(REIT) Financial Report for Fiscal Period Ended April 2022
June 15, 2022 | |||
REIT Securities Issuer | Hoshino Resorts REIT, Inc. | Stock Exchange Listing: Tokyo Stock Exchange | |
Securities Code: | 3287 | URL: | https://www.hoshinoresorts- |
reit.com/en/ |
Representative:
Asset Management
Company:
Representative:
Contact:
Kenji Akimoto, Executive Director
Hoshino Resort Asset Management Co., Ltd.
Kenji Akimoto, President & CEO
Takahiro Kabuki, Director & CFO
TEL: +81-3-5159-6338
Scheduled date of submission of securities report: Scheduled date of commencement of distributions payment:
Preparation of supplementary financial results briefing materials:
Holding of financial results briefing session:
July 27, 2022
July 26, 2022
Yes
Yes (for institutional investors and analysts)
(Amounts are rounded down to the nearest million yen) | ||||||||||||||||
1. Status of Management and Assets for Fiscal Period Ended April 2022 (from November 1, 2021 to April 30, 2022) | ||||||||||||||||
(1) Management Status | (% figures are the rate of period-on-period increase (decrease)) | |||||||||||||||
Fiscal period | Operating revenue | Operating profit | Ordinary profit | Profit | ||||||||||||
million yen | % | million yen | % | million yen | % | million yen | % | |||||||||
Ended Apr. 2022 | 5,438 | 12.4 | 2,200 | 19.2 | 1,764 | 24.9 | 1,761 | 24.9 | ||||||||
Ended Oct. 2021 | 4,840 | 5.4 | 1,845 | 1.6 | 1,412 | (0.7) | 1,410 | (3.8) | ||||||||
Fiscal period | Profit per unit | Ratio of profit | Ratio of ordinary profit | Ratio of ordinary profit | ||||||||||||
to net assets | to total assets | to operating revenue | ||||||||||||||
yen | % | % | % | |||||||||||||
Ended Apr. 2022 | 7,282 | 1.6 | 0.9 | 32.4 | ||||||||||||
Ended Oct. 2021 | 6,284 | 1.3 | 0.8 | 29.2 | ||||||||||||
(2) Distributions Status | ||||||||||||||||
Distributions per | Total | Distributions in | Total | Ratio of | ||||||||||||
excess of | distributions in | Distributions | ||||||||||||||
Fiscal period | unit | distributions | distributions to | |||||||||||||
earnings | excess of | payout ratio | ||||||||||||||
(excluding distributions | (excluding distributions | net assets | ||||||||||||||
in excess of earnings) | in excess of earnings) | per unit | earnings | |||||||||||||
yen | million yen | yen | million yen | % | % | |||||||||||
Ended Apr. 2022 | 7,195 | 1,758 | - | - | 99.8 | 1.5 | ||||||||||
Ended Oct. 2021 | 6,344 | 1,427 | - | - | 101.2 | 1.3 |
(Note 1) Total distributions in the fiscal period ended April 2022 is an amount after adding reversal of reserve for tax purpose reduction entry of 0 million yen to unappropriated retained earnings.
(Note 2) Total distributions in the fiscal period ended October 2021 is an amount after adding reversal of reserve for tax purpose reduction entry of 16 million yen to unappropriated retained earnings.
