JAPAN HOTEL REIT INVESTMENT CORPORATION
August 20, 2014
REIT Issuer:
Japan Hotel REIT Investment Corporation (TSE code: 8985) Yukio Isa, Executive Director
Asset Management Company:
Japan Hotel REIT Advisors Co., Ltd.
Hisashi Furukawa, Representative Director and President
Contact:Kazuyuki Udo Director and Officer
Management & Planning Office
TEL: +81-3-6422-0530
Notice Concerning Revision of Operating Forecast and Forecast of Dividend for the Fiscal Period December 2014 (15th Fiscal Period)
Japan Hotel REIT Investment Corporation (hereinafter called "JHR") informs you of the revision of the operating
forecast and forecast of dividend for the fiscal period ending December 2014 (January 1, 2014 through December
31, 2014) announced on the "Financial Report for the Fiscal Period ended December 31, 2013" dated February 20,
2014 as follows:
1. Revision of the operating forecast and forecast of dividend for the fiscal period ending December 2014 (January
1, 2014 through December 31, 2014)
Operating income | Operating profit | Ordinary income | Current net profit | Dividend per unit | Dividend per unit resulting from excess of earnings | |
Operating income | Operating profit | Ordinary income | Current net profit | (Excess of earnings exclusive) | Dividend per unit resulting from excess of earnings | |
Previous forecast (A) | JPY 1M 11,964 | JPY 1M 6,684 | JPY 1M 5,074 | JPY 1M 5,072 | JPY 1,940 | JPY 0 |
Revised forecast (B) | JPY 1M 12,667 | JPY 1M 7,260 | JPY 1M 5,496 | JPY 1M 5,494 | JPY 2,058 | JPY 0 |
Variance (C)= (B)－(A) | JPY 1M 703 | JPY 1M 576 | JPY 1M 421 | JPY 1M 421 | JPY 118 | JPY 0 |
Variance ratio (D)= (C)/(A) | % 5.9 | % 8.6 | % 8.3 | % 8.3 | % 6.1 | % 0 |
2. Operational results for the midterm of the fiscal period ending December 2014 (January 1, 2014 through June 30,
2014)
Operating income | Operating profit | Ordinary income | Current net profit | Dividend per unit | Dividend per unit resulting from excess of earnings | |
Operating income | Operating profit | Ordinary income | Current net profit | (Excess of earnings exclusive) | Dividend per unit resulting from excess of earnings | |
Previous forecast (A) | JPY 1M 5,275 | JPY 1M 2,709 | JPY 1M 1,860 | JPY 1M 1,858 | JPY － | JPY － |
Revised forecast (B) | JPY 1M 5,504 | JPY 1M 3,011 | JPY 1M 2,235 | JPY 1M 2,234 | JPY － | JPY － |
Variance (C)= (B)－(A) | JPY 1M 228 | JPY 1M 302 | JPY 1M 375 | JPY 1M 376 | JPY － | JPY － |
Variance ratio (D)= (C)/(A) | % 4.3 | % 11.2 | % 20.2 | % 20.3 | % － | % － |
Note: This document is intended to serve as a press release to make available the information on the revision of the operating forecast and forecast of dividend for the fiscal period December 2014 (15th period). This document should not be construed as an offer to sell or solicitation of an offer to purchase any unit or other investment of JHR. Prospective investors are advised to read the JHR's prospectus for new unit issuance and secondary offering (and its amendments, if any) and make any investment decisions at their own risk and responsibility.
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(Reference) | Forecast of net profit per unit for the full fiscal year: JPY 2,054 (Calculated using the forecasted average number of investment units, 2,674,377 units, during the fiscal period) |
(*1) | The number of the investment unit already issued as of today is 2,621,281 units. Additional issuance of new units (170,000 units) is assumed according to the resolution of the offering at the Board of Directors Meeting held today. |
(*2) | Dividend allowance, JPY251M, is planned to be the source of dividend payments. |
(*3) |
See " |
(*4) |
The acquisition of three properties (hereinafter "acquisition of three properties") in the second term of fiscal period ending December 31, 2014 is assumed as announced in the press releases "Notice Concerning Completion of Acquisition and (Planned) Change of Hotel Operator, Etc. of Asset ("Best Western Hotel Sapporo Nakajima Koen" dated July 9, 2014 and "Notice Concerning Acquisition of New assets ("Mercure Hotel Sapporo" and "Mercure Hotel Okinawa Naha") separately announced today. For operating forecast with full year impact of the three properties acquired (scheduled to be acquired) during the current fiscal year, see below " |
(*5) | Amount less than JPY1M is rounded down, and the second decimal place of variance ratio is rounded off. |
3. Rationale for revising the operating forecast and forecast of dividend
The major causes of variance in comparison with the previously announced operating forecast and forecast of dividend for fiscal period ending December 2014 and for the midterm of the fiscal period ending December 2014 are as follows:
(1) Fiscal period ending December 2014 (January 1, 2014 through December 31, 2014)
a) Increase in variable rents, etc. of existing properties
The operating income is expected to rise JPY273M compared with the previous forecast as a result of JPY192M increase of variable rent due to the increase in GOP(*2) of HMJ's five hotels(*1) and JPY81M increase in income from the management contract, etc. due mainly to sales increase in the lodging sector supported by strong leisure demand both domestic and abroad.
