Interim report
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- 1 - This English translation is provided for information purposes only. If any discrepancy is identified between this translation and the Japanese original, the Japanese original shall prevail. August 26, 2026 Midterm Financial Report for the Fiscal Year Ending December 31, 2026 (January 1, 2026 – June 30, 2026) Japan Hotel REIT Investment Corporation Listing: Tokyo Stock Exchange Securities code: 8985 URL: https://www.jhrth.co.jp/en/ Representative: Kaname Masuda, Executive Director Asset Management Company: Japan Hotel REIT Advisors Co., Ltd. Representative: Hiroyuki Aoki, President & CEO Contact: Noboru Itabashi Director of the Board, Head of Corporate Division Phone: +81-3-6422-0530 Scheduled date to file midterm Securities Report: September 17, 2026 Scheduled date to file midterm Securities Report: Yes Schedule for presentation of midterm financial results: Yes (Institutional investors and analysts only) (Amounts are rounded down to the nearest millions of yen) 1. Status summary of operation and assets for the midterm of the fiscal year ending December 31, 2026 (January 1, 2026 – June 30, 2026) (1) Operating results (Percentages: full year—changes from the same period of the previous year) Operating revenue Operating income Ordinary income Net income (loss) Midterm period ended JPY1M % JPY1M % JPY1M % JPY1M % June 30, 2026 22,568 5.1 14,687 1.6 11,789 (4.7) 11,789 (7.6) June 30, 2025 21,481 49.6 14,457 70.1 12,367 66.4 12,764 71.7 Fiscal year ended December 31, 2025 45,564 36.1 31,052 49.4 26,748 46.4 27,145 48.6 Net income for the current midterm period per unit Midterm period ended JPY June 30, 2026 2,103 June 30, 2025 2,504 Fiscal year ended December 31, 2025 5,325 (Note) Net income for the current midterm period per unit is calculated based on the period-average number of investment units issued. (2) Financial position Total assets Net assets Equity ratio Net assets per unit Midterm period ended JPY1M JPY1M % JPY June 30, 2026 688,770 342,250 49.7 57,969 June 30, 2025 555,761 276,578 49.8 54,262 Fiscal year ended December 31, 2025 576,683 293,114 50.8 57,507 (Note) Net assets per unit are calculated based on the total number of investment units issued and outstanding at the end of the midterm period/full year.
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- 2 - 2. Operating forecast for the fiscal year ending December 31, 2026 (January 1, 2026 – December 31, 2026) (Percentages show changes from the previous year) Operating revenue Operating income Ordinary income Net income Dividend per unit (Excess of earnings exclusive) Dividend per unit resulting from excess of earnings JPY1M % JPY1M % JPY1M % JPY1M % JPY JPY Full year 75,124 64.9 58,372 88.0 52,100 94.8 52,099 91.9 5,811 － (Reference) Estimated net income per unit for the fiscal year ending December 31, 2026 (full year): ¥9,051 (Calculated based on the estimate of the period-average number of investment units of 5,755,872). (Note) The source of the dividend payment is planned to be an amount that deducts the reserve for advanced depreciation under special provisions for property replacement (¥18,107 million), from the total net income plus the reversed amount for temporary difference adjustment (¥316 million). * Other (1) Changes in accounting policies, changes in accounting estimates, and restatement of financial statements for prior periods after error corrections (a) Changes in accounting policies due to revisions to accounting standards and other regulations: No change (b) Changes in accounting policies due to other reasons than above (a): No change (c) Changes in accounting estimates: No change (d) Restatement of financial statements for the prior period after error corrections: No change (2) Total number of investment units issued and outstanding (a) Total number of investment units issued and outstanding at the end of the fiscal year/period (including investment units owned by Japan Hotel REIT Investment Corporation (JHR)) As of June 30, 2026 5,904,006 units As of June 30, 2025 5,097,006 units As of December 31, 2025 5,097,006 units (b) Number of JHR’s investment units held at the end of the fiscal year As of June 30, 2026 0 unit As of June 30, 2025 0 unit As of December 31, 2025 0 unit (Note) For the number of investment units serving as the basis of computation for calculating net income per unit, please refer to “Notes on per unit information” on page 34. * Midterm financial reports are not subject to interim audit procedures by accountants. * Special items Forward-looking statements presented in this financial report , including operating forecasts , are based on information currently available to us and on certain assumptions we deem reasonable. As such, actual operating and other results may differ materially from these forecasts due to various factors. Furthermore, we do not intend to guarantee any dividend amount by this forecast. For the assumptions of the operating forecast and notes for the use of the operating forecast, please refer to “1. Operating results; (1) Operating results; (B) Outlook for the second half of the fiscal year” on page 6 and “Assumptions of the operating forecast for the full fiscal year ending December 2026 (27th period)” on page 13.
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- 3 - ○ Table of Contents 1. Operating results ............................................................................................................................................................................. 4 (1) Operating results ......................................................................................................................................................................... 4 2. Semi-annual financial statements .................................................................................................................................................. 19 (1) Semi-annual balance sheets ....................................................................................................................................................... 19 (2) Semi-annual statements of income ............................................................................................................................................ 21 (3) Semi-annual statements of changes in net assets ....................................................................................................................... 22 (4) Semi-annual statements of cash flows ....................................................................................................................................... 24 (5) Notes on going concern assumption .......................................................................................................................................... 25 (6) Notes on matters concerning significant accounting policies .................................................................................................... 25 (7) Notes to semi-annual financial statements ................................................................................................................................ 27 (8) Changes in the total number of investment units issued and outstanding .................................................................................. 35 3. Reference information.................................................................................................................................................................... 36 (1) Information on values of assets under management, etc. ............................................................................................................ 36 (2) Status of capital expenditures ..................................................................................................................................................... 47
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- 4 - 1. Operating results (1) Operating results (A) Overview of the midterm period under review (a) Brief history and principal activities Japan Hotel REIT Investment Corporation ( hereinafter referred to as “JHR”) was established under the Act on Investment Trusts and Investment Corporations (Act No. 198 of 1951, as amended; hereinafter referred to as the “Investment Trust Act”) on November 10, 2005, and was listed on the Real Estate Investment Trust (REIT) sectio n of the Tokyo Stock Exchange (Securities code: 8985) on June 14, 2006. JHR entrusts asset management to Japan Hotel REIT Advisors Co., Ltd. (hereinafter referred to as the “Asset Management Company”). Focusing on importance of hotels as social infrastructure and profitability as investment real estate, JHR primarily invests in real estate, which is wholly or partially used as hotels or real estate equivalents of such real estate or related assets that are backed by such real estate or real estate equivalents (hereinafter referred to as “Real Estate for Hotels, etc.”). JHR, the former Nippon Hotel Fund Investment Corporation, merged with Japan Hotel and Resort, Inc. with an effective date of April 1, 2012 (hereinafter referred to as the “Merger”), and changed its name to Japan Hotel REIT Investment Corporation. Since the Merger through the end of the midterm period under review (the six-month period from January 1, 2026, to June 30, 2026), JHR has conducted capital raising through public offerings, etc. and continuously acquired “highly competitive hotels” in mainly “strategic investment areas” where domestic and inbound leisure demand can be expected over the medium to long term. By steadily implementing the aforementioned growth strategy, JHR has expanded its asset size while improving the quality of its portfolio. As a result, JHR had a portfolio of 52 properties with a combined acquisition price of ¥641,391 million, and the total number of investment units issued and outstanding stood at 5,904,006 units at the end of the midterm period under review. (b) Investment performance for the midterm period under review Throughout the midterm period under review (the six-month period from January 1, 2026 to June 30, 2026), the Japanese economy continued to show a gradual recovery trend, supported by improvements in the employment and income environment and the