5th Fiscal Period Presentation Materials · 12/17/2015 · 5th Fiscal Period (ended October 2015) Presentation Materials . December 17, 2015 . Asset Management Company ... Forecasts

5th Fiscal Period (ended October 2015)

Presentation Materials December 17, 2015

Asset Management Company Hoshino Resort Asset Management Co., Ltd.

Security Code: 3287 http://www.hoshinoresorts-reit.net/

IV. Appendix

Portfolio overview (assets under management) (1) – (8) 33 Operational results for each property (1) – (8) 41 Balance sheet for the fiscal period ended October 2015 49 Statement of income for the fiscal period ended October 2015 50 Real estate appraisal value for continuously owned properties as of the end of the fiscal period ended October 2015 (1) – (3) 51

Information on unitholders as of the end of the fiscal period ended October 2015 54

Overview of HRR 55 Overview of Asset Management Company 56

II. Operational Results for Each Property Operational results for each property (1) – (5) 14 Overview of 21 Solare properties 19 Forecasts for 6th fiscal period ending April 2016 and 7th fiscal period ending October 2016 20

Rent type 22

I. Management Results of the Fiscal Period Ended October 2015

Highlights 3 Overview of capital increase through public offering 4 Improvement in unitholder value through further reinforcement of earnings stability by accelerating expansion of asset size

5

Entry to “urban tourism” in collaboration with the Hoshino Resorts Group 7

Realization of external growth opportunities through various approaches in collaboration with the Hoshino Resorts Group 8

External growth (newly acquired in the 5th fiscal period) 9 Status of portfolio after new acquisition of properties 10 Internal growth (management results highlights) 11 Finances 12

III. Future Management Policy Management policy for the time being 25 Realization of stable distribution 26 Market trend and strategy for differentiation 27 External growth 28 Hotels and ryokans operated by the Hoshino Resorts Group 29 Internal growth 30 Securement of stable earnings over the medium term through well-planned capital expenditures 31

Table of contents

1

I. Management Results of the Fiscal Period Ended October 2015

18,128 yen 18,289 yen

－111 yen －49 yen －42 yen

17,000

17,200

17,400

17,600

17,800

18,000

18,200

18,400

18,600

Overview of financial results for the 5th fiscal period (Ended October 2015)

Highlights

(Amounts are rounded down and ratios are rounded off.)

Results of the 4th fiscal period

Forecast for the 5th fiscal

period (as of June 17,

2015) (A)

Forecast for the 5th fiscal

period (as of July 30,

2015) (B)

Results of the 5th fiscal period

(C)

Comparison with forecast

(C)-(A)

Operational status (millions of yen)

Operating revenue 1,599 1,908 1,926 1,926 17

Operating income 818 1,024 1,029 1,034 10

Ordinary income 734 901 904 909 7

Net income 733 900 903 908 7

Distribution per unit (yen)

Distribution per unit 17,075 18,128 18,180 18,289 161

Others

NOI (millions of yen) 1,407 1,687 1,705 1,708 21

NOI yield (%) 8.4% 8.3% 8.1% 8.0% －

LTV 20.6% 16.2% 18.6% 18.6% －

Overview of financial results for the fiscal period ended October 2015 Distribution per unit was ¥18,289 Comparison with forecast was +¥161 (+0.9％) Breakdown of ¥1,926 million of operating revenue:

Fixed rent ¥1,648 million, floating rent ¥272 million Main differences in net income from the forecast ＋17M Increase in revenue related to rent business +17M

－5M Increase in expenses related to rent business Decrease in maintenance/repair expenses Increase in depreciation

＋2M －8M

－2M Increase in other operating expenses Increase in asset management fees

－2M

－2M Increase in non-operating expenses Increase in interest expenses

－2M

Non-operating income and loss

+ Corporate tax, etc.

Increase in expenses

related to rent business

Increase in operating expenses

Forecast (As of June 17)

Results

3

Increase in revenue

related to rent business

＋363 yen

0

20,000

40,000

60,000

80,000

100,000

120,000

50.0

100.0

150.0

200.0

250.0

300.0

'13/07 '13/10 '14/01 '14/04 '14/07 '14/10 '15/01 '15/04 '15/07 '15/10時価総額（単位：百万円）投資口価格(左軸) REIT指数(左軸)

Investment highlights

Overview of capital increase through public offering

Offering form Domestic offering

Number of units offered

Domestic primary offering: 26,970 units

Third-party allotment: 1,349 units

Total: 28,319 units

Total amount paid in ¥31,793 million

Issue price per unit ¥1,162,024

Resolution date of the issuance October 8, 2015

Pricing date October 20, 2015

Lead manager Nomura Securities Co., Ltd. SMBC Nikko Securities Inc.

Portfolio status after the offering

(Note) Among the 45 properties owned as of December 15, 2015, figures for the 39 properties owned as of October 31, 2015 are based on figures in the real estate appraisal reports as of October 31, 2015, whereas for the properties acquired on November 2, 2015, figures for RISONARE Atami are based on figures in the real estate appraisal reports as of July 31, 2015, figures for KAI Kinugawa are those as of August 31, 2015, and figures for ANA Crowne Plaza Hiroshima, ANA Crowne Plaza Fukuoka, ANA Crowne Plaza Kanazawa and ANA Crowne Plaza Toyama are those as of August 15, 2015.

Properties owned as of October 8, 2015

Properties acquired on November 2, 2015

Properties owned as of December 17, 2015

No. of properties owned 39 properties 6 properties 45 properties Total acquisition price ¥42.5 billion ¥42.8 billion ¥85.4 billion Total real estate appraisal value (Note) ¥49.6 billion ¥45.5 billion ¥96.9 billion Ratio of acquisition price to appraisal value (Note) 85.8% 94.1% 88.1% Appraisal NOI yield 7.6% 6.1% 6.9% Number of guest rooms 3,774 rooms 1,353 rooms 5,127 rooms

4

1. Improvement in unitholder value through further reinforcement of earnings stability by accelerating expansion of the asset size

2. Entry to “urban tourism” in collaboration with the Hoshino Resorts Group

3. Realization of external growth opportunities through various approaches in collaboration with the Hoshino Resorts Group

Overview of offering

Resolution date of the issuance for the offering

Investment unit price (left axis)

Market value (millions of yen)

REIT index (left axis)

Oct. 2013 Jul. 2013 Apr. 2014 Jan. 2014 Oct. 2014 Jul. 2014 Apr. 2015 Jan. 2015 Oct. 2015 Jul. 2015

4 ANA Crowne Plaza properties KAI RISONARE

Property name ANA Crowne Plaza Hiroshima ANA Crowne Plaza Kanazawa

KAI Kinugawa RISONARE Atami ANA Crowne Plaza Fukuoka ANA Crowne Plaza Toyama

Acquisition approach Collaborative investment structure Utilization of Sponsor Support Agreement

Utilization of revitalization know-how of the Hoshino

Resorts Group

Lessee’s attribute Hoshino Resorts Group Hoshino Resorts Group Hoshino Resorts Group

Rent type Fixed rent + floating rent (profit-linked)

Fixed rent + floating rent (profit-linked)

Fixed rent + floating rent (profit-linked)

Operator’s attribute IHG ANA Hotels Group Japan LLC. Hoshino Resorts Group Hoshino Resorts Group

Total acquisition price ¥36.0 billion ¥3.0 billion ¥3.7 billion Total real estate appraisal value ¥38.3 billion ¥3.2 billion ¥3.9 billion Ratio of acquisition price to appraisal value 93.8% 95.7% 95.7%

Lease period 20.0 years 20.0 years 20.0 years

Appraisal NOI yield 6.0% 6.1% 7.3%

Improvement in unitholder value through further reinforcement of earnings stability by accelerating expansion of asset size

5

0

20

40

60

80

100

0

20

40

60

80

100

As of listing FP ending Oct. 2014 FP ending Oct. 2015 As of December 17,

2015

Improvement in unitholder value through further reinforcement of earnings stability by accelerating expansion of asset size

(billions of yen) (No. of properties owned)

¥15 billion

¥33.3 billion

¥42.5 billion

During the 2 years and 5 months since listing, asset size expanded

approximately 5.6 times

6

¥85.4 billion

1st PO 24 properties ¥18.3 billion

2nd PO 8 properties

¥7.2 billion

3rd PO 6 properties

¥42.8 billion

6 properties

30 properties

39 properties

45 properties

Acquisition during the 5th FP

1 property ¥1.9 billion

Since listing in 2013, the promotion of diversification of the characteristics of operators, locations and cash flows has achieved steady expansion of the asset size to strengthen earnings stability

As of listing FP ending Oct. 2014 FP ending Oct. 2015 As of December 17, 2015

Properties leased by those other than the Hoshino Resorts Group (Total acquisition price) (left axis) Properties leased by the Hoshino Resorts Group (Total acquisition price) (left axis)

No. of properties owned (right axis)

Entry to “urban tourism” in collaboration with the Hoshino Resorts Group

7

What is “urban tourism”?