Please refer to "
HMJ's five hotels.
b) Operating expenses, financial expenses, etc. associated with existing properties
Operating expenses, financial expenses, etc. are expected to be approximately at the same level as the previous forecast.
JPY74M of finance-related expenses (one-time amortization of borrowing handling expenses, etc.) in association with early repayment is expected, reserve for dividend from negative goodwill will be allocated for the amount since said expense is a non-cash item.
c) Impact of three property acquisitions
In fiscal period ending December 2014, although increase of JPY429M in operating income, JPY259M in operating profit and JPY166M in current net profit due to three property acquisitions, reserve for dividend
from negative goodwill is planned to be allocated since dilution of investment units due to issuance of new
investment units is expected. See below "
For the operating forecast with full year impact of said three property acquisitions, see below "
(Note 1) HMJ's five hotels are namely Kobe Meriken Park Oriental Hotel, Oriental Hotel tokyo bay, Namba Oriental Hotel, Hotel Nikko Alivila, and Oriental Hotel Hiroshima.
(Note 2) GOP (Gross Operating Profit) is a representative management index for hotel operational abilities. Total
Note: This document is intended to serve as a press release to make available the information on the revision of the operating forecast and forecast of dividend for the fiscal period December 2014 (15th period). This document should not be construed as an offer to sell or solicitation of an offer to purchase any unit or other investment of JHR. Prospective investors are advised to read the JHR's prospectus for new unit issuance and secondary offering (and its amendments, if any) and make any investment decisions at their own risk and responsibility.
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departmental profits of hotel business (e.g., room sales, food and beverage sales, sales of goods and others) - Non allocated operating expenses (Administrative expenses such as labor cost or utilities cost that are not included in operating expenses of each department)
(2) Midterm of the fiscal period ending December 2014 (January 1, 2014 through June 30, 2014)
a) Increase in variable rents, etc.
The operating income increased JPY228M compared with the previous forecast as a result of JPY179M increase of variable rent due to the increase in GOP of HMJ's five hotels and JPY49M increase in income from the management contract, etc. due mainly to sales increase in the lodging sector supported by strong leisure demand both domestic and abroad.
b) Decrease in operating expenses, financial expenses, etc.
Operating expenses decreased JPY73M and non-operating expenses decreased JPY71M due to reduction of operating expenses compared with the previous forecast, carrying forward of operating expenses and expenses related to borrowings to the second half of fiscal year, etc.
(Note)
The above is the operating forecast as of today, and actual dividend per unit may fluctuate. This forecast does not guarantee the amount of dividend shown above.
*Website of Japan Hotel REIT Investment Corporation: http://www.jhrth.co.jp/
Note: This document is intended to serve as a press release to make available the information on the revision of the operating forecast and forecast of dividend for the fiscal period December 2014 (15th period). This document should not be construed as an offer to sell or solicitation of an offer to purchase any unit or other investment of JHR. Prospective investors are advised to read the JHR's prospectus for new unit issuance and secondary offering (and its amendments, if any) and make any investment decisions at their own risk and responsibility.