effects of various policies, despite the need to pay attention to the impacts of the situation in the Middle East and fluctuations in financial and capital markets. Regarding the domestic accommodation and tourism market, both domestic and international accommodation demand remained generally steady. The number of foreign visitors to Japan (hereinafter referred to as “inbound visitors”) was 21.08 million in the first half of 2026, a year -on-year decrease of 2.0% according to the Japan National Tourism Organization (JNTO). While inbound visitors from China significantly decreased due to the Chinese government’s request to refrain from traveling to Japan, inbound visitors from many countries and regions, including South Korea, Taiwan, other Asian countries, Europe, the U.S., and Australia, exceeded the previous year ’s levels. Based on the preliminary figures from the Overnight Travel Statistics Survey (Japan Tourism Agency), the number of Japanese overnight guests at domestic accommodations in the first half of 2026 was 214 million (down 2.7% year-on-year), and the number of foreign overnight guests was 83 million (down 8.5% year-on-year), both falling below the levels of the same period in the previous year. As a result, the total number of overnight guests at domestic accommodation facilities in the first half of 2026 was 297 million (down 4.4% year-on-year). In this market environment, JHR conducted a public offering for capital increase in March 2026 and acquired the HYATT REGENCY TOKYO (acquisition price: ¥126,000 million). By acquiring a large, full-service hotel with high scarcity value located in the heart of Tokyo, JHR has improved the quality of its portfolio and further strengthened its competitiveness. For internal growth, JHR has worked to increase revenue by raising average room rates through guest room renovations as well as effective marketing measures and meticulous revenue management to capture high-end domestic and overseas leisure demand, through maintaining close communication with the lessees and operators of each hotel. At the same time, JHR continued to work on measures to reduce operating costs and other efforts to improve profitability. During the midterm period under review, RevPAR (Note 1) in the Osaka area fell below the level of the same period in the previous year due to the impact of the Chinese government ’s request to refrain from traveling to Japan, as well as the reactionary decrease in
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- 5 - demand for accommodation following the increase caused by the Expo 2025 Osaka, Kansai held the previous year. On the other hand, the portfolio excluding the Osaka area maintained growth, and despite the overall number of overnight guests at domestic accommodation facilities falling below the level of the same period in the previous year, RevPAR of the 29 Hotels with Variable Rent, etc. (Note 2) exceeded that of the same period in the previous year. In addition, as part of its internal growth strategy, JHR implemented strategic CAPEX (capital expenditure) to improve earnings and strengthen competitiveness. By implementing strategic CAPEX, which involves selecting hotels with high growth potential and increasing revenue from guest rooms, restaurants, etc., JHR has worked to improve hotel revenue through renovations. As a result of these initiatives, during the midterm period under review, RevPAR of the 29 Hotels with Variable Rent, etc. was ¥16,599 (up 4.9% year-on-year), and GOP (Note 3) was ¥14,422 million (up 5.6% year-on-year), both significantly exceeding that of the same period in the previous year. For further details of sales, GOP (gross operating profit) and other management indicators for the 2 9 Hotels with Variable Rent, etc., please refer to “<Reference Information 2> Hotel operation indexes, sales and GOP (gross operating profit) < The 29 Hotels with Variable Rent, etc. >” on page 18. (Note 1) RevPAR represents Revenue Per Available Room, which is calculated by dividing total room sales for a certain period (including service charges) for a given period by the total number of guest rooms available for sale during the same period. The same shall apply hereinafter. (Note 2) The 29 Hotels with Variable Rent, etc., refer to the following 29 hotels. The same shall apply hereinafter. Kobe Meriken Park Oriental Hotel Oriental Hotel Tokyo Bay Namba Oriental Hotel Hotel Nikko Alivila Oriental Hotel Hiroshima Oriental Hotel Universal City Oriental Hotel Okinawa Resort & Spa Sheraton Grand Hiroshima Hotel (main facility of ACTIVE-INTER CITY HIROSHIMA) Oriental Hotel Fukuoka Hakata Station Holiday Inn Osaka Namba Hotel Oriental Express Fukuoka Tenjin Hilton Tokyo Narita Airport International Garden Hotel Narita Hotel Nikko Nara Hotel Oriental Express Osaka Shinsaibashi Oriental Hotel Kyoto Rokujo Hotel Oriental Express Fukuoka Nakasukawabata Hotel JAL City Kannai Yokohama Southern Beach Hotel & Resort OKINAWA Hilton Fukuoka Sea Hawk ibis Styles Kyoto Station ibis Styles Sapporo Mercure Sapporo Mercure Okinawa Naha Mercure Yokosuka the b suidobashi the b ikebukuro the b hachioji the b hakata (Note 3) GOP stands for Gross Operating Profit, which is the amount remaining after deducting expenses related to hotel operations, such as labor costs and general administrative costs from hotel sales. The same shall apply hereafter. (c) Funding status In the midterm period under review, JHR newly borrowed ¥65,000 million in March 2026 to partially fund the acquisition of HYATT REGENCY TOKYO. Additionally, JHR borrowed a total of ¥ 17,750 million to refinance existing loans due for repayment during the midterm
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- 6 - period under review, of which ¥14,150 million was refinanced with green loans. Furthermore, for the ¥3,000 million sixth unsecured investment corporation bonds that matured in March 2026, a refinancing was effectively carried out through borrowing conducted in the same month. Of the total funds raised, ¥49,500 million was borrowed by applying the base interest rate for the same period as the borrowing term or through interest rate swap agreements, thereby effectively fixing the interest rates. Consequently, as of the end of the midterm period under review, the balance of interest-bearing debt totaled ¥334,301 million, including, current portion of long-term loans payable of ¥40,400 million, long -term loans payable of ¥263,201 million, current portion of investment corporation bonds of ¥ 10,100 million and investment corporation bonds of ¥ 20,600 million. As a result, the appraisal-based LTV (Note) at the end of the midterm period under review stood at 34.5%, and the ratio of fixed interest rate to total interest-bearing debt at the end of the midterm period under review was at 78.5%. (Note) Appraisal-based LTV at the end of the midterm period = Balance of interest-bearing debt at the end of the midterm period/ (Total assets at the end of the midterm period + unrealized gains and losses) x 100 Unrealized gains and losses are calculated by deducting the total book value of assets held at the end of the midterm period from the total appraisal value at the end of the midterm period as the date of appraisal. The same shall apply hereinafter. The total asset-based LTV at the end of the midterm period is 48.5%. Total asset-based LTV at the end of the midterm period = Balance of interest-bearing debt at the end of the midterm period/Total assets at the end of the midterm period x 100 JHR’s issuer ratings as of the end of the midterm period under review are as follows. In May 2026, the issuer rating by Japan Credit Rating Agency, Ltd. (JCR) has been changed from “A+ (Positive )” to “AA － (Stable ),” and the issuer rating by Rating and Investment Information, Inc. (R&I) has been changed from “A (Positive)” to “A+ (Stable).” Rating agency Rating details Japan Credit Rating Agency, Ltd. (JCR) Long-term Issuer Rating: AA－ Outlook: Stable Rating and Investment Information, Inc. (R&I) Issuer Rating: A+ Rating Outlook: Stable (d) Financial results As a result of the abovementioned asset management, for the midterm period under review, JHR recorded operating revenue of ¥22,568 million, operating income of ¥14,687 million and ordinary income of ¥11,789 million and net income of ¥11,789 million. Operating revenue includes the variable rents of ¥7,518 million received from the hotels leased to the HMJ Group (Note 1). This amount is calculated based on the AGOP (Note 2) of each hotel of the HMJ hotels for the midterm period under review. The variable rent to be ultimately received from t he HMJ hotels will be determined by the full -year AGOP (12-month period) of each hotel of the HMJ hotels. JHR settles accounts on an annual basis and investment corporations do not have a system for interim dividends under the Investment Trust Act. Accordingly, no distribution of earnings can be made in the midterm period under review. Distribution of earnings will be made based on the earnings for the full year (12 -month period from January 1, 202 6 to December 31, 2026). With regard to such distribution of earnings, earnings exceeding 90% of JHR’s distributable profit as defined by Article 67-15 of the Act on Special Measures Concerning Taxation (Act No. 26 of 1957; as amended; hereinafter called “the Act on Special Measures Concerning Taxation”) will be distributed. (Note 1) HMJ stands for Hotel Management Japan Co., Ltd. (hereinafter referred to as “HMJ”), which is a group company of the Asset Management Company. HMJ and its subsidiaries are collectively referred to as the “HMJ Group.” The same shall apply hereinafter. (Note 2) AGOP (Adjusted GOP) is the amount remaining after deducting certain payments of fees, etc., from GOP. The same shall apply hereafter. (B) Outlook for the second half of the fiscal year (a) Investment policies and issues to be addressed Regarding the outlook for the Japanese economy, although it is necessary to closely monitor factors such as the rise in crude oil prices due to the impact of the situation in the Middle East and fluctuations in financial and capital markets, improvements in the employment and income environment, along with the effects of various government policies, are expected to support a gradual recovery.