Entry to “urban tourism”

Tourism mainly seeking to enjoy historical townscapes and urban culture (concerts, museums, modern architecture, etc.), night views, industrial/culture heritage, urban lifestyle (dining, shopping) and such.

Resort tourism Hot spring tourism

4 ANA Crowne Plaza properties

Urban tourism

Succeeded in addressing needs for a new type of tourism in collaboration with the sponsor

Considering an entry to “Urban tourism”

Resort tourism Hot spring tourism

Urban tourism

Hoshino Resorts Group

Realization of external growth opportunities through various approaches in collaboration with the Hoshino Resorts Group

8

(Note) “Management contract” is a contract in which Horizon Hotels Ltd. entrusts operations of subject hotels to IHG ANA Hotels Group Japan LLC. Currently, individual contracts for each of the four properties of ANA Crowne Plaza are concluded between Horizon Hotels Ltd. and IHG ANA Hotels Group Japan LLC.

IHG ANA Hotels Group Japan LLC.

(Operating company)

Hoshino Resort Co., Ltd.

Management contract (Note)

(1) Acquisition of shares of Horizon Hotels Ltd.

(1) Making it its 100% owned

subsidiary

(2) Sales of real estate

(2) Leases of real estate

Horizon Hotels Ltd. (Managing company)

Hoshino Resorts REIT, Inc.

Since no change in the management company or operating company is required, collaborative investment is considered to be an effective approach for the speedy acquisition of competitive properties.

Going forward HRR intends to proactively continue utilizing this as an approach in collaboration with the Hoshino Resort Group.

Seller Properties owned as of December 17, 2015

Utilization of Sponsor Support

Agreement

Utilization of revitalization know-how of the Hoshino

Resorts Group

Collaborative investment structure

Acquisition through the

Asset Management Company’s

unique route

Diversification of acquisition approaches Collaborative investment structure

HOSHINOYA Karuizawa

RISONARE Yatsugatake

HOSHINOYA Kyoto

KAI Kinugawa

KAI Kawaji RISONARE Atami

4 ANA Crowne Plaza

properties

22 Solare properties

3 Greens properties

5 Candeo properties

Collaborative investment

External growth (newly acquired in the 5th fiscal period)

Area characteristics and the surroundings Kagoshima city is located roughly in the center of Kagoshima prefecture, the southernmost prefecture in Kyushu, and has developed as a core city in southern Kyushu. To the east of the property is a large-scale coastal industrial zone, making the property ideally located to secure lodging demand from firms which have plants and such in the area. Overview and features The property is a relatively new hotel built in 2009. With a multi-story parking lot and parking for large vehicles, it is a facility that can accommodate the needs of guests.

9

Chisun Inn Kagoshima Taniyama (asset acquired during the 5th fiscal period) Address Kagoshima-shi, Kagoshima Acquisition date August 3, 2015 Acquisition price ¥1,995 million Real estate appraisal value ¥2,140 million

Appraisal NOI yield 6.5％ Number of guest rooms 217

External growth was achieved by utilizing acquisition capacity generated from the 2nd public offering (April 2015). Improvement in profitability is pursued by implementing, concurrently with the acquisition,

a change to a more suitable operator for the acquired asset and its rebranding.

Acquisition price N

ichinan Kaigan

Chisun Inn Kagoshima

Taniyama

Osaka Satsuma Peninsula

Kagoshima Airport

Kagoshima Bay Sakura- jima

Kagoshima-chuo Station

Shibushi Bay

Status of portfolio after new acquisition of properties

Diversification by operator (based on fixed rent)

Diversification by region (based on fixed rent)

10

HOSHINOYA

RISONARE

KAI

Others

O-28

O-27

O-18

O-10 O-11

O-4 O-26

H-2

O-9

O-22

O-20

O-16 O-29

K-2 O-21

O-24

O-17

O-5 O-12

O-7 K-5

K-6

O-13

O-14

O-6

O-25

O-2 H-1

K-1

O-1 O-3

O-15 O-23

R-1

O-8

O-34 O-33

O-31

O-32

O-30

K-7

R-2 K-4

K-3 (As of April 30, 2015)


Solare

(As of December 17, 2015)

3.7%

40.8% Solare

5.9%

29.8%

(As of April 30, 2015)

Hokkaido- Tohoku region

3.5%

Kanto region

16.9%

Chubu region

55.9%

Kinki region 8.6%

Chugoku- Shikoku region

6.0%

Kyushu -Okinawa region

7.4%

(As of December 17, 2015)

Hokkaido- Tohoku region 4.1%

Kanto region 13.5%

Chubu region

36.2%

Kinki region 4.1%

Chugoku– Shikoku region

16.5%

Kyushu -Okinawa region

10.8%

Hokuriku region 14.8%

70.6%


IHG ANA Hotels Group Japan LLC.

19.8%

Greens Candeo

19.8%

5.9% 3.7%

64.4% 35.6% 64.4% 35.6%

Inside pie: Operator Outside pie: Lessee

Hokuriku region 1.6%

O-19

Internal growth (management results highlights)

From October 2013 to

September 2014 Sales (Note 1)

From October 2014 to

September 2015 Sales (Note 1)

Change (comparison to previous year)

HOSHINOYA Karuizawa ¥2,804 million ¥3,065 million ¥261 million

HOSHINOYA Kyoto ¥592 million (Note 2)

¥1,026 million ー

RISONARE Yatsugatake ¥3,902 million ¥4,275 million ¥373 million

KAI Matsumoto ¥456 million ¥520 million ¥64 million

KAI Izumo ¥589 million ¥600 million ¥10 million

KAI Ito ¥608 million ¥713 million ¥105 million

KAI Hakone ¥687 million ¥677 million －¥10 million

KAI Aso ¥334 million ¥351 million ¥17 million

KAI Kawaji ¥476 million (Note 3)

¥665 million ー

21 Solare properties ¥3,236 million ¥3,366 million ¥131 million

As for the overall operational results (Note 1) of properties from May 2015 to October 2015, sales increased approximately 651 million yen year-on-year. Especially, the increase in sales of HOSHINOYA Karuizawa (increase of approx. 160 million yen), RISONARE Yatsugatake (increase of approx. 170 million yen) are notable. Improved recognition rate and showcasing their attractiveness have contributed to the sales increase.

26.8 29.5 35.7 50.8

62.1 72.3

2010 2011 2012 2013 2014 2015

Changes in recognition rate

(Source) Survey by the Hoshino Resorts Group

11

(Note 1) Year-on-year operational results are calculated for HOSHINOYA Karuizawa, HOSHINOYA Kyoto, RISONARE Yatsugatake, KAI Matsumoto, KAI Izumo, KAI Ito, KAI Hakone, KAI Aso, KAI Kawaji and 21 Solare properties.

(Note 2) 21 Solare properties refer to the 21 roadside hotels acquired on May 2, 2014.

(Note 1) Sales are rounded off to the nearest million. (Note 2) Due to the damage caused by Typhoon No. 18 on September 16, 2013,

operation of HOSHINOYA Kyoto was suspended to conduct repair work as well as reconstruction work of some facilities. Thus operational results from October 2013 to January 2014 do not exist.

(Note 3) Operational results of KAI Kawaji from January 2014 to May 2014 do not exist as operations were suspended to conduct renovation work.

42.2 43.4 45.1 45.4 51.6

57.3

2010 2011 2012 2013 2014 2015

Changes in intent to use

37.7% 35.5%

22.8% 20.6% 18.6% 25.3%

5%

15%

25%

35%

45%

55%

第1期第2期第3期第4期第5期第6期

1.75% 1.38% 0.86%

0.00%

0.50%

1.00%

1.50%

2.00%

平成25年 7月借入



Borrowings in July 2013

Borrowings in May 2014

Borrowings in November 2015

36.5%

29.0%

25.0%

3.2% 3.2%

0.8% 0.8% 0.8%

0.8% The Bank of Tokyo-Mitsubishi UFJ, Ltd.Sumitomo Mitsui Banking CorporationDevelopment Bank of Japan Inc.The Ashikaga Bank, Ltd.The Shizuoka Bank, Ltd.The Bank of Fukuoka, Ltd.The Yamaguchi Bank, Ltd.The Bank of Kyoto, Ltd.The Hokuriku Bank, Ltd.

Finances

(Average interest rate)

12

Realizing significant reduction of interest costs

2,019 834

2,389 369 1,177 814

1,143

43

3,443

3,443 1,543 3,543

4,243

0

2,000

4,000

6,000

8,000 (Unit: millions of yen)

Diversification of final repayment dates

As of December 17, 2015

Borrowed November 2, 2015 Existing borrowings

Reinforcement of bank formation

Generating acquisition capacity by controlling LTV (LTV)

Will aim to build a more stable financial base by achieving further reductions in interest costs and the reinforcement of bank formation.

