Make The World

More Sustainable

[Provisional Translation Only]

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

March 17, 2022

Issuer

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

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

Representative: Osamu Miyashita, Executive Director

www.ichigo-hotel.co.jp/en

Asset Management Company

Ichigo Investment Advisors Co., Ltd.

Representative: Hiroshi Iwai, President

Inquiries: Hidehito Iwasaka, Head of Ichigo Hotel

Tel: +81-3-3502-4892

January 2022 Fiscal Period Earning Results Versus Forecast

and Forecast Revision for the July 2022 Fiscal Period

Because Ichigo Hotel's January 2022 earnings results announced today differed from its forecast in the January 25, 2022 release "Earnings Forecast Revision for the January 2022 Fiscal Period," Ichigo Hotel is detailing the difference between the results and the forecast below.

Ichigo Hotel is also revising upward its July 2022 fiscal period earnings forecast announced in the September 14, 2021 release "July 2021 Fiscal Period Earnings."

1. January 2022 Earnings Results vs. Forecast

(JPY million)

Operating

Operating

Recurring

Net

Dividend

per Share

Revenue

Profit

Profit

Income

(JPY)

Forecast (A)

1,102

414

209

282

1,108

Results (B)

1,125

472

274

342

1,345

Difference

+23

+57

+64

+60

+237

(B) - (A)

% Change

+2.1%

+13.8%

+30.9%

+21.3%

+21.4%

Reference:

1,035

409

210

209

823

January 2021

Reference: Net Income per Share: JPY 1,345

Period-end number of shares outstanding: 254,974 shares

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2. July 2022 Earnings Forecast Revision

(JPY million)

Operating

Operating

Recurring

Net

Dividend

per Share

Revenue

Profit

Profit

Income

(JPY)

Previous Forecast

1,024

395

170

169

666

(A)

New Forecast

1,069

421

214

213

838

(B)

Difference

+44

+26

+43

+43

+172

(B) - (A)

% Change

+4.3%

+6.6%

+25.7%

+25.8%

+25.8%

Reference:

1,117

465

269

268

1,055

July 2021 Actual

Reference: Net Income per Share: JPY 838

Forecast period-end number of shares outstanding: 254,974 shares

Note: The new forecast is based on the "Preconditions for the July 2022 Earnings Forecast" on page 4. Actual results may vary due to changes in circumstances, so these forecasts should not be construed as a guarantee of such results. Ichigo Hotel will make a forecast revision should a material discrepancy emerge between this forecast and results.

3. January 2022 Earnings Results and July 2022 Earnings Forecast Revision Rationale January 2022 Earnings Results

January 2022 fiscal period earnings was higher than forecast on the back of greater than expected variable rent at some of the hotels in December 2021 and January 2022 due to increased occupancy.

As stated in the Preconditions for the January 2022 Fiscal Period in the January 25, 2022 release "Earnings Forecast Revision for the January 2022 Fiscal Period," Ichigo Hotel expected to record operating expenses of JPY 37.7 million for Covid-related hotel operator support and/or potential rent reductions. However, Ichigo Hotel did not incur such expenses because no rent reductions were granted.

As a result, January 2022 recurring profit and dividend per share increased by JPY 64 million (+30.9%) and JPY 237 (+21.4%), respectively, versus the forecast announced on January 25, 2022.

July 2022 Earnings Forecast Revision Rationale

2022 started with a new wave of Covid caused by the Omicron variant, resulting in the Japanese government declaring a quasi-state of emergency. Although hotel demand is gradually recovering on the back of the Covid vaccine rollout, a full-blown recovery is expected to take more time.

Given these conditions, Ichigo Hotel expects expenses such as AM fee, insurance, and repair expenses to increase. Meanwhile, borrowing-related expenses are forecast to decrease, and variable rent is forecast to increase due to the leasing of all guest rooms at several hotels to local governments.

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As a result, Ichigo Hotel is revising upward its July 2022 dividend per share by JPY 172 (+25.8%) versus the previous forecast announced on September 14, 2021.