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- 7 - With regard to the domestic accommodation and tourism market, domestic accommodation demand is expected to remain strong. Although inbound demand is expected to be affected by the decrease in visitors from China for a certain period, JHR believes that over all inbound demand will remain robust, supported by demand from South Korea, Taiwan, the U.S., and other countries and regions. JHR will aim to increase sales in accommodation business by proactively capturing demand in the robust accommodation market, continu ing to implement effective marketing initiatives and meticulous revenue management, and capturing domestic and international leisure demand at high average room rates. At the same time, in non -accommodation business, JHR will strive to increase sales through effective initiatives in both physical aspects (renovation, etc.) and non-physical aspects (service improvement, etc.). In terms of costs, JHR will continue to operate efficiently by reviewing hotel operations in collaboration with lessees and operators, as it has done in the past, while optimizing resources and striving to improve profitability. Furthermore, JHR plans to select hotels with particularly high growth potential and implement renovations using strategic CAPEX with the aim of increasing revenue from rooms and other sources. Given the large potential demand for overseas tourism globally, JHR expects Japan’s accommodation demand from inbound visitors will keep growing over the medium -to-long term and believes that the accommodation and tourism market will expand. JHR considers that the asset management capability of the Asset Management Company will particularly lead to the differentiation of the hotels’ performance, in addition to their locations, competitiveness and their operator’s capability (including the operator’s ability to differentiate the hotels they operate from other hotels, improve profitability including cost management and capture demand). Under this recognition of the environment, JHR, together with the Asset Management Company, will continue to implement a differentiation strategy that leverages its experience as a J -REIT specializing in hotels and will manage its properties in accordance with the following policy. Under the recognition of such circumstances, JHR, together with the Asset Management Company, will continue to implement a differentiation strategy that leverages the experience it has accumulated as a J-REIT specializing in hotels and will manage its properties according to the following policy. Internal growth JHR will secure stability mainly through fixed rents and upside potential through the implementation of an active asset management strategy that actively seeks to improve property profitability and asset value through various means, including the adoption of brands that match the characteristics of the hotel and coordination with the HMJ Group. For fixed-rent properties, JHR will continue to focus on setting and maintaining appropriate rents , considering either the market rent level where each hotel is situated, or the lessee’s creditworthiness and capacity to bear the rent . Additionally, JHR intends to increase rents (including the introduction of a revenue -sharing rent) in alignment with the accommodation market’s conditions. For hotels under variable rent contracts and a management contract structure, JHR is working to increase variable rents, etc., by implementing the active asset management strategy. (i) Properties under variable rent contracts JHR works to enhance the profitability of its properties under variable rent contracts through its active asset management strategies. JHR adopts world -leading international brands such as Hilton, Sheraton, Mercure and Holiday Inn as well as leading brands in Japan including Oriental Hotel (a brand of the HMJ Group) and Hotel Nikko and, together with excellent operators, aims to increase variable rents, etc. through improved performance of these hotels. JHR is collaborating with operators to enhance hotel performance by requesting them to realize synergy effects through implementing marketing strategies to capture a wide range of demand given the expansion of domestic and inbound leisure needs, taking measures to maintain and raise sales unit prices, and reducing costs by managing multiple properties. Meanwhile, JHR will continue to work closely with the lessees and operators of each hotel to create attractive products and provide added value by fully utilizing the characteristics of the owned properties, effective marketing measures, and expansion of sales channels in order to capture domestic and overseas demand in the future. At the same time, JHR will continue to promote various measures to increase hotel revenues through cost management and streamlining of operations.
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- 8 - Moreover, JHR will strive to improve hotel earnings by accurately grasping the conditions in the domestic accommodation and tourism market, including the changing needs of guests, and implementing strategic CAPEX as necessary. The large- scale renovation of the entire OKINAW A HARBORVIEW HOTEL, including the pool, guest rooms, and restaurants, which began in 2025, was completed in the first half of 2026. At Hilton Tokyo Odaiba, a large-scale renovation of the entire hotel is being carried out from 2026 and is scheduled for completion in 2027. At Hilton Fukuoka Sea Hawk, renovations of guest rooms, the Executive Lounge, and other areas are scheduled to begin sequentially from 2026. At HYATT REGENCY TOKYO, acquired in 2026, renovations including the addition of new guest rooms are planned for 2027. (ii) Properties under fixed rent contracts JHR will appropriately monitor the operating status of each hotel and pay careful attention to each lessee’s ability to bear the cost of rent. JHR will negotiate rent increases and the introduction of variable rent with hotels whose performance and rent-bearing capacity have improved in order to increase JHR’s revenue from these hotels. In addition, JHR will continuously execute investments to maintain and renew facilities and equipment in order to ensure that each hotel becomes prominent in the market and to maintain and enhance asset value. External growth In terms of external growth strategy, JHR will continue targeting the acquisition of highly competitive Real Estate for Hotels, etc. (Hotel Assets) in areas which can expect “domestic and inbound leisure demand” over the medium to long term . In addition, JHR will build a portfolio which can secure stable revenues with future growth potential in mind in order to achieve upside gains. Upon acquiring properties, JHR will focus on the infrastructure aspects of the relevant Hotel Assets such as buildings and facilities and service aspects such as the credibility of the hotel lessee and operator (including the ability of the hotel lessee to bear the cost of rent) as well as operation and management capabilities, and the properties’ locational superiority that serves as the base for stability in demand and growth potential. Specifically, JHR will aim to invest in “full-service hotels” and “resort hotels” that pose barriers to new openings due to such factors as operation and management know-how required for operating the hotels and limitations in terms of invested capital and location. As for “limited -service hotels,” JHR emphasizes the credibility and operation capabilities of the hotel l essee and operator as well as the building age, location, guestroom composition, profitability, etc. , of the properties. Moreover, JHR will take a particularly selective approach to hotels specialized for accommodation and of a budget type (low price zone) that mainly offers single rooms and where the source of competitiveness relies only on prices. Additionally, JHR implements capital recycling to improve the quality of its portfolio through strategic asset replacement, taking into account the profitability of assets held, future growth potential, repair and renewal expenses, and other factors comprehensively. In July 2026, JHR sold The Beach Tower Okinawa and in August 2026, acquired C andeo Hotels Osaka Namba, thereby enhancing the quality of its portfolio. In the hotel trading market, against the backdrop of growth expectations in the hotel industry, along with an active lending stance by financial institutions, not only foreign investors but also domestic investors, including J-REITs, continue to actively consider investments in hotels. It is expected that hotel trading will remain active. Going forward, while closely monitoring market trends from many angles, JHR will flexibly respond to changes in the earnings structures of hotels and the investment environment by leveraging the strengths and advantages it has cultivated as a J -REIT specializing in hotels and JHR will aim to expand asset size that accompanies improvement of the portfolio quality through acquiring highly competitive properties while utilizing the operation platform of the HMJ Group as necessary. Finance strategy JHR will focus on enhancing financial stability and soundness and intends to maintain and improve the relationship of trust with the financial institutions with which it does business through close communication, which will strengthen the lender formation. Amid expectations for further growth in the hotel industry, and while interest rates continue to rise, JHR will pay attention to the increase in borrowing costs and its impact on distributions while aiming to maintain a certain ratio of fixed interest