FP ending Apr. 2016 FP ending Oct. 2016







1st Fiscal Period

2nd 3rd 4th 5th 6th

II. Operational Results for Each Property

Operational results

2014 2015 Accumulated

total (Note 3)

(Reference) Nov. 2013 – Oct. 2014

Accumulated total Change

Nov. Dec. Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Guest room occupancy rate 83.5% 69.4% 67.6% 74.8% 65.0% 75.8% 89.6% 89.1% 97.4% 99.1% 92.7% 84.1% 82.9% 80.7% 2.2 pt.

ADR (yen) 64,553 64,328 61,273 56,060 52,970 56,659 69,166 59,899 72,431 96,157 80,110 76,015 69,140 63,023 6,117

RevPAR (yen) 53,915 44,628 41,410 41,906 34,406 42,948 61,979 53,390 70,520 95,271 74,249 63,914 57,320 50,881 6,439 Sales (millions of yen) 254 204 147 170 167 200 304 248 321 441 326 295 3,075 2,822 252

0

20,000

40,000

60,000

80,000

100,000

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

5月 6月 7月 8月 9月 10月 ADR（円）平成26年5月～平成26年10月 ADR（円）平成27年5月～平成27年10月客室稼働率平成26年5月～平成26年10月客室稼働率平成27年5月～平成27年10月

Operational results for each property (1)

HOSHINOYA Karuizawa

(Note 1) The monthly major indices are based on figures provided by the lessee, Hoshino Resort Co., Ltd. (Note 2) Figures for guest room occupancy rates are rounded to one decimal place, and figures for ADR, RevPAR and Sales are rounded to the nearest specified unit. (Note 3) The Accumulated total for Guest room occupancy rate, ADR and RevPAR indicate the average of figures from November 2014 to October 2015, whereas the accumulated total for

Sales indicates the sum total of figures from November 2014 to October 2015. (The same shall apply hereinafter.)

14

(yen)

Address: Karuizawa-machi, Kitasaku-gun, Nagano

Number of guest rooms: 77 rooms ADR (yen) May 2014 – Oct. 2014 Guest room occupancy rate May 2014 – Oct. 2014

ADR (yen) May 2015 – Oct. 2015 Guest room occupancy rate May 2015 – Oct. 2015


HOSHINOYA Kyoto

(Note 1) The monthly major indices are based on figures provided by the lessee, K.K. Arashiyama Onsen Rankyokan. (Note 2) Figures for guest room occupancy rates are rounded to one decimal place, and figures for ADR, RevPAR and Sales are rounded to the nearest specified unit. (Note 3) Due to the damage caused by Typhoon No.18 on September 16, 2013, operation was suspended to conduct repair work. Thus operational results from November 2013 to January

2014 do not exist.

15

Operational results

2014 2015

Accumulated total


Accumulated total (Note 3)

Change Nov. Dec. Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct.

Guest room occupancy rate 94.8% 86.4% 77.3% 91.2% 85.4% 90.0% 93.9% 87.6% 85.7% 84.5% 87.6% 96.9% 88.5% 81.5% 7.0 pt.

ADR (yen) 94,553 83,049 60,784 59,099 78,054 92,796 75,905 70,571 76,855 86,180 84,847 90,787 80,308 74,683 5,625

RevPAR (yen) 89,637 71,754 47,006 53,878 66,673 83,516 71,302 61,820 65,830 72,836 74,326 87,976 71,088 60,835 10,253 Sales (millions of yen) 108 88 58 58 87 101 93 80 78 93 92 113 1,050 681 369

(yen)

Address: Kyoto-shi, Kyoto Number of guest rooms: 25 rooms

0

20,000

40,000

60,000

80,000

100,000

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

5月 6月 7月 8月 9月 10月 ADR（円）平成26年5月～平成26年10月 ADR（円）平成27年5月～平成27年10月客室稼働率平成26年5月～平成26年10月客室稼働率平成27年5月～平成27年10月 ADR (yen) May 2014 – Oct. 2014 Guest room occupancy rate May 2014 – Oct. 2014


0

12,000

24,000

36,000

48,000

60,000

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

5月 6月 7月 8月 9月 10月 ADR（円）平成26年5月～平成26年10月 ADR（円）平成27年5月～平成27年10月客室稼働率平成26年5月～平成26年10月客室稼働率平成27年5月～平成27年10月

Operational results


total



Nov. Dec. Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Guest room occupancy rate 83.2% 67.7% 72.9% 69.9% 70.6% 60.6% 74.5% 67.1% 91.1% 97.6% 89.5% 86.4% 77.8% 78.6% -0.8 pt.

ADR (yen) 22,051 28,982 30,130 20,869 23,183 22,518 27,093 22,501 35,098 52,065 32,666 27,817 29,752 26,521 3,231

RevPAR (yen) 18,342 19,617 21,958 14,577 16,379 13,655 20,182 15,092 31,991 50,835 29,228 24,024 23,151 20,836 2,315 Sales (millions of yen) 388 291 181 190 290 235 422 304 480 659 439 415 4,294 3,941 353



(Note 1)The monthly major indices are based on figures provided by the lessee, Horizon Hotels Ltd. (Note 2) Figures for guest room occupancy rates are rounded to one decimal place, and figures for ADR, RevPAR and Sales are rounded to the nearest specified unit.

16

(yen)

Address: Hokuto-shi, Yamanashi Number of guest rooms: 172 rooms

May Jun. Jul. Aug. Sept. Oct.




6 KAI properties

Number of guest rooms: 181 rooms

17

Operational results


total



Nov. Dec. Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Guest room occupancy rate 75.7% 69.7% 65.2% 76.0% 78.7% 66.3% 74.6% 65.7% 69.2% 86.0% 75.2% 73.4% 73.0% 73.9% -0.9pt.

ADR (yen) 38,331 37,692 35,725 27,913 29,579 34,603 38,325 29,220 34,924 49,778 38,460 38,896 36,459 35,079 1,380

RevPAR (yen) 29,027 26,259 23,292 21,201 23,270 22,955 28,599 19,194 24,176 42,805 28,915 28,546 26,630 25,926 703 Sales (millions of yen) 321 292 252 247 298 257 315 229 275 430 307 312 3,534 3,148 386

(Note 1) 6 KAI properties refer to KAI Matsumoto, KAI Izumo, KAI Ito, KAI Hakone, KAI Aso and KAI Kawaji. (Note 2) The monthly major indices are based on figures provided by the lessee, Hoshino Resort Management Co., Ltd. (Note 3) Figures for guest room occupancy rates are rounded to one decimal place, and figures for ADR, RevPAR and Sales are rounded to the nearest specified unit.

(yen)

0

12,000

24,000

36,000

48,000

60,000

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%




21 Solare properties

18

Operational results

2014 2015

Accumulated total


Accumulated total

Change Nov. Dec. Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct.

Guest room occupancy rate 82.7% 75.7% 71.3% 76.9% 79.6% 76.2% 78.6% 76.0% 79.9% 85.1% 81.2% 84.0% 79.0% 79.6% -0.6pt.

ADR (yen) 5,317 5,219 5,218 5,058 5,417 5,355 5,895 5,299 5,650 6,850 5,810 5,510 5,569 5,300 269

RevPAR (yen) 4,395 3,950 3,721 3,887 4,315 4,082 4,635 4,028 4,514 5,831 4,717 4,631 4,397 4,217 180 Sales (millions of yen) 278 258 243 230 283 258 301 256 296 383 298 302 3,385 3,252 133

(yen)

(Note 1) The monthly major indices are based on figures provided by the lessee, SHR Roadside Inn Co., Ltd. (Note 2) Figures for guest room occupancy rates are rounded to one decimal place, and figures for ADR, RevPAR and Sales are rounded to the nearest specified unit.

Number of guest rooms: 1,988 rooms

0

2,000

4,000

6,000

8,000

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%



¥2,472 million ¥2,626 million



5,114 yen 4,964 yen 5,076 yen 5,204 yen 5,319 yen 5,583 yen

0

1,000

2,000

3,000

4,000

5,000

6,000

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

2010 2011 2012 2013 2014 2015

Sales (left axis) ADR (right axis)

(millions of yen) (yen) 62.1% 68.3%

74.9% 77.8% 79.7% 79.0%

Overview of 21 Solare properties

Guest room occupancy rate

(Note 1) Figures are based on real estate appraisal reports which evaluated values as of October 31, 2015. (Note 2) Guest room occupancy rates, ADR and sales of 2015 are calculated based on actual figures from January to October of 2015 and on forecasts from November to December of 2015.