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

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Preconditions for the July 2022 Earnings Forecast

Preconditions

Period ∙ February 1, 2022 to July 31, 2022 (181 days)

  • 23 hotels

Number of ∙ The Court Hotel Kurashiki had an operator change on December 15, 2021 and

Hotels was rebranded and reopened as The OneFive Garden Kurashiki on February 1, 2022.

Within operating revenue, rental income is forecast based on current lease contracts, taking into consideration such factors as hotel and market conditions.1

Forecast Operating Performance2

July 2022 Fiscal Period

Occupancy3

73.0%

ADR4

JPY 4,891

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

Operating

number of guest rooms * number of days hotel was in operation during the period)

Revenue

4 ADR or Average Daily Rate is calculated with the following formula:

ADR = Total sales from accommodation (excluding restaurant charges and other

service fees) / number of guest rooms occupied during the period

Details of the July 2022 Rental Income Forecast by Hotel

(JPY million)

Fixed Rent/

Variable

Hotel Name

Minimum

Total

Guaranteed

Rent

Rent

Smile Hotel Kyoto Shijo

30

-

30

Nest Hotel Sapporo Ekimae

31

11

42

The OneFive Osaka Sakaisuji

1

1

2

Comfort Hotel Hamamatsu

55

-

55

Nest Hotel Sapporo Odori

27

-

27

The OneFive Fukuoka Tenjin

34

-

34

Nest Hotel Osaka Shinsaibashi

66

-

66

Comfort Hotel Central International Airport

151

-

151

4

Smile Hotel Tokyo Asagaya

61

-

61

Nest Hotel Matsuyama

36

8

44

The OneFive Okayama

70

-

70

Comfort Hotel Kushiro

18

-

18

Comfort Hotel Suzuka

15

-

15

Court Hotel Kurashiki

-

3

4

Nest Hotel Kumamoto

25

27

52

Valie Hotel Hiroshima

17

43

61

HOTEL EMIT SHIBUYA

47

-

47

Other1

210

27

238

Total

902

122

1,024

1 Figures for Hotel Wing International Nagoya, Hotel Wing International Kobe

Shin Nagata Ekimae, Hotel Livemax Nihombashi-Hakozaki, Capsule Plus

Yokohama, Urbain Hiroshima Executive, and Washington Hotel Plaza

Shimonoseki Eki Nishi are included in "Other" because the hotel operators did

not provide consent to disclose hotel-specific data.

∙ Retail: JPY 28 million of rental income from retail tenants at The OneFive Osaka

Sakaisuji, Hotel Wing International Kobe Shin Nagata Ekimae, and Smile Hotel

Tokyo Asagaya, and from banquet rooms at Nest Hotel Kumamoto.

∙ Depreciation: JPY 351 million. Depreciation has been calculated using the

straight-line method.

∙ Property and city planning taxes: JPY 119 million

∙ Building maintenance and repair expenses are based on what Ichigo Investment

Advisors, the asset management company of Ichigo Hotel, estimates will be

necessary for each hotel during the period. However, actual expenses for the

period could differ significantly from these forecast amounts for reasons including

Operating

the variability of maintenance and repair expenses, one-time costs due to

Expenses

unexpected building damage, etc.

∙ Rental expenses, Ichigo Hotel's principal operating expense (other than

depreciation, see above), are calculated based on historical data adjusted for

anticipated expense variations.

∙ Actual operating expenses may differ significantly from these assumptions due to

unforeseeable factors.

∙ SG&A expenses: JPY 1.3 million for engineering report costs and JPY 0.5 million

for environmental certification costs.

Non-Operating

∙ Interest expenses and other borrowing-related expenses: JPY 206 million

Expenses

∙ Total borrowings: JPY 26.34 billion as of July 31, 2022 based on the assumption

Borrowings

that JPY 450 million of long-term borrowing due February 28, 2022 will be

refinanced.

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Ichigo Hotel REIT Investment Corporation published this content on 17 March 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 17 March 2022 06:30:07 UTC.