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- 9 - rate debt, extend loan maturities, and stagger repayment deadlines. At the same time, JHR will strengthen its financial base by inviting new lenders and appropriately controlling capital expenditures. Regarding LTV , JHR ’s policy is to control leverage by appraisal-based LTV and to operate with a cap of 40% for the appraisal-based LTV in principle. In addition, JHR will further diversify its financing methods, including consideration of issuing investment corporation bonds and utilizing green finance. Additionally, through the asset replacement conducted in July and August 2026, JHR lowered the appraisal -based LTV , expanded borrowing capacity, and further strengthened financial stability. Policy on handling of negative goodwill From the fiscal year ended December 31, 2017 (18th period), JHR started appropriation for dividends through reversal of reserve for temporary difference adjustment in connection with partial amendments to the “Ordinance on Accounting of Investment Corporations” (Cabinet Office Ordinance No. 47 of 2006, as amended; hereinafter referred to as the “Ordinance on Accountings of Investment Corporations”) and the “Regulation for Real Estate Investment Trusts and Real Estate Investment Corporations” of the Investment Management Association of Japan . JHR stipulated a policy to reverse ¥262 million (hereinafter called the “50 -year amortization amount of negative goodwill”), which is an amount equivalent to 2% (1/50) of the balance of the reserve for temporary difference adjustment for the fiscal year ended December 31, 2017, to pay out as dividends every year, with the balance of the reserve for temporary difference adjustment remaining at the time of reversal set as the maximum reversal amount (Note). Furthermore, in cases of incurrence of losses caused by property dispositions, impairment loss of assets, dilution of dividend per unit due to the issuance of new investment units through public offerings, etc., loss on retirement of noncurrent assets, and suspension of sales and such due to large-scale renovations with significant impact on revenues, JHR stipulated a policy to reverse additional portion of the negative goodwill on top of the 50-year amortization amount of negative goodwill (¥262 million) (Note). (Note) The policy may change due to a resolution of the board of directors, and it does not guarantee the method of reversing the reserve for temporary difference adjustment and amounts to be reversed, etc., in the future. Initiatives for sustainability In recent years, consideration for ESG (Environment, Social and Governance) has grown in importance in the investment management industry from the standpoint of long-term sustainability. JHR recognizes that conducting real estate investment management that considers ESG is important to maximize unitholder value and to further raise the attractiveness of JHR. In addition, JHR believes that it is indispensable to establish favorable relationships with its stakeholders, including unitholders, hotel guests, lessees, operators, business partners such as property managers, local communities, and officers and employees of the Asset Management Company, and to fulfill our social responsibilities expected from each of them. In order to put these ideas into practice, JHR, together with the Asset Management Company, has established “Sustainability Policy” as guidance for its ESG initiatives, promoting efforts based on this policy. JHR will continue to recognize its social responsibility toward the community as a J-REIT specializing in hotels and will actively engage in social contribution activities. ■Identification of Materiality (Key Issues) Related to ESG In December 2021, JHR identified ESG -related materiality (Key Issues) for JHR from two perspectives: stakeholder expectations and the impact on JHR's business. ■Acquisition of Third-Party Certifications Related to ESG and Green Buildings JHR has acquired the following third- party certifications related to ESG and green buildings to ensure the reliability and objectivity of its efforts to reduce environmental impact. ・GRESB (Note 1) Real Estate Assessment JHR achieved a “3 Stars” in the 2025 GRESB Real Estate Assessment and received a “Green Star” for the eighth consecutive year.
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- 10 - ・BELS (Note 2) Certification JHR acquired the Building-Housing Energy-efficiency Labeling System (BELS) Certification for Hotel Nikko Alivila and Mercure Okinawa Naha in February 2018 for UAN kanazawa in February 2024, bringing the total number of BELS- certified properties in JHR’s portfolio to three. ・CASBEE (Note 3) Certification for Buildings In April 2020, Hilton Tokyo Odaiba obtained the CASBEE (Comprehensive Assessment System for Built Environment Efficiency) Certification for Buildings, marking the first such recognition for an existing hotel property, and it re - obtained the certification in December 2024. In May 2021, Oriental Hotel Fukuoka Hakata Station also received CASBEE Certification for Buildings. ・DBJ Green Building Certification (Note 4) In June 2026, OKINAW A HARBORVIEW HOTEL and Southern Beach Hotel & Resort OKINAWA obtained the DBJ Green Building Certification. With these acquisitions, the number of JHR hotels that have acquired this certification has increased to 12. ■Initiatives for Climate Change In November 2021, the Asset Management Company has expressed its support for the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), established by the Financial Stability Board (FSB), and has joined the TCFD Consortium, an organization of Japanese companies that support the TCFD recommendations. In August 2022, JHR disclosed its efforts to address the four disclosure themes recommended by the TCFD, including the financial impact of climate change scenario analysis. JHR is also progressively clarifying its numerical targets by establishing and disclosing a CO 2 reduction target by 2050 in February 2023. ■Formulation of Green Finance Framework In January 2024, JHR formulated the Green Finance Framework as a framework for financing environmentally friendly projects. Under the framework, JHR borrowed ¥10,900 million in March 2026 and ¥3,250 million in June 2026 as green loans. JHR will continue to strive to promote initiatives for environmental improvement by utilizing funds procured under the framework. ■ Initiatives in collaboration with hotel lessees, etc. JHR collaborates with hotel lessees, etc. to engage in activities that utilize the characteristics of hotels, such as local environmental conservation activities, community culture and arts activities, and childcare support. ■ Initiatives for employees The Asset Management Company develops a comfortable and appealing work environment and provides ongoing professional education and training opportunities so that officers and employees may feel highly motivated to improve quality and have an incentive to work over the medium to long term. ■Release of ESG Report Since March 2023, JHR has been publishing an ESG report annually. Together with Asset Management Company, JHR will continue to actively promote and expand various sustainability initiatives and disclosures. (Note 1) GRESB, which stands for Global Real Estate Sustainability Benchmark, is an annual benchmarking assessment to measure ESG (Environmental, Social and Governance) considerations of real estate companies and funds. It evaluates initiatives for the sustainability of real estate companies, REITs and real estate funds, not of ind ividual properties. The GRESB Rating makes relative assessment based on total scores, with 5 Stars being the highest ranking. (Note 2) BELS (Building-Housing Energy-Efficiency Labeling System) is a display system of energy conservation performance of a building set by the Ministry of Land, Infrastructure, Transport and Tourism. (Note 3) CASBEE (Comprehensive Assessment System for Built Environment Efficiency) is a system for evaluating and rating the environmental performance of buildings. In addition to environmental considerations such as energy conservation and the use of materials and equipment with low environmental impact, it comprehensively evaluates the quality of buildings, including consideration for interior comfort and landscaping. (Note 4) DBJ (Development Bank of Japan) Green Building Certification is a certification program established by Development Bank of Japan Inc. (DBJ) to support environmentally and socially conscious real estate management (“Green Buildings”).