Acquisition Price ¥14,000 million

Appraisal Value (Note 1) ¥16,289 million

Appraisal NOI yield (Note 1) 7.5% Number of guest rooms 1,988 rooms Guest room occupancy rate (2015) 79.0%

ADR (2015) 5,583 yen RevPAR (2015) 4,408 yen

(Note 2)

Portfolio overview of 21 Solare properties

19

Operational results of 21 Solare properties

Forecasts for 6th fiscal period ending April 2016 and 7th fiscal period ending October 2016

FP ending April 2016 Assumption FP ending October 2016 Assumption

Operating revenue (millions of yen)

3,528 [Operating revenue] Fixed rent ¥2,809 million Floating rent 707 million [Operating expenses] Fixed assets tax, city planning tax, etc. ¥217 million Depreciation ¥734 million Maintenance/repair expenses ¥156 million Asset management fees ¥245 million [Non-operating expenses] Public-offering-related expenses ¥70 million Debt-financing-related expenses ¥241 million [Expected LTV at the end of FP] 25.3％

Operating revenue (millions of yen)

3,664 [Operating revenue] Fixed rent ¥2,823 million Floating rent ¥829 million [Operating expenses] Fixed assets tax, city planning tax, etc. ¥285 million Depreciation ¥752 million Maintenance/repair expenses ¥118 million Asset management fees ¥323 million [Non-operating expenses] Debt-financing-related expenses ¥197 million [Expected LTV at the end of FP] 24.3％

Operating income (millions of yen) 1,876 Operating income

(millions of yen) 1,875

Ordinary income (millions of yen) 1,565 Ordinary income


Net income (millions of yen) 1,564 Net income


Distribution per unit (yen) 20,056 Distribution per

unit (yen) 21,507

(Amounts are rounded down and ratios are rounded off.)

20

Expected rent for the 6th fiscal period ending April 2016

Forecasts for 6th fiscal period ending April 2016 and 7th fiscal period ending October 2016

Expected rent for the 7th fiscal period ending October 2016

21

(millions of yen) (millions of yen)

Rent type Name of facility, etc. Fixed

rent

Floating rent

(announced on

December 15)

Other rent Total

Fixed rent + floating

rent (sales-linked)

(Note 2)

HOSHINOYA Karuizawa HOSHINOYA Kyoto 393 117 － 511

RISONARE Yatsugatake 262 58 － 320 KAI Matsumoto

KAI Izumo KAI Ito

KAI Hakone KAI Aso

KAI Kawaji

233 48 － 282

22 Solare properties 558 (Note 4) 114 10 683

Fixed rent 5 Candeo properties 3 Greens properties 269 －－ 269


rent (profit-linked)

(Note 2)

RISONARE Atami KAI Kinugawa

257 (Note 5) －－ 257

ANA Crowne Plaza Hiroshima ANA Crowne Plaza Fukuoka

ANA Crowne Plaza Kanazawa ANA Crowne Plaza Toyama

835 368 － 1,204

Total 2,809 707 10 3,528

(Note 1) Floating rent is calculated based on actual figures of past sales and profits of each facility, reflecting seasonal factors and other fluctuating factors, using calculation methods prescribed in the lease agreement of each facility. For 5 Candeo properties and 3 Greens properties, as well as Chisun Inn Kagoshima Taniyama, RISONARE Atami and KAI Kinugawa, which will have premium fixed rent during the fiscal period ending April 2016, floating rent will not apply.

(Note 2) Sales-linked floating rent is calculated deeming sales of the 12 months from October 2014 to September 2015 as the base sales. Profit-linked floating rent is calculated deeming profits of the 12 months from June 2014 to May 2015 as the base profits.

(Note 3) Among the properties owned by HRR, the 22 hotels operated by SHR Roadside Inn Co., Ltd. are referred to as 22 Solare properties, the 5 properties operated by Candeo Hospitality Management, Inc. as 5 Candeo properties, and the 3 properties operated by Greens Co., Ltd. as 3 Greens properties.

(Note 4) Out of 22 Solare properties, since Chisun Inn Kagoshima Taniyama has premium fixed rent during the fiscal period ending April 2016, the figure is calculated based on the premium fixed rent for Chisun Inn Kagoshima Taniyama.

(Note 5) Since RISONARE Atami and KAI Kinugawa have premium fixed rents during the fiscal period ending April 2016, the premium fixed rents are indicated.

Rent type Name of facility, etc. Fixed

rent

Floating rent

(announced on

December 15)

(A)

Other rent Total

(Reference) Floating rent (as of

October 8) (B)

Change (A)-(B)


rent (sales-linked)

(Note 2)

HOSHINOYA Karuizawa HOSHINOYA Kyoto 401 79 － 481 76 3

RISONARE Yatsugatake 262 59 － 321 56 2

KAI Matsumoto KAI Izumo

KAI Ito KAI Hakone

KAI Aso KAI Kawaji

233 44 － 278 42 2

22 Solare properties 558 (Note 3) 122 10 692 115 6

Fixed rent 5 Candeo properties 3 Greens properties 269 －－ 269 －－


rent (profit-linked)

(Note 2)

RISONARE Atami KAI Kinugawa

258 (Note 4) －－ 258 －－

ANA Crowne Plaza Hiroshima ANA Crowne Plaza Fukuoka

ANA Crowne Plaza Kanazawa ANA Crowne Plaza Toyama

840 523 － 1,363 501 21

Total 2,823 829 10 3,664 792 37 (Note 1) Floating rent is calculated based on actual figures of past sales and profits of each facility, reflecting

seasonal factors and other fluctuating factors, using calculation methods prescribed in the lease agreement of each facility. For 5 Candeo properties and 3 Greens properties, as well as Chisun Inn Kagoshima Taniyama, RISONARE Atami and KAI Kinugawa, which will have premium fixed rent during the fiscal period ending October 2016, floating rent will not apply.

(Note 2) Sales-linked floating rent is calculated deeming sales of the 12 months from April 2015 to March 2016 as the base sales. Profit-linked floating rent is calculated deeming profits of the 12 months from December 2014 to November 2015 as the base profits.

(Note 3) Out of 22 Solare properties, since Chisun Inn Kagoshima Taniyama has premium fixed rent during the fiscal period ending October 2016, the figure is calculated based on the premium fixed rent for Chisun Inn Kagoshima Taniyama.

(Note 4) Since RISONARE Atami and KAI Kinugawa have premium fixed rents during the fiscal period ending October 2016, the premium fixed rents are indicated.

Rent type

Base profits x 95% Base profits

Base sales

Base sales x floating rate

Floating rent (sales-linked) Floating rent (profit-linked)

Rent type Fixed rent Fixed rent + floating rent Fixed rent + floating rent Index for floating rent － Sales Profits Number of properties 8 properties 31 properties 6 properties

Acquisition price Price ¥7.2 billion ¥35.3 billion ¥42.8 billion Ratio 8.5% 41.4% 50.2%

Name of facility 5 Candeo properties, 3 Greens properties

HOSHINOYA Karuizawa, HOSHINOYA Kyoto, RISONARE Yatsugatake, KAI Matsumoto,

KAI Izumo, KAI Ito, KAI Hakone, KAI Aso, KAI Kawaji, 22 Solare

properties

RISONARE Atami, KAI Kinugawa, 4 ANA Crowne Plaza properties

(Note) Method for calculating rents for Chisun Inn Kagoshima Taniyama, RISONARE Atami and KAI Kinugawa differs from the above illustrated images.

22

Floating

Fixed

Floating

Fixed

7th FP base sales 9th FP base sales

Rent type

Period used for base sales for monthly floating rent (Note)

(1) For May to October every year, deem sales for 12 months to be from April of the previous year to March of the relevant year as the base sales; (2) For November to the next April every year, deem sales for 12 months to be from October of the previous year to September of the relevant year

as the base sales.

2014 2015 2016 2017 Apr. M

ay Jun. Jul. Aug. Sep. O

ct. N

ov. D

ec. Jan. Feb. M

ar. Apr. M


ct. N

ov. D

ec. Jan. Feb. M

ar. Apr. M


ct. N

ov. D

ec. Jan. Feb. M

ar. Apr. M


ct.

3rd FP 4th FP 5th FP 6th FP 7th FP 8th FP 9th FP

6th FP base sales 8th FP base sales

Sales-linked type

Profit-linked type Period used for base sales for monthly floating rent (Note)

(1) For May to October every year, deem sales for 12 months to be from December two years prior to November of the previous year as the base profits; (2) For November to the next April every year, deem sales for 12 months to be from June of the previous year to May of the relevant year as the base profits.

2014 2015 2016 2017 Apr. M


ct. N

ov. D

ec. Jan. Feb. M

ar. Apr. M


ct. N

ov. D

ec. Jan. Feb. M

ar. Apr. M


ct. N

ov. D

ec. Jan. Feb. M

ar. Apr. M


ct.

3rd FP 4th FP 5th FP 6th FP 7th FP 8th FP 9th FP

6th FP base sales 8th FP base sales 10th FP base sales

(Note) The timing of floating rents arising and the specific calculation methods vary depending on the acquisition timing and such of each property. In the lease agreements with each lessee, the starting dates of floating rent are stated as November 1, 2015 (6th FP) for KAI Kawaji, November 1, 2016 (8th FP) for Chisun Inn Kagoshima Taniyama, and November 1, 2018 (12th FP) for RISONARE Atami and KAI Kinugawa. Therefore, floating rent will not arise prior to those said dates regardless of the amounts of sales or profits of the hotels, ryokans and ancillary facilities.