(3) Financial Position
Fiscal period | Total assets | Net assets | Ratio of net assets | Net assets per unit |
to total assets | ||||
million yen | million yen | % | yen | |
Ended Apr. 2022 | 192,603 | 119,027 | 61.8 | 487,107 |
Ended Oct. 2021 | 179,715 | 106,157 | 59.1 | 471,885 |
(4) Status of Cash Flows
Fiscal period | Cash flows from | Cash flows from | Cash flows from | Cash and cash |
equivalents at end of | ||||
operating activities | investing activities | financing activities | ||
period | ||||
million yen | million yen | million yen | million yen | |
Ended Apr. 2022 | 3,497 | (12,994) | 11,006 | 10,416 |
Ended Oct. 2021 | 2,587 | (3,603) | 1,304 | 8,907 |
2. Management Status Forecast for Fiscal Period Ending October 2022 (from May 1, 2022 to October 31, 2022) and Management Status Forecast for Fiscal Period Ending April 2023 (from November 1, 2022 to April 30, 2023)
(% figures are the rate of period-on-period increase (decrease))
Distributions per unit | Distributions | ||||||||||
Fiscal period | Operating revenue | Operating profit | Ordinary profit | Profit | in excess of | ||||||
(excluding distributions | |||||||||||
earnings | |||||||||||
in excess of earnings) | |||||||||||
per unit | |||||||||||
million yen | % | million yen | % | million yen | % | million yen | % | yen | yen | ||
Ending Oct. 2022 | 5,868 | 7.9 | 2,457 | 11.7 | 1,947 | 10.4 | 1,945 | 10.4 | 7,607 | - | |
Ending Apr. 2023 | 6,171 | 5.2 | 2,589 | 5.4 | 2,132 | 9.5 | 2,130 | 9.5 | 8,331 | - |
(Reference) | Forecast profit per unit (fiscal period ending October 2022) | 7,613 yen |
Forecast profit per unit (fiscal period ending April 2023) | 8,336 yen | |
Forecast profit per unit is calculated by the following formula: | ||
Forecast profit per unit = Forecast profit / Forecast total number of investment units issued and outstanding at end of period | ||
(Note) | The forecasts for the distributions per unit for the fiscal period ending October 2022 and the fiscal period ending April 2023 are assuming that | |
these distributions will be made after performing a reversal of part of the reserve for tax purpose reduction entry included in retained earnings. |
- Others
- Changes in Accounting Policies, Changes in Accounting Estimates, and Retrospective Restatement ① Changes in accounting policies accompanying amendments to accounting standards, etc.: No
② Changes in accoun ng policies other than ①: | No |
③ Changes in accounting estimates: | No |
④ Retrospective restatement: | No |
- Total Number of Investment Units Issued and Outstanding
① Total number of investment units issued and outstanding (including own investment units) at end of period
Fiscal period ended April 2022 | 244,355 units | Fiscal period ended October 2021 224,965 units |
- Number of own investment units at end of period
Fiscal period ended April 2022- units Fiscal period ended October 2021 - units
(Note) For the number of investment units serving as the basis for calculation of profit per unit, please refer to "Notes on Per Unit Information" on page 37.
- Financial reports are exempt from audit conducted by certified public accountants or an audit corporation.
-
Special Note
The management status outlook and other forward-looking statements contained in this document are based on information that are currently available and certain assumptions that are deemed reasonable. Accordingly, the actual management status, etc. may differ materially due to various factors. In addition, the forecast is not a guarantee of the amount of distributions. For the assumptions underlying the management status forecast, please refer to "Assumptions Underlying Management Status Outlook for Fiscal Period Ending October 2022 and Fiscal Period Ending April 2023" on pages 11 to 16.
Index
1. | Management Status ..................................................................................................................................................... | 2 | |
(1) | Management Status............................................................................................................................................. | 2 | |
① | Overview of the Fiscal Period under Review ................................................................................................... | 2 | |
(a) | Brief History of the Investment Corporation................................................................................................... | 2 | |
(b) | Investment Environment and Management Performance.............................................................................. | 2 | |
(c) | Overview of Fund Procurement ...................................................................................................................... | 2 | |
(d) | Overview of Business Performance and Distributions .................................................................................... | 3 | |
② | Outlook for the Next Fiscal Period................................................................................................................... | 3 | |
(a) | Management Environment for the Next Fiscal Period .................................................................................... | 3 | |
(b) | Future Management Policy and Challenges to Address .................................................................................. | 3 | |
(c) | Sustainability Initiatives................................................................................................................................... | 6 | |
(d) | Management Status Outlook........................................................................................................................... | 7 | |
③ | Significant Subsequent Events......................................................................................................................... | 8 | |
(a) | Borrowing of Funds (Refinancing of Existing Loans)........................................................................................ | 8 | |
(b) | Issuance of New Investment Units .................................................................................................................. | 8 | |
(c) | Acquisition of Assets (Planned) ....................................................................................................................... | 8 | |
(d) | Borrowing of Funds (Planned) ......................................................................................................................... | 9 | |
(e) | Change in the Content of Shares (Planned)................................................................................................... | 10 | |
(2) | Investment Risks ................................................................................................................................................ | 16 | |
2. | Financial Statements .................................................................................................................................................. | 17 | |
(1) | Balance Sheet .................................................................................................................................................... | 17 | |
