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 26th fiscal period (from January 1, 2025 to December 31, 2025) for JHR.

In the hotel market in 2025, leisure demand from both domestic and international visitors remained robust throughout the year, with inbound demand being particularly strong. The number of inbound visitors reached approximately 43 million, representing a significant increase of 33.9% compared with 2019, and 15.8% compared with 2024. Notably, the number of visitors from Europe, the U.S. and Australia, who tend to have longer lengths of stay and higher travel spending, grew substantially, serving as a favorable tailwind that expanded revenue opportunities for JHR.

In light of these market conditions, JHR focused on enhancing the quality of its portfolio. From January to February 2025, it sold Washington Hotel Plaza Hakata, Nakasu for approximately JPY4.6 billion, which had limited potential for rent increases due to an ordinary lease contract with fixed rent only, and acquired Hilton Fukuoka Sea Hawk, a large-scale and highly competitive property, for approximately JPY64.3 billion. The acquisition was funded through asset sales and bank borrowings.

As a result of this initiative, as of the end of December 2025, JHR owned 51 properties, with a total asset size of JPY515.3 billion based on acquisition price.

With respect to internal growth, JHR advanced guestroom renovations through the proactive implementation of strategic capex expenditures (CAPEX), with the aim of increasing ADR. In 2025, a comprehensive renovation covering guestrooms, restaurants, and the lobby was carried out at the Okinawa Harborview Hotel, which marked its 50th anniversary since opening, further enhancing the hotel’s competitiveness. In addition, as a result of the continued execution of marketing initiatives and sophisticated revenue management, accommodation revenue increased by 14.1% year on year, food and beverage revenue rose by 8.1%, and total revenue grew by 12.1%. Furthermore, supported by the effects of ongoing efforts to reduce operating costs, profit margins also improved (Note).
(Note) Revenue figures are based on data from the 28 Hotels with Variable Rent, etc.

As a result, JHR recorded operating revenue of JPY45,564 million, ordinary income of JPY26,748 million and net income of JPY27,145 million, for the fiscal year under review. Accordingly, dividend per unit was set at JPY5,061. Looking ahead to 2026, we expect the growth trend to continue, supported by steady domestic demand and robust inbound demand. We 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.