5th FP base sales 7th FP base sales 9th FP base sales

23

III. Future Management Policy

Management policy for the time being

25

Maintenance of growth and stability of distribution

Continuous improvement in unitholder value

Utilization of Sponsor Support Agreement

Utilization of revitalization know-how of the Hoshino Resorts Group

Utilization of the Asset Management Company’s unique information on properties operated by those other than the Hoshino Resorts Group

External growth strategy

Internal growth by operators and the Asset Management Company

Introduction of floating rent linked to sales or profits

Maintenance/Enhancement of asset value and competitiveness of the portfolio through establishment/execution of capital expenditures and repair plans from a medium- to long-term perspective

Internal growth strategy

1

2 1

2 3

3

13,081

16,649 17,075 18,289

20,056 21,507

35.5%

22.8% 20.6% 18.6% 25.3% 24.3%

0

5,000

10,000

15,000

20,000

25,000 Distribution per unit (yen) LTV（％）

Actual result FP ended April 2014 (2nd fiscal period)

Actual result FP ended October 2014

(3rd fiscal period)

Actual result FP ended April 2015 (4th fiscal period)

Actual result FP ending October 2015

(5th fiscal period)

Forecast FP ending April 2016

(6th fiscal period)

Forecast FP ending October 2016

(7th fiscal period)

Distribution up by

3,568 yen

Distribution up by

1,214 yen

Realization of stable distribution

Aim for stable improvement in distribution through realization of external growth utilizing public offering and acquisition capacity and internal growth by executing capital expenditures and repair plans from a medium- to long-

term perspective.

26

2nd PO

Distribution up by

1,767 yen (forecast)

3rd PO

1st PO

Acquired in the 5th FP

Market trend and strategy for differentiation

With hopes for further growth of the tourism industry in the future, such as from the accumulated total number of foreign visitors to Japan in 2015 exceeding 16 million as of the end of October, breaking the 2014 figure which was a record high at that time, movements of leading companies inside and outside the country for launching new hotels is active. The hotel transaction market has been very active and competition for acquisitions is intensifying mainly in the cities. The decline in cap rate is expected to deepen further.

Trends in the hotel property investment market

27

Even in the rather over-heated hotel transaction market, HRR will basically target properties that are competitive but with fewer acquisition competitors on a negotiation basis.

HRR’s strategy for differentiation

Criteria for selecting investment properties

Superior know-how and experience Whether it has a business model, brand power, etc. that can differentiate itself from competitors, and whether it is operated by an operator with extensive expertise

Superior equipment and facilities Whether the facility itself possesses superiority as to its location, rarity of the building, etc.

Target for the time being: Achieving asset size of 100 billion yen

External growth strategy

While focusing on stable growth and the speed of external growth, HRR will aim to make continuous property acquisitions from the Hoshino Resorts Group and also to acquire properties operated by those other than the Hoshino Resorts Group from which long-

term and stable cash flow can be expected.

External growth

III Utilization of the Asset Management Company’s unique information on properties operated by those other than the Hoshino Resorts Group HRR is collecting information on property acquisitions by establishing networks not only with the Hoshino Resorts Group but also

with the owners and operators of hotels, ryokans and ancillary facilities across the nation. HRR will strive to acquire competitive properties by utilizing the Asset Management Company’s unique information gathering ability.

I Utilization of Sponsor Support Agreement HRR will utilize the comprehensive sponsor support, such as information on properties owned by the Hoshino Resorts

Group, the provision of human/material resources, knowledge, experience and know-how in the tourism industry and the resort sector, etc.

II Utilization of revitalization know-how of the Hoshino Resorts Group HRR will be provided with information on properties that have regained attractiveness through revitalization know-how of

the Hoshino Resorts Group.

28

[Measures for realization of external growth]

Hotels and ryokans operated by the Hoshino Resorts Group

KAI Nikko

HOSHINOYA Karuizawa

Hotel Bleston Court

KAI Aso

HOSHINOYA Kyoto

KAI Enshu

Aomoriya

KAI Tsugaru

KAI Hakone

KAI Atami RISONARE Atami

UTOCO Auberge & Spa

KAI Izumo

RISONARE Tomamu

Tomamu Tomamu SKI Resort

Oirase Keiryu Hotel

Alts Bandai Ski Resort

Ura Bandai Nekoma Ski Resort Ura Bandai Hotel

Bandaisan Onsen Hotel

KAI Ito

HOSHINOYA Fuji

HOSHINOYA Tokyo (scheduled to open in 2016)

KAI Kaga KAI Kawaji

KAI Alps


L'Hotel de Hiei

KAI Kinugawa

HOSHINOYA Bali (scheduled to open in 2016)

29

(Excluding the above properties)

HRR’s portfolio

Hoshino Resorts Group’s portfolio

Vietnam Thailand

Myanmar

Philippines

Indonesia

Malaysia

China

(Source) Prepared by the Asset Management Company based on materials provided by Hoshino Resort Co., Ltd. (Note 1) Based on information as of December 17, 2015. (Note 2) The map shows facilities operated by the Hoshino Resorts Group and includes properties that are not acquired by HRR. There are

no specific plans or guarantee that HRR will acquire these properties in the future, as of December 17, 2015. (Note 3) The scheduled openings are subject to change.

KAI Matsumoto

RISONARE Kohamajima

RISONARE Iriomotejima

Iriomote Island

Ishigaki Island

HOSHINOYA Taketomijima Taketomi

Island Kuro Island

Aragusuku Island

Okinawa Prefecture Yaeyama Islands

Tahiti Kiaora

Rangiroa

HRR will aim to realize both stable distribution and growth of distribution through the expansion of sales or profits that are indices for floating rent as well as maintenance/improvement of the

competitiveness of facilities.

Internal growth strategy

Internal growth

I Internal growth by operators and the Asset Management Company HRR intends to maintain/enhance the competitiveness of facilities by selecting property management operators who have a

deep understanding of HRR’s property features and possess business models and know-how that are deemed to be optimum based on characteristics of the relevant properties.

The Asset Management Company will aim to reinforce the profitability of the portfolio by conducting operation, management and renewals for maintaining/enhancing the competitiveness of facilities.

II Introduction of floating rent linked to sales or profits HRR will discuss introduction of floating rent linked to sales or profits in accordance with calculation method for floating

rents set with consideration given to the facility’s brand and operating features, in addition to the fixed rent system, in the lease agreement. HRR believes this is a system that will enable HRR to enjoy the enhanced business results of hotels, ryokans and ancillary facilities operated with the know-how of operators.

III Maintenance/Enhancement of asset value and competitiveness of the portfolio through establishment/execution of capital expenditures and repair plans from a medium- to long-term perspective HRR will aim for stable earnings from operations by reducing the future excessive risks of major repairs, and of decreased

sales resulting from deterioration of facility attractiveness through careful and sufficient capital expenditures, while at the same time making efforts to maintain/enhance the asset value and competitiveness of the portfolio from a medium-term perspective.

30

[Measures for realization of internal growth]

Securement of stable earnings over the medium term through well-planned capital expenditures

6th FP 7th FP 8th FP

The 1st Attractive Investment

Project “HOSHINOYA Kyoto”

The 2nd Attractive Investment

Project “RESONARE

Atami”

The 3rd Attractive Investment

Project “RESONARE

Yatsugatake”

HRR aims to further improve ADR by implementing appropriate value enhancement works based on the in-depth market research by the Hoshino Resorts Group.

Period: 6th FP to 7th FP (plan) Details: Renovation and new construction of Books & Café/renovation of exterior walls

Period: December 14, 2015 to March 16, 2016 (closed) Details: Renovation of the mid-air tea room/renovation of the wine cellar in the restaurant

31

Period: 8th FP (plan) Details: Renovation of guest rooms/renewal of restaurants

IV. Appendix

RISONARE Atami Address Atami-shi, Shizuoka Acquisition Price ¥3,750 million Real estate appraisal value ¥3,920 million Appraisal NOI yield 7.3％

Name of tenant Horizon Hotels Ltd.

Number of guest rooms 76

HOSHINOYA

KAI

(Note) Figures for the 5 properties except for RISONARE Atami are based on real estate appraisal reports which evaluated values as of October 31, 2015, and figures for RISONARE Atami are based on that as of July 31, 2015. Appraisal NOI (Net Operating Income) is defined as operating revenues less operating expenses contained in the relevant real estate appraisal report, which is before depreciation. This is different from NCF (Net Cash Flow) calculated by subtracting gain on investment of leasehold deposit, etc., and capital expenditures from NOI. Appraisal NOI yield is the figure calculated by the Asset Management Company by dividing appraisal NOI by the acquisition price.

Portfolio overview (assets under management) (1)

33

RISONARE

HOSHINOYA Karuizawa

Address Karuizawa-machi, Kitasaku-gun, Nagano

Acquisition Price ¥7,600 million Real estate appraisal value ¥10,400 million Appraisal NOI yield 7.6％ Name of tenant Hoshino Resort Co., Ltd. Number of guest rooms 77

HOSHINOYA Kyoto Address Kyoto-shi, Kyoto Acquisition Price ¥2,785 million Real estate appraisal value ¥3,480 million Appraisal NOI yield 7.7％

Name of tenant K.K. Arashiyama Onsen Rankyokan


RISONARE Yatsugatake Address Hokuto-shi, Yamanashi Acquisition Price ¥4,500 million Real estate appraisal value ¥5,830 million Appraisal NOI yield 9.9％

Name of tenant Horizon Hotels Ltd.


