Supplementary Explanation Materials Regarding Today’s Press Release

Overview and Significance of Planned Asset Acquisition

Japan Hotel REIT Investment Corporation plans to acquire the large full-service hotel "Hyatt Regency Tokyo" located in Shinjuku, Tokyo for 126,000 million yen. The acquisition price is set at a discount, representing 80.8% of the appraised value of 156,000 million yen. The property has 712 rooms and underwent extensive renovations between 2024 and 2025. Additional renovations (approximately 1.5 billion yen) are planned post-acquisition to enhance its earning power. Backed by redevelopment in the Shinjuku area and recovery in inbound demand, the investment ratio in the Tokyo area and the ratio of international brands are expected to increase.

Revision of Operating Forecast and Financial Position

The DPU for the fiscal year ending December 2026 is expected to absorb dilution from the issuance of new investment units through the reversal of negative goodwill, resulting in a 6.1% increase year-over-year. Increased depreciation expenses from the acquired asset will also be offset by negative goodwill to eliminate its impact on dividends. The market value LTV stands at a stable level of 36.0%. Borrowings total 334.3 billion yen, with an average remaining term of 3.3 years and an interest-bearing debt cost of 1.7%. Strategic CAPEX including major renovations will be actively implemented to strengthen the overall portfolio competitiveness.

Market Environment and Future Strategy

Tokyo is Japan’s largest lodging market, with strong inbound demand. New supply is limited due to rising construction costs, increasing hotel scarcity. Although inbound demand from China has declined, steady demand continues primarily from Europe, the US, and Australia. The transportation convenience and redevelopment plans in the Shinjuku area also support hotel value. Through active asset management, the corporation aims to improve profitability and increase asset value.