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- 11 - (b) Significant subsequent events (i) Sale of asset JHR sold the following asset on July 31, 2026. Name of sold asset The Beach Tower Okinawa Asset category Real estate beneficial interest in trust Asset type Hotel Location 8-6 Aza Mihama, Chatan-cho, Nakagami-gun, Okinawa Sale price (Note 1) ¥30,900 million Gain on sale (forecast) (Note 2) ¥24,071 million Closing date July 31, 2026 Buyer Mihama Terroir TMK (Note 1) The sale price does not include selling expenses, settlement of property tax, city planning tax, etc., and consumption tax and local consumption tax. (Note 2) The amount obtained by deducting the book value (forecast) and selling expenses (forecast) from the sale price is indicated. (ii) Acquisition of asset JHR acquired the following asset on August 3, 2026. Name of acquired asset Candeo Hotels Osaka Namba Asset category Real estate beneficial interest in trust and movable assets associated with the hotel Asset type Hotel Location 2-2-5, Higashi-shinsaibashi, Chuo-ku, Osaka city, Osaka Acquisition date August 3, 2026 Seller GK Hikari Hotel Acquisition price (Note) ¥14,320 million (Note) The acquisition price does not include expenses for acquisition, settlement of property tax, city planning tax, etc., and consumption tax and local consumption tax.
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- 12 - (c) Operating forecast (i) Operating result for the midterm of the fiscal year ending December 2026 (27th period) The actual results of JHR for the midterm of the fiscal year ending December 2026 (27th period), along with the differences from the previous forecast (Note 1) , are detailed below. During the period, JHR's operating revenue increased by ¥ 868 million from the previous forecast, mainly due to an increase in variable rents. Additionally, net income increased by ¥975 million from the previous forecast, primarily due to decreases in non-operating expenses. Midterm of the fiscal year ending December 2026 (27th period) Actual Results Previous forecast (Note 1) Difference Percent change Operating revenue ¥22,568 million ¥21,699 million ¥868 million 4.0% Operating income ¥14,687 million ¥13,821 million ¥866 million 6.3% Ordinary income ¥11,789 million ¥10,814 million ¥975 million 9.0% Net income ¥11,789 million ¥10,814 million ¥975 million 9.0% (ii) Operating forecast for the full fiscal year ending December 2026 (27th period) JHR’s operating and dividend forecasts for the full fiscal year ending December 2026 (27th period) are estimated as follows: Operating revenue is expected to increase by ¥58 million from the previous forecast, mainly due to an increase in variable rents in the first half. Operating expenses are projected to decrease by ¥93 million after reviewing property-related expenses and operating expenses . Non-operating expenses are expected to decrease by ¥33 million, mainly due to a decrease in financial costs. As a result, net income is anticipated to rise by ¥222 million from the previous forecast. For the assumptions of these forecasts, please refer to “Assumptions of the operating forecast for the full fiscal year ending December 2026 (27th period)” on page 13. Full fiscal year ending December 2026 (27th period) Current forecast Previous forecast (Note 1) Difference Percent change Operating revenue ¥75,124 million ¥75,066 million ¥58 million 0.1% Operating income ¥58,372 million ¥58,220 million ¥151 million 0.3% Ordinary income ¥52,100 million ¥51,878 million ¥222 million 0.4% Net income ¥52,099 million ¥51,876 million ¥222 million 0.4% Dividend per unit ¥5,811 ¥5,580 ¥231 4.1% Dividend per unit resulting from excess of earnings ¥－ ¥－ ¥－ －% (Note 1) The figures were announced in the “Notice Concerning Revision of Operating and Dividend Forecasts for the Fiscal Year Ending December 2026 (27th Period) ,” dated July 17, 2026. The same shall apply hereinafter. (Note 2) The forecasted figures above are the current forecasts calculated based on certain assumptions. As such, actual operating revenue, operating income, ordinary income, net income, dividend per unit and dividend per unit resulting from excess of earnings may vary due to changes in the circumstances. Furthermore, the forecasts are not intended to guarantee any dividend amount per unit.
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- 13 - Assumptions of the operating forecast for the full fiscal year ending December 202 6 (27th period) Item Assumptions Calculation Period ・ Full fiscal year ending December 2026 (27th Period): January 1, 2026 through December 31, 2026 (365 days) Assets under Management ・ It is assumed that JHR’s portfolio consists of 52 properties as of today. ・ It is assumed that there will be no change (acquisition of new property or disposition of the existing properties, etc.) in assets under management through the end of the fiscal year ending December 202 6 (27 th period). However, changes in assets under management may take place. Operating Revenue ・ Gain on sale of real estate properties of ¥24,071 million, is expected to be recognized from the sale of The Beach Tower Okinawa on July 31, 2026. ・ Operating revenue is calculated based on the conditions of the lease and other contracts effective as of today, considering the competitiveness of hotels, market environment and other factors. If there are lease contracts with facilities other than hotels, such as commercial facilities and offices, operating revenue calculated based on the said lease contracts is included. ・ The variable rents, etc., of the main hotels are calculated as follows: (1) The 29 Hotels with Variable Rent, etc. (Unit: millions of yen) Full year The Five HMJ Hotels (*1) 4,381 Oriental Hotel Universal City 1,098 Oriental Hotel Okinawa Resort & Spa 1,563 Sheraton Grand Hiroshima Hotel (*2) 786 Oriental Hotel Fukuoka Hakata Station 1,848 Holiday Inn Osaka Namba 664 Hotel Oriental Express Fukuoka Tenjin 840 Hilton Tokyo Narita Airport 452 International Garden Hotel Narita 230 Hotel Nikko Nara 257 Hotel Oriental Express Osaka Shinsaibashi 39 Oriental Hotel Kyoto Rokujo 264 Hotel Oriental Express Fukuoka Nakasukawabata 413 Hotel JAL City Kannai Yokohama 89 Southern Beach Hotel & Resort OKINAWA 405 Hilton Fukuoka Sea Hawk 2,411 ibis Styles Kyoto Station (*3) 457 ibis Styles Sapporo (*3) 608 Mercure Sapporo (*3) 816 Mercure Okinawa Naha (*3) 481 Mercure Yokosuka 430 the b suidobashi 157 the b ikebukuro 224 the b hachioji 132 the b hakata 290 Total 19,346
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- 14 - Item Assumptions Operating Revenue (*1) The Five HMJ Hotels refer to the following five hotels which JHR leases to HMJ: Kobe Meriken Park Oriental Hotel, Oriental Hotel Tokyo Bay, Namba Oriental Hotel, Hotel Nikko Alivila and Oriental Hotel Hiroshima. The same shall apply hereinafter. (*2) Stating the rent for Sheraton Grand Hiroshima Hotel, the major facility of ACTIVE -INTER CITY HIROSHIMA. (*3) The management contract system is adopted. The management contract system refers to the operation of the hotel property owned by JHR by entrusting the operation of the hotel to the trustee and incorporating the results of the operation into JHR as income from real estate management. Each hotel’s GOP amount is recognized in operating revenues as income from management contracts. (2) Other hotels with variable rent, etc. (Unit: millions of yen) Full year dormy inn Kumamoto 107 Comfort Hotel Tokyo Higashi Nihombashi 125 Smile Hotel Nihombashi Mitsukoshimae 53 Chisun Hotel Kamata 183 Chisun Inn Keikyu Kamata 99 Hilton Tokyo Bay Undisclosed (*4) Hotel Francs 141 Hilton Nagoya Undisclosed (*4) Hilton Tokyo Odaiba －(*5) UAN kanazawa 26 Hotel Oriental Express Ginza West 590 La’gent Stay Sapporo Odori 798 MIMARU Tokyo Shinjuku West Undisclosed (*4) HOTEL AMANEK Shinjuku-Kabukicho. Undisclosed (*4) OKINAWA HARBORVIEW HOTEL 215 HYATT REGENCY TOKYO 3,248 Total 7,991 (*4) Undisclosed since tenants that concluded lease contracts did not agree to disclose rent revenue, etc. (*5) A large-scale renovation is planned for Hilton Tokyo Odaiba from February 2026 to the end of December 2027 (hereinafter called the “Renovation”). Since no variable rent is expected during the renovation period, it is indicated as “－.” The following is the breakdown of variable rent, etc. (Unit: millions of yen) Full year The 29 Hotels with Variable Rent, etc. 19,346 Other hotels with variable rent, etc. 7,991 Office and commercial tenants 36 Total 27,374 (*6) For details of variable rent, please refer to “3. Reference Information; (1) Information on values of assets under management, etc. B. Assets under management; (C) Other major assets under management; (ii) Rent structures of hotels with variable rent, etc.”