KAI Matsumoto Address Matsumoto-shi,

Nagano Acquisition Price ¥600 million Real estate appraisal value ¥728 million Appraisal NOI yield 10.1％

Name of tenant Hoshino Resort Management Co., Ltd.


KAI Izumo Address Matsue-shi, Shimane Acquisition Price ¥680 million Real estate appraisal value ¥803 million Appraisal NOI yield 8.9％




34

KAI

(Note) Figures for the 4 properties except for KAI Kinugawa are based on real estate appraisal reports which evaluated values as of October 31, 2015, and figures for KAI Kinugawa are based on that as of August 31, 2015. Appraisal NOI (Net Operating Income) is defined as operating revenues less operating expenses contained in the relevant real estate appraisal report, which is before depreciation. This is different from NCF (Net Cash Flow) calculated by subtracting gain on investment of leasehold deposit, etc., and capital expenditures from NOI. Appraisal NOI yield is the figure calculated by the Asset Management Company by dividing appraisal NOI by the acquisition price.

KAI Kinugawa Address Nikko-shi, Tochigi Acquisition Price ¥3,080 million Real estate appraisal value ¥3,220 million Appraisal NOI yield 6.1％ Name of tenant Hoshino Resort Co., Ltd. Number of guest rooms 48

KAI Ito Address Ito-shi, Shizuoka Acquisition Price ¥670 million Real estate appraisal value ¥862 million Appraisal NOI yield 10.3％



KAI Hakone

Address Hakone-machi,

Ashigarashimo-gun, Kanagawa

Acquisition Price ¥950 million Real estate appraisal value ¥1,190 million Appraisal NOI yield 9.1％

Name of tenant Hoshino Resort Management Co., Ltd


KAI Aso Address Kokonoe-machi, Kusu-gun,

Oita Acquisition Price ¥575 million Real estate appraisal value ¥674 million Appraisal NOI yield 8.0％



KAI Kawaji Address Nikko-shi, Tochigi Acquisition Price ¥1,000 million Real estate appraisal value ¥1,110 million Appraisal NOI yield 8.5％




35

Others

Chisun Inn Shiojiri Kita IC Address Shiojiri-shi, Nagano Acquisition Price ¥672 million Real estate appraisal value ¥786 million Appraisal NOI yield 7.4％

Name of tenant SHR Roadside Inn Co., Ltd.


Chisun Inn Sano Fujioka IC Address Sano-shi, Tochigi Acquisition Price ¥742 million Real estate appraisal value ¥876 million Appraisal NOI yield 7.4％



Chisun Inn Suwa IC Address Suwa-shi, Nagano Acquisition Price ¥658 million Real estate appraisal value ¥775 million Appraisal NOI yield 7.5％



Chisun Inn Toyokawa IC Address Toyokawa-shi, Aichi Acquisition Price ¥602 million Real estate appraisal value ¥708 million Appraisal NOI yield 7.4％



Chisun Inn Tosu Address Tosu-shi, Saga Acquisition Price ¥504 million Real estate appraisal value ¥588 million Appraisal NOI yield 7.6％



Chisun Inn Chiba Hamano R16 Address Chiba-shi, Chiba Acquisition Price ¥798 million Real estate appraisal value ¥988 million Appraisal NOI yield 7.4％



(Note) Figures are based on real estate appraisal reports which evaluated values as of October 31, 2015. Appraisal NOI (Net Operating Income) is defined as operating revenues less operating expenses contained in the relevant real estate appraisal report, which is before depreciation. This is different from NCF (Net Cash Flow) calculated by subtracting gain on investment of leasehold deposit, etc., and capital expenditures from NOI. Appraisal NOI yield is the figure calculated by the Asset Management Company by dividing appraisal NOI by the acquisition price.


36

Others

Chisun Inn Utsunomiya Kanuma Address Utsunomiya-shi,

Tochigi Acquisition Price ¥714 million Real estate appraisal value ¥808 million Appraisal NOI yield 7.4％



Chisun Inn Fukui Address Fukui-shi, Fukui Acquisition Price ¥644 million Real estate appraisal value ¥738 million Appraisal NOI yield 7.7％



Chisun Inn Kumamoto Miyukifueda Address Kumamoto-shi,

Kumamoto Acquisition Price ¥616 million Real estate appraisal value ¥708 million Appraisal NOI yield 7.6％



Chisun Inn Fukushima Nishi IC

Address Fukushima-shi, Fukushima

Acquisition Price ¥672 million Real estate appraisal value ¥751 million Appraisal NOI yield 7.4％



Chisun Inn Niigata Chuo IC Address Niigata-shi, Niigata Acquisition Price ¥630 million Real estate appraisal value ¥725 million Appraisal NOI yield 7.4％



Chisun Inn Nagasaki Airport Address Omura-shi, Nagasaki Acquisition Price ¥630 million Real estate appraisal value ¥730 million Appraisal NOI yield 7.4％





37

Others

Chisun Inn Hitachinaka

Address Hitachinaka-shi, Ibaraki




Chisun Inn Tsuchiura Ami

Address Ami-machi, Inashiki-gun, Ibaraki




Chisun Inn Kofu Isawa

Address Fuefuki-shi, Yamanashi




Chisun Inn Marugame Zentsuji Address Marugame-shi,

Kagawa Acquisition Price ¥588 million Real estate appraisal value ¥668 million Appraisal NOI yield 7.6％



Chisun Inn Munakata Address Munakata-shi, Fukuoka Acquisition Price ¥504 million Real estate appraisal value ¥606 million Appraisal NOI yield 7.9％



Chisun Inn Iwate Ichinoseki IC Address Ichinoseki-shi, Iwate Acquisition Price ¥700 million Real estate appraisal value ¥749 million Appraisal NOI yield 7.1％





38

Others

Chisun Inn Karuizawa

Address Karuizawa-machi, Kitasaku-gun, Nagano




Chisun Inn Himeji Yumesakibashi Address Himeji-shi, Hyogo Acquisition Price ¥616 million Real estate appraisal value ¥712 million Appraisal NOI yield 7.7％



Chisun Inn Kurashiki Mizushima

Address Kurashiki-shi, Okayama




Candeo Hotels Handa Address Handa-shi, Aichi Acquisition Price ¥620 million Real estate appraisal value ¥670 million Appraisal NOI yield 6.5％

Name of tenant Candeo Hospitality Management, Inc.


Candeo Hotels Chino Address Chino-shi, Nagano Acquisition Price ¥793 million Real estate appraisal value ¥886 million Appraisal NOI yield 6.7％



Candeo Hotels Fukuyama Address Fukuyama-shi, Hiroshima Acquisition Price ¥1,075 million Real estate appraisal value ¥1,200 million Appraisal NOI yield 6.5％





39

Others

Chisun Inn Kagoshima Taniyama Address Kagoshima-shi, Kagoshima Acquisition Price ¥1,995 million Real estate appraisal value ¥2,160 million

Appraisal NOI yield 6.5％

Name of tenant SHR Roadside Inn Co., Ltd. Number of guest rooms 217

Candeo Hotels Sano Address Sano-shi, Tochigi Acquisition Price ¥1,260 million Real estate appraisal value ¥1,410 million Appraisal NOI yield 6.5％



Candeo Hotels Kameyama Address Kameyama-shi, Mie Acquisition Price ¥470 million Real estate appraisal value ¥513 million Appraisal NOI yield 7.1％



Comfort Hotel Hakodate Address Hakodate-shi, Hokkaido Acquisition Price ¥937 million Real estate appraisal value ¥1,010 million


Name of tenant Greens Co., Ltd. Number of guest rooms 139

Comfort Hotel Kure Address Kure-shi, Hiroshima Acquisition Price ¥1,100 million Real estate appraisal value ¥1,190 million Appraisal NOI yield 6.1％ Name of tenant Greens Co., Ltd. Number of guest rooms 149

Comfort Hotel Tomakomai Address Tomakomai-shi, Hokkaido Acquisition Price ¥963 million Real estate appraisal value ¥1,040 million Appraisal NOI yield 6.3％ Name of tenant Greens Co., Ltd. Number of guest rooms 123



40

Others

ANA Crowne Plaza Toyama

Toyama-shi, Toyama

¥4,008 million

¥4,280 million

7.4％

Horizon Hotels Ltd.

251

ANA Crowne Plaza Fukuoka

Fukuoka-shi, Fukuoka

¥7,599 million

¥8,100 million

6.0％

Horizon Hotels Ltd.

320

ANA Crowne Plaza Kanazawa

Kanazawa-shi, Ishikawa

¥6,609 million

¥6,990 million

6.3％

Horizon Hotels Ltd.