(2) | Statement of Income ......................................................................................................................................... | 20 | |
(3) | Statement of Unitholders' Equity ...................................................................................................................... | 21 | |
(4) | Statement of Cash Distributions........................................................................................................................ | 22 | |
(5) | Statement of Cash Flows ................................................................................................................................... | 23 | |
(6) | Notes on the Going Concern Assumption.......................................................................................................... | 25 | |
(7) | Notes on Matters Concerning Significant Accounting Policies .......................................................................... | 25 | |
(8) | Notes to the Financial Statements..................................................................................................................... | 27 | |
(9) | Changes in Total Number of Investment Units Issued and Outstanding........................................................... | 42 | |
3. | Reference Information ............................................................................................................................................... | 43 | |
(1) | Information on Values of Assets Under Management, Etc. .............................................................................. | 43 | |
① | Investment Status.......................................................................................................................................... | 43 | |
② | Investment Assets.......................................................................................................................................... | 46 | |
(a) | Major Issues of Investment Securities........................................................................................................... | 46 | |
(b) | Investment Real Estate Properties ................................................................................................................ | 47 |
a. | Acquisition Price, Book Value, Appraisal Value, Share of Investment, Etc................................................ | 47 | |
b. | Location, Area, Size, Etc............................................................................................................................. | 49 | |
c. | Summary of Real Estate Appraisal Report, Etc.......................................................................................... | 55 | |
d. | Status of Leasing to Major Tenants ........................................................................................................... | 59 | |
e. | Portfolio Overview..................................................................................................................................... | 60 | |
f. | Individual Investment Real Estate, Etc. Property Income Statements ...................................................... | 61 | |
(2) | Status of Capital Expenditures........................................................................................................................... | 66 | |
① | Schedule of Capital Expenditures .................................................................................................................. | 66 | |
② | Capital Expenditures during the Period......................................................................................................... | 66 | |
(3) Other Investment Assets........................................................................................................................................... | 67 |
- 1 -
1. Management Status
-
Management Status
①Overview of the Fiscal Period under Review
(a) Brief History of the Investment Corporation
Hoshino Resorts REIT, Inc. (hereinafter, "HRR") invests in hotels, ryokans (Japanese-style inns) and ancillary facilities that serve at the core of the tourism industry and for which stable use is expected for the medium to long term.
HRR was established under the Act on Investment Trusts and Investment Corporations (Act No. 198 of 1951, as amended; hereinafter, the "Investment Trusts Act") with Hoshino Resort Asset Management Co., Ltd. (hereinafter, the "Asset Management Company") as the organizer and investments in capital of 150 million yen (300 units) on March 6, 2013. An issuance of new investment units through public offering (19,000 units) was implemented with July 11, 2013 as the payment due date, and the investment securities were listed on the Real Estate Investment Trust Securities Market of Tokyo Stock Exchange, Inc. (hereinafter the "Tokyo Stock Exchange") (securities code: 3287) on July 12, 2013. HRR has steadily expanded its asset size since, bringing the assets held by HRR as of the end of the fiscal period under review to 65 properties (sum total of acquisition price: 176,856 million yen).
- Investment Environment and Management Performance
COVID-19 dealt a severe blow to the tourism-related industries, but HRR believes that its impact is diminishing and that the negative effect of rising case numbers on tourism-related industry demand is gradually weakening. In December 2021, demand for travel, which is considered an important form of entertainment for many in the modern world, recovered to levels seen prior to the COVID-19 pandemic (meaning that COVID-19 had a severe impact on all industries. Same below.).
On the other hand, as there is also the dimension of concerns over negative effects on the Japanese economy, such as inflation, progressing yen depreciation, the situation in Ukraine, and rising U.S. interest rates, HRR will continue to follow these trends.
In the environment described above, the hotels and ryokans held by HRR were managed with a focus on securing stable earnings. With regard to the properties held by HRR, in the severe situation under COVID-19 pandemic, hotels, ryokans, and ancillary facilities operated by the Hoshino Resorts Group (collectively refers to Hoshino Resorts Inc. [hereinafter "Hoshino Resorts"] and its parent company and subsidiaries; the same shall apply hereinafter) (hereinafter the "properties operated by the Hoshino Resorts Group") have been capturing a higher level of demand relative to their industry peers largely due to the establishment of microtourism demand and the development of unique policies such as local collaboration projects. - Overview of Fund Procurement
In the fiscal period under review, HRR procured 12,534 million yen from the issuance of new investment units through primary offering on November 24, 2021, and it was allocated to KAI Kirishima and KAI Beppu, and the funds for acquisition of mezzanine loan receivables related to "(Tentative name) Hotel WBF Grande Kansai Airport" (TLS5 Specified Purpose Company Class D Loan Receivables) and its related expenses.