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- 15 - Item Assumptions Operating Expenses ・ With respect to real estate operating costs, which constitute a major part of the operating expenses, expenses other than depreciation are calculated based on historical data, and variable factors are reflected in the calculation. ・ It is assumed that ¥2,579 million will be recognized as expenses for fixed asset taxes, city planning taxes, etc. In general, fixed asset taxes and city planning taxes for the year of acquisition on acquired assets are settled with the previous owner on a pro-rata basis over a period of time, and the amount equivalent to such settlement is included in the acquisition cost. Therefore, the fixed asset taxes, city planning tax, etc., of the Acquired Asset are not posted as expenses for the relevant calculation period. ・ Capital expenditure is assumed to be ¥12,954 million (¥8,112 million for capital expenditure I, ¥1,113 million for capital expenditure II and ¥3,728 million for capital expenditure III ) for the fiscal year ending December 202 6 (27th period). (*) JHR classifies capital expenditures into the following three categories. (I) Capital investment related to the renewal of equipment and facilities of buildings which is required to maintain proper values of properties, (II) capital investment for fixtures, furniture, and equipment that are not directly related to the building structure or facilities but necessary for operating hotels, and (III) strategic capital investment such as renovating guest rooms, etc. for improving the competitiveness of the hotels. ・ Depreciation is calculated using the straight-line method including the planned capital expenditures above and is assumed to be ¥7,856 million. ・ Repair expenses for buildings are recognized as expenses in the assumed amount necessary for each operating period. Please note that the repair expenses of each operating period may differ materially from the forecast amount for various reasons, such as; (1) Emergency repair expenses may be necessary due to damage to buildings from unexpected causes; (2) The amount of repair expenses generally tends to increase in difference over time; and (3) Repair expenses are not required regularly. Non-operating Expenses ・ ¥6,309 million is expected as non-operating expenses for borrowing-related costs and other expenses. Borrowing- related costs include interest expense, amortization for financing fees, and arrangement fee. Interest- bearing Debt ・ The balance of interest -bearing debt (sum of loans and investment corporation bonds) as of today is ¥334,301 million. In the fiscal year ending December 2026 (27th period), it is assumed that a new borrowing of ¥ 6,000 million will be made to partially fund the large-scale renovation of Hilton Tokyo Odaiba, resulting in a balance of interest-bearing debt (sum of borrowings and investment corporation bonds) of ¥340,301 million as of the end of the fiscal year ending December 2026 (27th period). ・ The amount of loans due by the end of the fiscal year ending December 2026 (27th Period) is ¥4,950 million, but the entire amount is assumed to be refinanced through borrowings or the issuance of investment corporation bonds. ・ The amount of investment corporation bonds due by the end of the fiscal year ending December 2026 (27th Period) is ¥10,100 million, but the entire amount is assumed to be refinanced through borrowings or the issuance of investment corporation bonds.
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- 16 - Item Assumptions Dividend per Unit ・ Dividend per unit for the fiscal year ending December 2026 (27th period) is calculated based on the following assumptions. Unappropriated retained earnings ¥52,101 million Amount of reserve for advanced depreciation under special provisions for property replacement (*1) (¥18,107 million) Reversal of reserve for temporary difference adjustment (negative goodwill) 50-year amortization amount of negative goodwill (*2) ¥262 million Loss on retirement of noncurrent assets (*3) ¥54 million Distributable amount ¥34,311 million Total number of investment units issued 5,904,006 units Dividend per unit ¥5,811 (*1) A portion of the gain on the sale of real estate properties from the sale of the Beach Tower Okinawa on July 31, 2026, is planned to be allocated as reserve for advanced depreciation under special provisions for property replacement, utilizing the “Special Taxation Measures for the Replacement of Specified Assets” as stipulated in Article 65-7 of the Act on Special Measures Concerning Taxation. (*2) ¥262 million (hereinafter called “50 -year amortization amount of negative goodwill”) is scheduled to be paid out as dividends, with the remaining balance of the reserve for temporary difference adjustment set as the maximum amount, for every fiscal year. (*3) The amount recognized as a loss on retirement of noncurrent assets will be appropriated by the reserve for temporary difference adjustment (negative goodwill) and is expected to have no impact on the dividend per unit. ・ Dividend per unit may fluctuate due to various causes, such as fluctuation of rent revenue resulting from the transfer of assets under management, change of tenants, etc., at hotels, change in the business environment of hotel business for hotel tenants, etc., unexpected repairs, and an actual number of new investment units issued, etc. ・ The remaining balance of the reserve for temporary difference adjustment (negative goodwill) after the appropriation of the reserve for temporary difference adjustment (negative goodwill) for dividends for the fiscal year ending December 2026 (27th period) is expected to be ¥6,173 million. Dividend per Unit Resulting from Excess of Earnings ・ It is assumed that the excess of earnings (dividend per unit resulting from an excess of earnings) will not be distributed. Others ・ It is assumed that there will be no amendments to laws and regulations, the tax system, accounting standards, listing rules, or the regulations of the Investment Management Association of Japan, etc., that will affect the above forecast figures. ・ It is assumed that unexpected major incidents will not occur in the general economy, real estate market , hotel business environment, etc. ・ The numerical values are rounded down to the nearest millions of yen in the assumptions above.