249

ANA Crowne Plaza Hiroshima

Address Hiroshima-shi, Hiroshima

Acquisition Price ¥17,784 million Real estate appraisal value ¥19,000 million


Name of tenant Horizon Hotels Ltd. Number of guest rooms 409

(Note) Figures are based on real estate appraisal reports which evaluated values as of August 15, 2015. Appraisal NOI (Net Operating Income) is defined as operating revenues less operating expenses contained in the relevant real estate appraisal report, which is before depreciation. This is different from NCF (Net Cash Flow) calculated by subtracting gain on investment of leasehold deposit, etc., and capital expenditures from NOI. Appraisal NOI yield is the figure calculated by the Asset Management Company by dividing appraisal NOI by the acquisition price.


41

Operational results 2014 2015 Accumulated total Nov. Dec. Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct.

Guest room occupancy rate 70.3% 57.0% 54.0% 59.9% 67.8% 70.4% 90.2% 75.7% 85.6% 95.9% 89.6% 85.1% 75.7% ADR (yen) 38,776 41,357 35,549 24,885 26,801 33,326 39,078 31,260 37,406 57,507 42,310 40,331 38,446 RevPAR (yen) 27,243 23,585 19,194 14,904 18,177 23,456 35,248 23,660 32,023 55,152 37,916 34,326 29,087 Sales (millions of yen) 42 33 26 25 34 38 56 37 51 75 55 53 524









KAI Matsumoto

KAI Izumo

KAI Ito

KAI Hakone

KAI Aso


42



KAI Kawaji









Chisun Inn Shiojiri Kita IC

Chisun Inn Sano Fujioka IC

Chisun Inn Suwa IC

Chisun Inn Toyokawa IC


43



Chisun Inn Tosu









Chisun Inn Chiba Hamano R16

Chisun Inn Kumamoto Miyukifueda

Chisun Inn Utsunomiya Kanuma

Chisun Inn Fukui



Chisun Inn Fukushima Nishi IC


44









Chisun Inn Niigata Chuo IC

Chisun Inn Nagasaki Airport

Chisun Inn Hitachinaka

Chisun Inn Tsuchiura Ami



Chisun Inn Kofu Isawa


45









Chisun Inn Marugame Zentsuji

Chisun Inn Munakata

Chisun Inn Iwate Ichinoseki IC

Chisun Inn Karuizawa



Chisun Inn Himeji Yumesakibashi


46



Chisun Inn Kurashiki Mizushima


Guest room occupancy rate 73.6% 73.1% 75.9% 84.1% 76.7% ADR (yen) 6,846 6,669 6,827 7,255 6,913 RevPAR (yen) 5,041 4,876 5,183 6,102 5,304 Sales (millions of yen) 339 317 346 407 1,409





Candeo Hotels (5 properties)

Comfort Hotel Tomakomai

Comfort Hotel Hakodate




Comfort Hotel Kure

47


Guest room occupancy rate －－－－－－－－－ 70.6% 72.8% 76.7% 73.4% ADR (yen) －－－－－－－－－ 5,140 5,173 5,211 5,176 RevPAR (yen) －－－－－－－－－ 3,627 3,764 3,998 3,800 Sales (millions of yen) －－－－－－－－－ 25 27 29 82

Chisun Inn Kagoshima Taniyama


Guest room occupancy rate 79.5% 74.1% 76.9% 76.0% 87.6% 74.4% 69.9% 77.5% 79.6% 92.0% 81.0% 75.0% 78.7% ADR (yen) 37,761 45,834 40,645 31,907 36,887 37,552 41,826 31,781 45,615 66,930 41,397 43,255 42,382 RevPAR (yen) 30,027 33,974 31,248 24,260 32,299 27,950 29,222 24,623 36,302 61,590 33,536 32,460 33,353 Sales (millions of yen) 114 119 107 90 128 105 109 85 134 208 119 118 1,437

RISONARE Atami (Note) Since the consent for disclosure of past operational results has not been obtained from the previous owner, operational results from November 2014 to July 2015 are undisclosed.





ANA Crowne Plaza Hiroshima

ANA Crowne Plaza Fukuoka





ANA Crowne Plaza Kanazawa

ANA Crowne Plaza Toyama


48

Balance sheet for the fiscal period ended October 2015

49

Previous fiscal period (ended Apr. 30, 2015)

Current fiscal period (ended Oct. 31, 2015)

Assets Current assets

Cash and deposits 3,552,630 4,320,744 Operating accounts receivable 19,149 31,347 Prepaid expenses 32,980 69,612 Consumption tax receivable - 563,748 Deferred tax asset 14 13 Total current assets 3,604,775 4,985,644

Non-current assets Tangible assets

Buildings 27,199,180 34,615,473 Accumulated depreciation -929,076 -1,321,880 Buildings, net 26,270,104 33,293,593

Structures 632,941 933,257 Accumulated depreciation -25,443 -39,679 Structures, net 607,498 893,577

Machinery and equipment 83,801 83,801 Accumulated depreciation -13,262 -16,880 Machinery and equipment, net 70,538 66,920

Land 6,704,893 8,548,067 Construction in progress 22,251 258,812 Total tangible assets 33,675,286 43,060,971

Intangible assets Leasehold rights 69,149 213,359 Software 3,827 3,293 Total intangible assets 72,977 216,653

Investment and other assets Long-term prepaid expenses 58,554 136,127 Guarantee deposits 10,000 10,000 Other - 2,890 Total investment and other assets 68,554 149,017

Total non-current assets 33,816,817 43,426,642 Total assets 37,421,593 48,412,286

Previous fiscal period (ended Apr. 30, 2015)

Current fiscal period (ended Oct. 31, 2015)

Liabilities Current liabilities

Operating accounts payable 35,310 20,202 Short-term loans payable - 1,400,000 Current portion of long-term loans payable 183,576 2,018,781 Accounts payable 206,053 331,635 Income taxes payable 854 786 Consumption tax payable 88,470 - Advance received 268,703 331,335 Other - 3 Total current liabilities 782,967 4,103,157

Non-current liabilities Long-term loans payable 7,509,480 5,582,487 Tenant leasehold and security deposits 1,389,320 1,704,501 Total non-current liabilities 8,898,800 7,286,988

Total liabilities 9,681,767 11,390,145 Net assets

Unitholders’ equity Unitholders’ capital 27,006,092 36,113,352 Surplus

Unappropriated retained earnings (undisposed loss) (−)

733,732 908,788

Total surplus 733,732 908,788 Total unitholders’ equity 27,739,825 37,022,141

Total net assets 27,739,825 37,022,141 Total liabilities and net assets 37,421,593 48,412,286

(Unit: thousands of yen)

Statement of income for the fiscal period ended October 2015

50

Previous fiscal period (From Nov. 1, 2014 to Apr. 30, 2015)

Current fiscal period (From May 1, 2015 to Oct. 31, 2015)

Operating revenue Rent revenue – real estate 1,599,251 1,926,493 Total operating revenue 1,599,251 1,926,493

Operating expenses Expenses related to rent business 531,974 628,413 Asset management fee 161,820 186,833 Asset custody fee 1,760 1,747 Administrative service fees 8,765 8,806 Directors’ compensations 2,640 2,640 Accounting auditors’ compensations 6,000 6,000 Other operating expenses 67,519 57,603 Total operating expenses 780,479 892,044

Operating income 818,772 1,034,448 Non-operating income

Interest income 363 493 Insurance received - 422 Interest on refunds 1,488 - Miscellaneous income 1,188 165 Total non-operating income 3,040 1,081

Non-operating expenses Interest expenses 73,170 73,254 Borrowing related expenses 13,999 14,575 Investment unit issuance expenses - 38,060 Total non-operating expenses 87,170 125,891

Ordinary income 734,642 909,639 Income before income taxes 734,642 909,639 Income taxes –current 927 886 Income taxes –deferred 0 1 Total income taxes 928 887 Net income 733,714 908,751 Retained earnings brought forward 18 37 Unappropriated retained earnings (undisposed loss) (−) 733,732 908,788

(Unit: thousands of yen)

Real estate appraisal value for continuously owned properties as of the end of the fiscal period ended October 2015 (1)

51

Appraisal value for continuously owned properties 51,445million yen Unrealized gain 8,429million yen Net asset per unit 745,077 yen

Total book value 43,015million yen Unrealized gain per unit 169,644 yen NAV per unit 914,722 yen

Property No. Property name Acquisition

Price

Real estate appraisal value with the

valuation date of Oct. 31, 2013, etc.


valuation date of January 31, 2014, etc.

(acquisition time)


valuation date of April 30, 2014, etc.


valuation date of October 31, 2014, etc.


valuation date of April 30, 2015, etc.