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(1) Hotel sales (by ho0tel)
Sales of HM J five hotels with variable rent | CY 2012 (Note 1) | CY 2013 | CY 2014 | ||||||
Sales of HM J five hotels with variable rent | Actual | Comp arison with last p eriod | Actual | Comp arison with last p eriod | Previous forecast | Revised forecast 1st half： Actual 2nd half： Forecast | Comp arison with p revious forecast | Comp arison with last p eriod | |
Kobe M eriken Park Oriental Hotel | 1st half of the y ear | 2,544 | -0.1% | 2,416 | -5.0% | 2,457 | 2,424 | -1.3% | 0.4% |
Kobe M eriken Park Oriental Hotel | 2nd half of the y ear | 2,922 | -2.9% | 2,795 | -4.3% | 2,949 | 2,930 | -0.6% | 4.9% |
Kobe M eriken Park Oriental Hotel | Full y ear | 5,466 | -1.6% | 5,210 | -4.7% | 5,406 | 5,355 | -0.9% | 2.8% |
Oriental Hotel toky o bay | 1st half of the y ear | 3,221 | 45.1% | 3,209 | -0.4% | 3,227 | 3,366 | 4.3% | 4.9% |
Oriental Hotel toky o bay | 2nd half of the y ear | 3,542 | 0.4% | 3,973 | 12.2% | 3,711 | 3,823 | 3.0% | -3.8% |
Oriental Hotel toky o bay | Full y ear | 6,762 | 17.6% | 7,182 | 6.2% | 6,938 | 7,190 | 3.6% | 0.1% |
Namba Oriental Hotel | 1st half of the y ear | 885 | -5.9% | 934 | 5.5% | 957 | 998 | 4.3% | 6.8% |
Namba Oriental Hotel | 2nd half of the y ear | 973 | 0.5% | 1,038 | 6.6% | 1,033 | 1,083 | 4.8% | 4.3% |
Namba Oriental Hotel | Full y ear | 1,858 | -2.6% | 1,972 | 6.1% | 1,990 | 2,081 | 4.6% | 5.5% |
Hotel Nikko Alivila | 1st half of the y ear | 2,041 | 6.8% | 2,193 | 7.5% | 2,125 | 2,190 | 3.0% | -0.1% |
Hotel Nikko Alivila | 2nd half of the y ear | 3,048 | -3.6% | 3,183 | 4.4% | 3,365 | 3,341 | -0.7% | 5.0% |
Hotel Nikko Alivila | Full y ear | 5,088 | 0.3% | 5,375 | 5.6% | 5,491 | 5,531 | 0.7% | 2.9% |
Oriental Hotel Hiroshima | 1st half of the y ear | 989 | 9.3% | 1,046 | 5.8% | 1,063 | 1,046 | -1.7% | -0.0% |
Oriental Hotel Hiroshima | 2nd half of the y ear | 1,148 | 11.0% | 1,208 | 5.2% | 1,165 | 1,195 | 2.6% | -1.1% |
Oriental Hotel Hiroshima | Full y ear | 2,137 | 10.2% | 2,254 | 5.5% | 2,229 | 2,241 | 0.5% | -0.6% |
Total | 1st half of the y ear | 9,679 | 13.6% | 9,797 | 1.2% | 9,830 | 10,024 | 2.0% | 2.3% |
Total | 2nd half of the y ear | 11,633 | -0.6% | 12,197 | 4.8% | 12,223 | 12,374 | 1.2% | 1.4% |
Total | Full y ear | 21,312 | 5.4% | 21,994 | 3.2% | 22,053 | 22,397 | 1.6% | 1.8% |
(*1) The settlement period for the fiscal period ended December 2012 is nine months but full year numbers (one year from January 1 through
December 31) are shown above for comparing hotel business results.
(*2) Less than JPY1M is rounded off for sales. The second decimal place is rounded off for comparison with the previous period.
(2) Hotel GOP
GOP of HM J five hotels with variable rent | CY 2012 (Note 1) | CY 2013 | CY 2014 | |||||
GOP of HM J five hotels with variable rent | Actual | Comp arison with last p eriod | Actual | Comp arison with last p eriod | Previous forecast | Revised forecast | Comp arison with p revious forecast | Comp arison with last p eriod |
HM J's five hotels in total | 5,645 | 9.4% | 6,155 | 9.0% | 6,003 | 6,239 | 3.9% | 1.4% |
GOP ratio to sales | 26.5% | 1.0% | 28.0% | 1.5% | 27.2% | 27.9% | 0.6% | -0.1% |
(*1) The settlement period for the fiscal period ended December 2012 is nine months but full year numbers (one year from January 1 through
December 31) are shown above for comparing hotel business results.
(*2) Less than JPY1M is rounded off for GOP. The second decimal place is rounded off for GOP ratio to sales and comparison with the previous period.