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- 17 - <Reference Information 1> Highlight of operating forecast and dividend estimate Comparison of operati onal fore cast and estimated dividend for the full fiscal year ending December 202 6 (27th period) (current forecast) with the previous forecast and main reasons for the difference (*) Each figure is calculated using the following formulas. The same shall apply hereinafter. NOI (Net Operating Income) = Real estate operating revenue – Real estate operating costs + Depreciation + Loss on retirement of noncurrent assets + Asset retirement obligations expenses NOI after depreciation = Real estate operating revenue – Real estate operating costs (Unit: millions of yen) FY12/2026 (27th Period) FY12/2026 (27th Period) Previous Forecast Current Forecast (A) (B) 52 52 － － 648,101 648,101 － － 75,066 75,124 58 0.1% 50,994 51,052 58 0.1% Fixed Rent 22,576 22,574 (1) (0.0%) Composition 45.2% 45.2% Variable Rent 27,342 27,374 31 0.1% Composition 54.8% 54.8% Other Income 1,075 1,103 27 2.6% 24,071 24,071 － － 45,809 45,853 43 0.1% 37,887 37,940 53 0.1% 58,220 58,372 151 0.3% 51,878 52,100 222 0.4% 51,876 52,099 222 0.4% 312 316 4 1.3% (19,240) (18,107) 1,133 － 32,944 34,308 1,363 4.1% 5,904,006 5,904,006 － － 5,580 5,811 231 4.1% Amount of reversal from reserve for temporary difference adjustments Previous Forecast: 50-year amortization amount on negative goodwill: JPY262M M Loss on retirement of noncurrent assets: JPY 50M M Current Forecast: 50-year amortization amount on negative goodwill: JPY262M M Loss on retirement of noncurrent assets: JPY 54M M No. of Unit Issued (Unit) Dividend per Unit (JPY) Amount of Reserv e for Adv anced Depreciation under Special Provisions for Property Replacement T otal Div idends Net Income Dividend Amount of Rev ersal from Reserv e for T emporary Difference Adjustment (Negative Goodwill) Ordinary Income Operating Income NOI after Depreciation (*) Gain on Sale of Properties Profit and Loss Operating Rev enue Real E state Operating Rev enue NOI (*) Properties No. of Properties Acq uisition Price Factors Causing V ariance (B)-(A) % of increase/ decrease Difference
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- 18 - <Reference Information 2> Hotel operation indexes, sales, and GOP (gross operating profit) The numeral figures are based on figures obtained from hotel lessees, etc. Please note that these figures have not been audited nor have they gone through other procedures. No guarantee is made as to the accuracy or completeness of the figures and information. ADR (Note 1) and RevPAR (Note 2) are rounded off to the nearest yen. Sales and GOP are rounded off to the nearest millions of yen. Occupancy rate and comparison with the previous period are rounded off to one decimal place. < The 29 Hotels with Variable Rent, etc. > Fiscal year ended December 2025 Fiscal year ending December 2026 Result Previous forecast Current forecast Comparison with previous fiscal year Comparison with previous forecast Occupancy rate First half of the year 82.1％ 82.9％ 83.5％ 1.3pt 0.6pt Second half of the year 85.0％ 86.8％ 88.4％ 3.4pt 1.6pt Full year 83.6％ 84.8％ 85.9％ 2.4pt 1.1pt ADR (JPY) First half of the year 19,264 19,764 19,890 3.3％ 0.6％ Second half of the year 22,155 23,195 22,203 0.2％ (4.3％) Full year 20,746 21,533 21,089 1.7％ (2.1％) RevPAR (JPY) First half of the year 15,817 16,379 16,599 4.9％ 1.3％ Second half of the year 18,830 20,130 19,619 4.2％ (2.5％) Full year 17,336 18,270 18,121 4.5％ (0.8％) Sales (JPY1M) First half of the year 37,547 38,587 39,280 4.6％ 1.8％ Rooms dept. 25,133 26,026 26,375 4.9％ 1.3％ F&B dept. 10,993 11,036 11,355 3.3％ 2.9％ Others 1,421 1,525 1,549 9.0％ 1.6％ Sales (JPY1M) Second half of the year 44,343 46,788 46,052 3.9％ (1.6％) Rooms dept. 30,416 32,516 31,691 4.2％ (2.5％) F&B dept. 12,227 12,584 12,724 4.1％ 1.1％ Others 1,700 1,688 1,636 (3.7％) (3.1％) Sales (JPY1M) Full year 81,890 85,375 85,332 4.2％ (0.1％) Rooms dept. 55,549 58,542 58,066 4.5％ (0.8％) F&B dept. 23,220 23,620 24,080 3.7％ 1.9％ Others 3,121 3,213 3,185 2.1％ (0.9％) GOP (JPY1M) First half of the year 13,660 14,095 14,422 5.6％ 2.3％ Second half of the year 17,923 19,421 19,100 6.6％ (1.6％) Full year 31,583 33,516 33,522 6.1％ 0.0％ (Note 1) ADR: This represents the average daily rate, calculated by dividing total room revenue for a certain period (including service charges) by the total number of rooms sold during the period. The same shall apply hereinafter. (Note 2) RevPAR: This represents revenue per available room, calculated by dividing total room revenue for a certain period (including service charges) by the total number of rooms available for sale during the period. The same shall apply hereinafter.
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- 19 - 2. Semi-annual financial statements (1) Semi-annual balance sheets (Unit: thousands of yen) As of December 31, 2025 As of June 30, 2026 Assets Current assets Cash and deposits 26,388,683 9,633,606 Cash and deposits in trust 15,592,444 16,868,002 Operating accounts receivable 7,970,249 5,378,142 Prepaid expenses 982,882 1,145,283 Income taxes receivable 11,481 － Derivative assets 23,866 101,701 Other current assets 25,189 190,825 Total current assets 50,994,797 33,317,562 Noncurrent assets Property and equipment, at cost Machinery and equipment 1,387,952 1,473,895 Accumulated depreciation (656,939) (716,714) Machinery and equipment, net 731,012 757,181 Tools, furniture and fixtures 9,404,302 9,798,624 Accumulated depreciation (5,892,049) (6,325,258) Tools, furniture and fixtures, net 3,512,253 3,473,365 Buildings in trust ※１ 191,150,641 ※１ 199,665,836 Accumulated depreciation (44,461,856) (47,540,464) Buildings in trust, net 146,688,785 152,125,372 Structures in trust 3,805,070 4,401,637 Accumulated depreciation (896,977) (944,846) Structures in trust, net 2,908,093 3,456,790 Machinery and equipment in trust 884,751 946,174 Accumulated depreciation (344,040) (367,052) Machinery and equipment in trust, net 540,711 579,121 Tools, furniture and fixtures in trust 129,718 129,718 Accumulated depreciation (115,982) (116,712) Tools, furniture and fixtures in trust, net 13,736 13,005 Land in trust 330,376,769 450,652,059 Construction in progress in trust 134,439 1,405,108 Net property and equipment 484,905,800 612,462,005 Intangible assets Software 194,446 197,483 Leasehold rights in trust 27,324,752 27,324,752 Fixed-term leasehold rights in trust 4,089,967 4,022,364 Other intangible assets 3,201 2,861 Total intangible assets 31,612,367 31,547,461 Investments and other assets Security deposits 12,520 12,500 Leasehold and security deposits in trust 139,668 139,668 Long-term prepaid expenses 3,636,487 3,803,584 Derivative assets 4,968,392 6,873,070 Reserve fund for repairs and maintenance 249,298 266,953 Total investments and other assets 9,006,367 11,095,777 Total noncurrent assets 525,524,536 655,105,245 Deferred assets Investment unit issuance costs 105,609 300,831 Investment corporation bond issuance costs 58,610 46,856 Total deferred assets 164,220 347,687 Total assets 576,683,553 688,770,495