H-1 HOSHINOYA Karuizawa 7,600 9,160 － 9,240 9,470 9,800 10,400

H-2 HOSHINOYA Kyoto 2,785 － 2,930 － 3,000 3,270 3,480

R-1 RISONARE Yatsugatake 4,500 5,190 － 5,220 5,350 5,540 5,830

K-1 KAI Matsumoto 600 687 － 688 685 697 728

K-2 KAI Izumo 680 737 － 738 747 758 803

K-3 KAI Ito 670 717 － 723 761 778 862

K-4 KAI Hakone 950 1,090 － 1,100 1,140 1,160 1,190

K-5 KAI Aso 575 － 639 － 645 657 674

K-6 KAI Kawaji 1,000 － 1,100 － 1,100 1,110 1,110

(Unit: millions of yen)


Price

Real estate appraisal value with the valuation

date of January 31, 2014, etc. (acquisition time)


date of October 31, 2014, etc.

Real estate appraisal value with the valuation date of April 30, 2015,

etc.


date of October 31, 2015, etc.

O-1 Chisun Inn Shiojiri Kita IC 672 743 757 768 786 O-2 Chisun Inn Sano Fujioka IC 742 845 845 861 876 O-3 Chisun Inn Suwa IC 658 728 746 757 775 O-4 Chisun Inn Toyokawa IC 602 665 678 691 708 O-5 Chisun Inn Tosu 504 558 568 579 588 O-6 Chisun Inn Chiba Hamano R16 798 947 947 971 988 O-7 Chisun Inn Kumamoto Miyukifueda 616 675 686 697 708 O-8 Chisun Inn Utsunomiya Kanuma 714 769 770 795 808 O-9 Chisun Inn Fukui 644 702 715 724 738 O-10 Chisun Inn Fukushima Nishi IC 672 714 718 739 751 O-11 Chisun Inn Niigata Chuo IC 630 686 699 709 725 O-12 Chisun Inn Nagasaki Airport 630 688 702 713 730 O-13 Chisun Inn Hitachinaka 742 851 852 879 894 O-14 Chisun Inn Tsuchiura Ami 770 886 886 896 901 O-15 Chisun Inn Kofu Isawa 658 723 738 751 764 O-16 Chisun Inn Marugame Zentsuji 588 631 647 656 668 O-17 Chisun Inn Munakata 504 536 552 582 606 O-18 Chisun Inn Iwate Ichinoseki IC 700 738 739 749 749 O-19 Chisun Inn Karuizawa 812 898 918 933 984 O-20 Chisun Inn Himeji Yumesakibashi 616 672 686 698 712 O-21 Chisun Inn Kurashiki Mizushima 728 789 805 814 830


52



Price


valuation date of December 15, 2014,

etc. (acquisition time)


valuation date of February 28, 2015, etc.

(acquisition time)


valuation date of May 31, 2015, etc. (acquisition time)



O-22 Candeo Hotels Handa 620 654 - - 670 O-23 Candeo Hotels Chino 793 868 - - 886 O-24 Candeo Hotels Fukuyama 1,075 1,170 - - 1,200 O-25 Candeo Hotels Sano 1,260 1,390 - - 1,410 O-26 Candeo Hotels Kameyama 470 501 - - 513 O-27 Comfort Hotel Hakodate 937 - 993 - 1,010 O-28 Comfort Hotel Tomakomai 963 - 1,020 - 1,040 O-29 Comfort Hotel Kure 1,100 - 1,170 - 1,190 O-30 Chisun Inn Kagoshima Taniyama 1,995 - - 2,140 2,160


53


Information on unitholders as of the end of the fiscal period ended October 2015

54

IndividualFinancial institutions (including financial trading operators)Other domestic corporationsForeign corporations, etc.

Composition of unitholders

14,705 units (29.6%) 23,228 units (46.7%) 4,403 units (8.9%)

7,353 units (14.8%)

8,261 (95.6%)

65 (0.8%) 206

(2.4%) 107 (1.2%)

Major unitholders Number of investment

units held (units)

Ratio (%)

Japan Trustee Services Bank, Ltd. (Trust account) 7,598 15.29 Trust & Custody Services Bank, Ltd. (Securities investment trust account) 5,578 11.22 The Master Trust Bank of Japan, Ltd. (Trust account) 4,447 8.94 Hoshino Resort Co., Ltd. 3,070 6.17 Nomura Trust and Banking Co., Ltd. (Investment trust account) 1,683 3.38 Nomura Bank (Luxembourg) S.A. 1,010 2.03 The Hokkoku Bank, Ltd. 573 1.15 Mizuho Securities Co., Ltd. 548 1.10 Yamato Shinkin Bank 450 0.90 MSCO CUSTOMER SECURITIES 417 0.83

Total 25,374 51.06

Number of units held by type of unitholder

Total: 49,689 units

Number of investors by type of unitholder

Total: 8,639

(Note) Ratio indicates the ratio of the number of investment units held to the total investment units issued and outstanding, rounded down to two decimal places

Overview of HRR

55

HRR General Meeting of

Unitholders

Board of Directors Executive Officer: Kenji Akimoto

Supervisory Director: Hiroshi Shinagawa Supervisory Director: Yukiko Fujikawa

Independent Auditor Grant Thornton Taiyo LLC

Sponsor Hoshino Resort Co., Ltd.

Asset Management Company

Hoshino Resort Asset Management Co., Ltd.

Asset Management Agreement

Asset Custody

Agreement

Transfer Agency

Agreement

General Service

Agreement

February 28, 2013 Application for registration of HRR was filed by the organizer (Hoshino Resort Asset Management Co., Ltd.) under Article 69-1 of the Act on Investment Trusts and Investment Corporations (Investment Trusts Act) March 6, 2013 HRR was registered and established under Article 166 of the Investment Trusts Act March 25, 2013 Application for registration of HRR was filed under Article 188 of the Investment Trusts Act April 10, 2013 HRR was registered by the Prime Minister under Article 187 of the Investment Trusts Act (registration number 84, filed with the Director of the Kanto Local Financial Bureau) July 12, 2013 HRR was listed on the Real Estate Investment Trust Section of the Tokyo Stock Exchange (securities code: 3287) July 16, 2013 Asset management started

History

Sponsor Support

Agreement

Asset Custodian Mitsubishi UFJ Trust and Banking

Corporation

Administrative Agent for Unitholders’ Registry

Mitsubishi UFJ Trust and Banking Corporation

Administrative Agent for Operation of Institutions

Mitsubishi UFJ Trust and Banking Corporation

Overview of Asset Management Company

56

Name Hoshino Resort Asset Management Co., Ltd. Address 6-18, Kyobashi 3-chome, Chuo-ku, Tokyo Date of Establishment May 14, 2010 Paid-in Capital ¥100 million Shareholder Hoshino Resort Co., Ltd. 100% Registration and Licenses Registration as a Financial Instruments Business: Director of Kanto Local Finance Bureau (Kin-sho) No. 2405 Discretionary Real Estate Transaction License: The Minister of Land, Infrastructure, Transportation and Tourism No.74 Building Lots and Buildings Transaction Business License: The Governor of Tokyo No. (1) 94316

Structure of Asset Management Company

Overview

General Meeting of Shareholders

Board of Directors

President & CEO Compliance Officer

Compliance Department

Corporate Planning Department

Investment Management Department

Auditor

Investment Management Committee Compliance Committee

Finance & Administration Department

Disclaimer

57

This document is provided for information purposes only and is not a solicitation for investment, nor recommendation or invitation to make specific transactions. We caution readers to undertake investment decisions at their own discretion and responsibility. This document is not a disclosure document or report based upon the Financial Instruments and Exchange Act, the Act on Investment Trusts and Investment Corporations, public listing regulations of the Tokyo Stock Exchange or other related laws and regulations. This document includes charts, data and other materials prepared by Hoshino Resort Asset Management Co., Ltd. (the “Asset Management Company”) based on data, indices, etc. disclosed by third parties, in addition to statements related to Hoshino Resorts REIT, Inc. (“HRR”). Statements on analysis, judgments and other opinions of the Asset Management Company as of the date of the document are also included. The contents of this document have not been audited and their accuracy and completeness are not guaranteed. Analysis, judgments and other opinions of the Asset Management Company that are not actual instance are only reflecting the views of the Asset Management Company as of the date of the document. Therefore, other views and opinions exist and the Asset Management Company may change its views in the future. The figures under the same item of other disclosed materials may differ from figures presented in this document due to different rounding of fractions and such. While HRR has taken due care in the preparation of this document, the possibility of errors exists. Readers are also cautioned that the contents of this document are subject to correction or change without prior notice. HRR or the Asset Management Company will not be responsible for any inaccuracy in data, indices and such disclosed by third parties. Although this documents include statements regarding HRR’s future policies, etc., these statements do not guarantee such future policies, etc. For the convenience of preparing graphs, the dates indicated may differ from actual business dates.

Contact TEL: +81-3-5159-6338

Registration as a Financial Instruments Business: Director of Kanto Local Finance Bureau (Kin-sho) No. 2405 Member of the Investment Trusts Association, Japan

Documents

5th Fiscal Period Presentation Materials · 12/17/2015 · 5th Fiscal Period (ended October 2015) Presentation Materials . December 17, 2015 . Asset Management Company ... Forecasts