furukawa |
Building Lots and Buildings Transaction Business Operator, Governor of Tokyo (4) No. 83613 | |
Discretionary Transaction Agent by Minister of Land, Infrastructure, Transport and Tourism No. 38 | |
Registration and Licenses | Financial Instruments Trading Company, Director-General of Kanto Local Finance Bureau No. 334 |
Member of The Investment Trusts Association, Japan | |
Member of The Japan Investment Advisers Association |
Shareholders' Meeting | ||||||||||
Auditor | ||||||||||
Board of Directors' Meeting | ||||||||||
Investment (and | Compliance Committee | |||||||||
Operation) Committee | ||||||||||
Representative Director | ||||||||||
Compliance Office | ||||||||||
Investment Division | Operations Division | |||||||||||||||||||||||
Acquisitions | Public REIT | Private Fund | Planning | Finance | Accounting & | Personnel and | ||||||||||||||||||
Reporting | Administration | |||||||||||||||||||||||
54
2. Features and Governance of the Asset Management Company
Mission Statement
"Provide attractive hotel investment opportunities to investors as specialist in investment and management of hotel assets. Gain trust from our stakeholders, and contribute to local communities and society through investing and managing hotel assets."
Code of Conduct
As an independent asset management company, all employees and officers at JHRA should have a "spirit of challenge" aiming to constantly provide high added value.
Also, "teamwork" is inevitable to provide high added value.
JHRA recognizes "challenge" and "teamwork" as essential value which our code of conduct is based upon.
Challenge | Teamwork | ||
- Be a self-starter, take initiative and demonstrate drive
- Set high goal and strive
- Respect creativity and innovation
- Promote challenge, free from fear of failure
- Respect teamwork and collaborate with team-mates
- Respect others. Respect values and opinions of others
- Promote "sharing" (idea, knowledge, information, goal, achievement, joy of achievement, lesson, etc.)
- Make effort for open, frank and sincere communication
55
2. Features and Governance of the Asset Management Company (cont.)
Advanced Expertise
- Ability to propose transaction scheme, execute transaction, and plan and execute unprecedented measures of asset management based on in-depth understanding of hotel operation and track record of such asset management.
- Extensive experience of renovation and rebranding through collaboration with many hotel lessees and hotel operators.
- Strong and long-term relationships with a large number of hotel lessees and hotel operators.
- High analytical skills and accurate judgement capacity based on rich information and data obtained through a broad network and high credibility.
Ensured Independence
- No employee of JHRA is a seconded employee from sponsor.
- Part-timedirectors from our main sponsor, SC CAPITAL PARTNERS group and non-sponsor-relatedfull-time directors each account for half of JHRA's board of directors.
- With regard to transactions with sponsor-related parties and JHR, JHRA has set strict decision-making rules.
In principle, in addition to obtaining approval by Compliance Committee which includes an outside specialist, who is authorized to dismiss proposals, JHRA is required to obtain approval from JHR's board of directors' meetings (directors are all third-party members who do not have any relationship with the sponsor-related parties). - As our main sponsor, SC CAPITAL PARTNERS group is also an independent asset management company, it fully understands and respects importance of JHRA's independency. JHRA conducts asset management business based upon its own judgement.
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Disclaimer
This material is prepared and provided solely for the purpose of providing information and not to offer, solicit, or do business, etc. with specific products including purchase of investment units, investment unit subscription rights, or investment corporation bonds of Japan Hotel REIT Investment Corporation ("JHR") or any other particular products. If any discrepancy is identified between this translation and the Japanese original, the Japanese original shall prevail.
This material is neither a disclosure document nor an investment report required under or prepared pursuant to the Financial Instruments and Exchange Act, Act on Investment Trusts and Investment Corporations and related government ordinances, Cabinet Office regulations, listing rules by Tokyo Stock Exchange, Regulations of The Investment Trusts Association, Japan, or other related rules and regulations.
This material contains forward-looking statements about financial conditions, operational results, and businesses of JHR, as well as plans and intentions of JHR and its asset management company, Japan Hotel REIT Advisors Co., Ltd ("JHRA"). Such forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause actual results or performance of JHR to materially differ from those expressed or implied forecasts. Those forecasts are made based on JHR's present and future business strategies and assumptions relating to the political and economic circumstances surrounding JHR in the future.
Every effort has been made to ensure the accuracy of the information contained in this material. However, there can be no assurance that the information is accurate, complete, appropriate or fair. The information may be revised or retracted without prior notice.
Regarding the offering and trading of investment units, investment unit subscription rights or investment corporation bonds, financial institutions may charge you pre-determined handling fees and other charges aside from the price of the investment units, investment unit subscription rights or investment corporation bonds. Since neither JHR nor JHRA handles the offering and trading of investment units, investment unit subscription rights or investment corporation bonds, please ask financial institutions for the amount, upper limit, and calculation methods of such fees and other charges.
JHR mainly invests in real estate-related assets, primarily hotels which are subject to change in values. Therefore, unitholders, holders of investment unit subscription rights and investment corporation bonds may suffer losses due to economic conditions of the real estate market or securities market, economic situations including interest rate environment, the nature of investment units, investment unit subscription rights, and investment corporation bonds, dependency on mechanisms and related persons of investment corporations, changes in legal systems related to real estate (include tax regulations, building regulations and others), damage caused to the real estate-related assets by natural disasters, fluctuation in prices or profitability of the real estate-related assets, nature of the trust beneficiary rights under management, delisting of the investment units, or worsening financial position or insolvency of JHR. For details, please refer to the Articles of Incorporation, Securities Registration Statement, Annual Securities Report and Extraordinary Report, etc. of JHR.
The contents of this material may not be copied or reproduced without our prior permission.
Japan Hotel REIT Advisors Co., Ltd.
Financial Instruments Trading Company
Director-General of Kanto Local Finance Bureau No. 334
Member of The Investment Trust Association, Japan
Member of The Japan Investment Advisers Association
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Japan Hotel REIT Investment Corporation published this content on 20 February 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 20 February 2020 08:41:31 UTC