Japan Hotel REIT (8985) H1 2024 earnings summary

Executive summary

• Achieved strong midterm results for FY12/2024, with operating revenue up 27.2% to JPY14,362MM and net income up 51.8% to JPY7,433MM, driven by robust hotel operations, inbound tourism, and strategic acquisitions.

• Portfolio expanded to 51 properties by July 2024, with four hotels acquired at about 20% below appraised value, accelerating external growth and portfolio quality.

• RevPAR for 28 variable rent hotels increased 18.6% YoY, and GOP rose 29.4%, reflecting strong market demand and internal growth strategies.

• Conducted a global public offering in June/July 2024, issuing over 460,000 new units and raising more than JPY33Bn for acquisitions and CAPEX.

• Secured JPY30Bn in new loans, maintaining financial soundness and extending loan maturities.

Financial highlights

• Operating revenue for 1H2024 rose 27.2% YoY to JPY14,362MM; net income increased 51.8% to JPY7,433MM; operating income was JPY8,498MM, up 47.5%.

• Full-year FY12/2024 forecast: operating revenue up 23.8% to JPY32,910MM, net income up 34.3% to JPY17,644MM, and DPU up 26.5% to JPY3,815.

• NOI yield for the full year is forecast at 6.3%, with NOI after depreciation up 42.2% YoY for 1H2024.

• NAV per unit projected to reach JPY86,178 (+9.6% YoY); net assets per unit as of June 2024 were JPY51,480.

• Cash flows from operating activities were JPY10,871MM, with cash and cash equivalents at JPY21,594MM as of June 2024.

Outlook and guidance

• 2H2024 expected to remain strong, with full-year RevPAR and sales forecast to rise 15.0% and 14.3% YoY, respectively.

• GOP for 2024 projected to increase 20.9% YoY for 28 hotels with variable rent.

• Dividend per unit for the year is estimated at JPY3,815, factoring in a reversal of negative goodwill to offset dilution.

• Ongoing CAPEX and renovations, with JPY7,311MM planned for 2024, to drive further unit price and sales growth.

• Continued growth in inbound tourism and ADR-driven RevPAR growth expected.