Thank you for your support and patronage to Japan Hotel REIT Investment Corporation (JHR) and its asset management company, Japan Hotel REIT Advisors Co., Ltd.

We are pleased to report our financial results for the midterm of the 27th fiscal period (from January 1, 2026 to June 30, 2026) for JHR.

In the first half of 2026, the hotel market experienced a significant decline in inbound visitors from China due to the Chinese government’s request to refrain from traveling to Japan. Meanwhile, inbound arrivals from South Korea, Taiwan, and other Asian countries, as well as from Europe, the United States and Australia, exceeded the previous year’s levels.

Against this backdrop, JHR completed a public offering in March 2026 and acquired HYATT REGENCY TOKYO. By adding this highly distinctive large-scale full-service hotel in central Tokyo to its portfolio, JHR enhanced portfolio quality and further strengthened its competitiveness. In addition, as part of its strategic asset replacement, JHR sold The Beach Tower Okinawa in July 2026, realizing unrealized gains, and acquired Candeo Hotels Osaka Namba in August 2026, thereby executing a capital recycling strategy. As a result of these initiatives, JHR’s portfolio comprised 52 properties with total assets of JPY648.1 billion based on acquisition price as of August 26, 2026.

With respect to internal growth, RevPAR in the Osaka area declined year on year due to the decrease in inbound visitors from China and the reactionary impact following the surge in accommodation demand generated by the Osaka-Kansai Expo in the previous year. By contrast, areas outside Osaka continued to demonstrate growth. As a result, despite a year-on-year decline in the total number of guest nights at accommodation facilities across Japan, RevPAR for the 29 Hotels with Variable Rent, etc. exceeded the level recorded in the same period of the previous year. On the cost side, we continued to promote efficient hotel operations through operational improvements at each hotel while optimizing human capital, thereby enhancing profitability. These efforts resulted in operating revenue of 22,568 million yen, ordinary income of 11,789 million yen and interim net income of 11,789 million yen for the six month ended June 30, 2026.

Looking ahead to the second half of 2026, domestic accommodation demand is expected to remain solid. Although the impact of weaker demand from China is expected to continue for some time, demand from other countries and regions is anticipated to help mitigate the impact. JHR will continue to proactively capture demand and strive to maximize revenue.

Together with Japan Hotel REIT Advisors Co., Ltd., JHR is dedicated to further growth and enhancing its attractiveness by leveraging its extensive expertise and know-how cultivated to date.
We sincerely appreciate your continued support for us.