Dividend per unit has been calculated as follows:
(JPY1M) Previous forecast Revised forecast
Current net profit 5,072 5,494
Profit carried forward from the previous period - 1
Utilization of negative goodwill (Loss on retirement
of noncurrent assets) 13 13
Utilization of negative goodwill (Financial expense
associated with early repayment) - 74
Utilization of negative goodwill (Preventing
dilution) - 164
Total amount of dividend 5,085 5,746
Total number of investment units issued 2,621,281units 2,791,281 units
Dividend per unit JPY1,940 JPY2,058
・Loss on retirement of noncurrent asset and redeeming handling charges for borrowings associated with refinancing due to early repayment in September 2014 and redemption expenses, etc. for derivative products (Interest-cap) will be covered by dividend allowance from negative goodwill so as not to affect dividend per unit.
・Although dilution of investment units due to issuance of new investment units is expected, allocation of reserve
Note: This document is intended to serve as a press release to make available the information on the revision of the operating forecast and forecast of dividend for the fiscal period December 2014 (15th period). This document should not be construed as an offer to sell or solicitation of an offer to purchase any unit or other investment of JHR. Prospective investors are advised to read the JHR's prospectus for new unit issuance and secondary offering (and its amendments, if any) and make any investment decisions at their own risk and responsibility.
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for dividend from negative goodwill is planned to avoid the impact of said dilution on dividend per unit for fiscal period ending December 2014.
・Dividend per unit may fluctuate by various factors such as transfer of operating asset, change of hotel lessee, or
fluctuation of the rent income resulting from changing lessee's business environment or unexpected repair, etc.
No. of properties | |
Acquisition price (scheduled acquisition inclusive) (Note 2) | JPY1M |
Appraisal value
(Note 3)
JPY1M 117,706 131,227 166,237 165,537 188,123
NOI yield (Note 4) | ％ |
NOI yield after depreciation (Note 5) | ％ |
LTV (Acquisition price) (Note 6) | ％ |
Appraisal LTV (Note 6) | ％ |
Market cap (Note 7) | JPY1M |
Distribution per unit | JPY |
(Note 1) Referring to the NOI yield and NOI yield after depreciation on the effective date of merger, the actual of Fiscal period ended March 2012 (12th period) has been applied for the properties owned by former Nippon Hotel Fund Investment Corporation (NHF), and the actual of Fiscal period ended March 2012 (7th period) has been applied for the properties owned by former Japan Hotel and Resort, Inc. (JHR).
(Note 2) Acquisition prices (Scheduled acquisition inclusive) indicate acquisition prices stated on the Purchase and Sales
Agreement for the Beneficial Interest in Trust or Real Estate Purchase and Sale Agreement (Consumption tax, local consumption tax and the acquisition expense such as broker's fee are not included.) As for Mercure Sapporo and Mercure Okinawa Naha, (both scheduled to be acquired), acquisition prices (scheduled) are indicated.
(Note 3) As for appraisal value at the end of each fiscal year, in accordance with the asset appraisal method and standards stipulated in the Articles of Incorporation and also with the rules set by The Investment Trusts Association, Japan,
appraisal value with the appraisal date at the end of relevant fiscal year is indicated. Dormy Inn Namba was sold as of January 24, 2014. Accordingly, the appraisal value of the property in the appraisal value column for End of FY12/2013 (14th period) indicates the selling price. Appraisal value for previously forecasted indicates appraisal value at the end of FY12/2013 (14th period) excluding Dormy Inn Namba. Appraisal value for After acquiring (scheduled) assets indicates the sum total of the appraisal value with the appraisal date at the end of June 2014
and the appraisal value for assets (scheduled to be) acquired, Best Western Hotel Sapporo Nakajimakoen, Mercure Hotel Sapporo and Mercure Hotel Okinawa Naha, based on the real estate appraisal report prepared by
Note: This document is intended to serve as a press release to make available the information on the revision of the operating forecast and forecast of dividend for the fiscal period December 2014 (15th period). This document should not be construed as an offer to sell or solicitation of an offer to purchase any unit or other investment of JHR. Prospective investors are advised to read the JHR's prospectus for new unit issuance and secondary offering (and its amendments, if any) and make any investment decisions at their own risk and responsibility.