In addition, HRR procured 5,450 million yen of long-term borrowings on April 28, 2022 as funds for repayment of a total remaining principal amount of 5,450 million yen of existing borrowings due for repayment. Of the procured amount, 3,300 million yen is a green loan, HRR's first initiative executed based on the Green Finance Framework developed by HRR (hereinafter, said Green Finance Framework is referred to as the "Framework," and said green loan is referred to as the "Green Loan"). HRR allocated the full amount of the Green Loan to repayment of borrowings in connection with the initial acquisition of HOSHINOYA Karuizawa, KAI Kinugawa and Quintessa Hotel Osaka Shinsaibashi, which are properties that satisfy the criteria for eligible green properties under the Framework.
Furthermore, contractual repayments of borrowings, etc. were made, resulting in balance of interest-bearing liabilities of 68,424 million yen and ratio of interest-bearing liabilities to total assets (LTV) of 35.5% as of April 30, 2022.
- 2 -
(Status of credit rating)
The credit rating HRR has obtained as of the end of the fiscal period under review is as follows.
Credit rating agency | Rating | Outlook |
Japan Credit Rating Agency, Ltd. (JCR) | Long-term issuer rating: A | Stable |
Bond credit rating (Note): A | - | |
(Note) | The bond rating applies to the First Series Unsecured Investment Corporation Bond (with special pari passu conditions among specified |
investment corporate bonds) and the Second Series Unsecured Investment Corporation Bond (with special pari passu conditions | |
among specified investment corporate bonds) (green bonds). |
- Overview of Business Performance and Distributions
As a result of the management described above, business performance in the fiscal period under review was operating revenue of 5,438 million yen, operating profit of 2,200 million yen, ordinary profit of 1,764 million yen and profit of 1,761 million yen. Concerning distributions, after adding the amount of reversal of reserve for tax purpose reduction entry to unappropriated retained earnings pursuant with Article 42 of the Corporation Tax Act, the decision was made to distribute almost the entire aggregate amount to ensure application of special provisions for taxation on investment corporations (Article 67-15 of the Act on Special Measures Concerning Taxation (Act No. 26 of 1957, as amended; hereinafter, the "Act on Special Measures Concerning Taxation")), and distributions per investment unit was thus declared to be 7,195 yen.
- Outlook for the Next Fiscal Period
-
Management Environment for the Next Fiscal Period
In the Japanese economy, as Japan enacts thorough measures to prevent the spread of COVID-19 and economic and social activities head toward normalization, the economy is expected to recover due to these policies and improvement in the overseas economy. However, with a sense of uncertainty over the spread of COVID-19 and the situation in Ukraine, supply-side restrictions including surging materials costs, labor shortages, and stagnant distribution, as well as fluctuations in the financial and capital markets, HRR believes that it will be necessary to keep a close eye on downside risks.
In the tourism market, if restrictions on entry into Japan for the purpose of tourism as a border measure to prevent the spread of COVID-19 are relaxed, we expect inbound demand to recover, even though it may take considerable time. Furthermore, as the Japanese government is also expected to enact demand stimulus measures including the Go To Travel Campaign, the resulting increase in the desire to travel among consumers is expected to promote a gradual recovery in Japan's tourism market.
Under these circumstances, HRR will properly manage its assets underpinned by its aims of securing consistent rent revenue, achieving steady growth in asset size, and appropriately building its financial base, from a medium- to long-term perspective on the basis of the management policy described in "(b) Future Management Policy and Challenges to Address" below. - Future Management Policy and Challenges to Address
Under such circumstances, HRR's basic policy is to form a portfolio with a stable revenue base centering on hotels, ryokans and ancillary facilities that can respond to the travel needs of tourists.
In the hotel/ryokan industry which has been commoditized in general (commoditization referred to here describes the state where similar products and services are produced in large quantity with an emphasis on optimizing productivity and maximizing the efficiency of their delivery, and under this state, no company can maintain a competitive advantage), HRR believes facilities that are differentiated from others due to a superior business model, operating skills, location and such are the ones that will be able to generate stable earnings and secure steady cash flow over a long-term period.
From this perspective, HRR selects investment properties from the stance of "superior know-how and experience" (whether the business model, brand power, etc. can be differentiated from competitors, and whether it is operated by an operator with extensive expertise) and "superior equipment and facilities" (whether the facility itself is superior as to its location, rarity of the building, etc.).
HRR seeks to flexibly form an optimum portfolio in order to secure long-term and stable cash flow. After proactively obtaining information on properties operated by the Hoshino Resorts Group and hotels, ryokans - 3 -
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Hoshino Resorts REIT Inc. published this content on 16 June 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 16 June 2022 06:12:04 UTC.