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Japan Real Estate Institute with May 26, 2014, May 16, 2014 and June 1, 2014 as the pricing date, respectively. (Note 4) NOI = Real estate operating profit - Real estate operating expense + Depreciation expense + Loss on retirement
of noncurrent assets
NOI yield = NOI ÷ Acquisition price (or scheduled acquisition price)
(Note 5) NOI After depreciation = Real estate operating profit - Real estate operating expense
NOI yield after depreciation = NOI after depreciation ÷ Acquisition price (or scheduled acquisition price)
(Note 6) LTV (Acquisition price) = Total interest bearing debt ÷ Acquisition price (or scheduled acquisition price) ×
100
Appraisal LTV = Total interest bearing debt ÷ total appraisal value × 100
Interest bearing debt as of Previously forecasted and for After acquiring assets (scheduled to be acquired) are calculated with the figures of interest bearing debt as of the end of the midterm period ended December 31, 2014 added by JPY 7,426M of planned borrowing for new acquisition.
(Note 7) The amount is the market cap calculated by using the closing price of the regular transaction at Tokyo Stock Exchange, Inc. on relevant timing for each. However, the market cap on effective date of merger indicated on April 2, 2012.
Market cap after acquiring assets (scheduled to be acquired) is calculated by multiplying the sum (2,791,281 units) of the number of investment units issued (2,621,281 units) and the number of new investment units (170,000 units) which is resolved at today's board meeting by the closing price of the regular transaction at
Tokyo Exchange, Inc. on August 8, 2014.
(Note 8) The dividend per unit when the asset acquision effect for the full year was calculated.
(Note 9) The amounts less than JPY1M are rounded down. Fractions less than two decimal places are rounded off.
(Unit: JPY 1M)
Best Western Hotel Sapporo Nakajimakoen | Mercure Hotel Sapporo | Mercure Hotel Okinawa Naha | Total | |
Acquisition price (or scheduled acquisition price) | 6,797 | 6,000 | 3,000 | 15,797 |
Appraisal value | 6,840 | 6,030 | 3,040 | 15,910 |
NOI yield (%) | 6.4 | 6.3 | 6.3 | 6.3 |
NOI yield after depreciation (%) | 5.3 | 5.0 | 4.6 | 5.0 |
Note: This document is intended to serve as a press release to make available the information on the revision of the operating forecast and forecast of dividend for the fiscal period December 2014 (15th period). This document should not be construed as an offer to sell or solicitation of an offer to purchase any unit or other investment of JHR. Prospective investors are advised to read the JHR's prospectus for new unit issuance and secondary offering (and its amendments, if any) and make any investment decisions at their own risk and responsibility.
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l'(.;'A" PAN HOTEL REIT
(?/
-----,
January 2014 to January 2014 to
December 2014 December 2014
(Unit: JPY MN)
Forecast for full financial year (Reference) Variance (l) Variance (2) Forecast this Annualized
Initai l forecast
time actual
( A ) ( B) (C} ( B ) - ( A ) ( C ) - ( A )
Operating income 11,964 12,667 13,593 703 1,629
Variable rent 3,006 3,605 4,332 599 1,326
Fixed rent 8,958 9,061 9,260 103 302
NOI ("') 10,180 10,881 11,509 701 1,329
6.5% 6.3% 6.6% · 0.2% 0.1% De reciation cost 2,358 2,437 2,564 79 206
Loss on retirement of
Noncurrent assets
13 13 13 o o
1•NOI(Net operating income) = Real estate operating income - Real estate operating expenses + Depreciation expenses + Loss on retirement of non-current assets. NOI yield = NOI{Total purchase price of the assets owned a:s of the end of the period. NOI after depreciation = Real estate operating income - Real estate operating expenses.NOI yield after depreciation = NOI after
depreciation l Total purcha:se price of the a:sset owned as of the end of the period.
*Major causes of variance
{Unit: JYP 1M)
-
< New property acq uisi tions >
Va riance Variance ®<Existi ng properties> Variance
lncrease in rents, etc.
Increllse in operz ting expenses, etc.
lncrease in depreciation lncrease in financial cost
lncrease in profit associated with new
429
-92
·78
-92
1,355
-446
-205
-126
lncrease in rents (HMJ's 5 hotels)
Increasein management contract revenue
(Shinjuku/Kyoto)
Increase in other revenue
Decrease in operating expenses
192 192
43 43
37 37
-18 55
property acquisitions (a) 166 577 lncreasein profit from existing properties (b) 255 329
Current net profit<(a)+(b)> 421 906
Note: This document is intended to serve as a press release to make available the information on the revision of the operating forecast and forecast of dividend for the fiscal period December 2014 (15th period). This document should not be construed as an offerto sell or solicitation of an offer to purchase any unit or other investment of JHR. Prospective investors are advised to read the JHR's prospectus for new unit issuance and secondary offering (and its amendments, if any) and make any investment decisions at their own risk and responsibility.
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