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- 20 - (Unit: thousands of yen) As of December 31, 2025 As of June 30, 2026 Liabilities Current liabilities Operating accounts payable 4,010,343 1,200,620 Current portion of investment corporation bonds 13,100,000 10,100,000 Current portion of long-term loans payable 22,780,000 40,400,000 Accrued expenses 879,670 1,053,836 Income taxes payable 1,210 605 Consumption taxes payable 1,065,969 715,870 Advances received 857,060 840,845 Dividends payable 12,953 22,558 Deposits received 2,688 26,754 Other current liabilities 198,217 723,274 Total current liabilities 42,908,112 55,084,366 Long-term liabilities Investment corporation bonds 20,600,000 20,600,000 Long-term loans payable 212,901,000 263,201,000 Tenant leasehold and security deposits 1,040,520 1,044,187 Tenant leasehold and security deposits in trust 4,161,611 3,988,574 Derivative liabilities － 1,701 Deferred tax liabilities 1,614,286 2,255,551 Asset retirement obligations 343,350 344,181 Total long-term liabilities 240,660,769 291,435,196 Total liabilities 283,568,881 346,519,563 Net assets Unitholders’ equity Unitholders’ capital 232,708,699 294,511,987 Surplus Capital surplus 21,746,398 21,746,398 V oluntary reserve Reserve for temporary difference adjustment ※２ 6,959,044 ※２ 6,490,327 Reserve for advanced depreciation 1,174,860 2,992,860 Total voluntary reserve 8,133,905 9,483,188 Unappropriated retained earnings (undisposed loss) 27,147,695 11,791,838 Total surplus 57,027,999 43,021,425 Total unitholders’ equity 289,736,699 337,533,413 Valuation and translation adjustments Deferred gains (losses) on hedges 3,377,972 4,717,518 Total valuation and translation adjustments 3,377,972 4,717,518 Total net assets ※３ 293,114,671 ※３ 342,250,932 Total liabilities and net assets 576,683,553 688,770,495
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- 21 - (2) Semi-annual statements of income (Unit: thousands of yen) For the six months ended June 30, 2025 For the six months ended June 30, 2026 Operating revenue Real estate operating revenue ※１ 18,585,934 ※１ 22,008,571 Other real estate operating revenue ※１ 549,145 ※１ 559,569 Gain on sale of real estate properties ※２ 2,346,230 － Total operating revenue 21,481,309 22,568,140 Operating Expenses Real estate operating costs ※１ 5,544,352 ※１ 6,285,301 Asset management fee 1,205,288 1,381,345 Asset custody and administrative service fee 69,894 80,173 Directors’ compensation 8,700 8,700 Other operating expenses 195,534 124,972 Total operating expenses 7,023,770 7,880,491 Operating income 14,457,539 14,687,648 Non-operating income Interest income 26,091 33,016 Gain on forfeiture of unclaimed dividends 1,135 1,156 Gain on insurance claims － 3,292 Interest on tax refunds 87 115 Total non-operating income 27,313 37,580 Non-operating Expenses Interest expense 1,286,107 2,068,442 Interest expense on investment corporation bonds 133,852 137,222 Borrowing costs 639,431 643,420 Amortization of investment corporation bond issuance costs 13,356 11,754 Amortization of investment unit issuance costs 39,347 68,668 Other non-operating expenses 5,721 5,742 Total non-operating expenses 2,117,817 2,935,250 Ordinary income 12,367,035 11,789,978 Extraordinary income Gain on sale of trademark rights 398,251 － Total extraordinary income 398,251 － Income (loss) before income taxes 12,765,287 11,789,978 Income taxes – current 605 605 Total income taxes 605 605 Net income (loss) 12,764,682 11,789,373 Retained earnings brought forward 2,636 2,465 Unappropriated retained earnings (undisposed loss) 12,767,319 11,791,838
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- 22 - (3) Semi-annual statements of changes in net assets For the six months ended June 30, 2025 Valuation and translation adjustments Total net assets Deferred gains (losses) on hedges Total valuation and translation adjustments Balance, January 1, 2025 744,087 744,087 283,402,640 Changes of items during the period Reversal of reserve for temporary difference adjustment － Dividends paid (20,066,912) Net income 12,764,682 Net changes in items other than unitholders’ equity 478,015 478,015 478,015 Total changes in amount during the period 478,015 478,015 (6,824,213) Balance, June 30, 2025 1,222,103 1,222,103 276,578,426 (Unit: thousands of yen) Unitholders’ equity Unitholders’ capital Surplus Total unitholders’ equity Capital surplus V oluntary reserve Unappropriated retained earnings (undisposed loss) Total surplus Reserve for temporary difference adjustment Reserve for advanced depreciation Total voluntary reserve Balance, January 1, 2025 232,708,699 21,746,398 8,754,629 1,174,860 9,929,490 18,273,964 49,949,853 282,658,552 Changes of items during the period Reversal of reserve for temporary difference adjustment (1,795,584) (1,795,584) 1,795,584 － － Dividends paid (20,066,912) (20,066,912) (20,066,912) Net income 12,764,682 12,764,682 12,764,682 Net changes in items other than unitholders’ equity Total changes in amount during the period － － (1,795,584) － (1,795,584) (5,506,645) (7,302,229) (7,302,229) Balance, June 30, 2025 *1 232,708,699 21,746,398 6,959,044 1,174,860 8,133,905 12,767,319 42,647,623 275,356,322
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- 23 - For the six months ended June 30, 2026 Valuation and translation adjustments Total net assets Deferred gains (losses) on hedges Total valuation and translation adjustments Balance, January 1, 2026 3,377,972 3,377,972 293,114,671 Changes of items during the period Issuance of new investment units 61,803,288 Reversal of reserve for temporary difference adjustment － Provision of reserve for special advanced depreciation － Dividends paid (25,795,947) Net income 11,789,373 Net changes in items other than unitholders’ equity 1,339,546 1,339,546 1,339,546 Total changes in amount during the period 1,339,546 1,339,546 49,136,260 Balance, June 30, 2026 4,717,518 4,717,518 342,250,932 (Unit: thousands of yen) Unitholders’ equity Unitholders’ capital Surplus Total unitholders’ equity Capital surplus V oluntary reserve Unappropriated retained earnings (undisposed loss) Total surplus Reserve for temporary difference adjustment Reserve for advanced depreciation Total voluntary reserve Balance, January 1, 2026 232,708,699 21,746,398 6,959,044 1,174,860 8,133,905 27,147,695 57,027,999 289,736,699 Changes of items during the period Issuance of new investment units 61,803,288 61,803,288 Reversal of reserve for temporary difference adjustment (468,716) (468,716) 468,716 － － Provision of reserve for special advanced depreciation 1,818,000 1,818,000 (1,818,000) － － Dividends paid (25,795,947) (25,795,947) (25,795,947) Net income 11,789,373 11,789,373 11,789,373 Net changes in items other than unitholders’ equity Total changes in amount during the period 61,803,288 － (468,716) 1,818,000 1,349,283 (15,355,857) (14,006,573) 47,796,714 Balance, June 30, 2026 *1 294,511,987 21,746,398 6,490,327 2,992,860 9,483,188 11,791,838 43,021,425 337,533,413
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- 24 - (4) Semi-annual statements of cash flows (Unit: thousands of yen) For the six months ended June 30, 2025 For the six months ended June 30, 2026 Cash flows from operating activities Income before income taxes 12,765,287 11,789,978 Depreciation and amortization 3,157,991 3,782,355 Loss on retirement of noncurrent assets 110,094 4,172 Amortization of investment corporation bond issuance costs 13,356 11,754 Amortization of investment unit issuance costs 39,347 68,668 Decrease of property and equipment due to sale 195 － Decrease of property and equipment in trust due to sale 2,094,231 － Interest income (26,091) (33,016) Interest expense 1,419,960 2,205,665 Interest on tax refunds (87) (115) Gain on sale of trademark rights (398,251) － (Increase) decrease in operating accounts receivable 1,627,181 2,592,107 (Increase) decrease in prepaid expenses (175,410) (162,401) (Increase) decrease in long-term prepaid expenses (658,089) (167,097) Increase (decrease) in operating accounts payable (143,795) (306,154) Increase (decrease) in accrued expenses 30,158 79,152 Increase (decrease) in consumption taxes payable (176,277) (350,098) Increase (decrease) in advances received (15,899) (16,214) Increase (decrease) in deposits received (28,505) 24,065 Other 366,268 352,473 Subtotal 20,001,665 19,875,295 Interest received 20,787 40,659 Interest paid (1,421,860) (2,110,652) Interest received on tax refunds 87 115 Income taxes - refunded (paid) (759) 10,271 Net cash provided by (used in) operating activities 18,599,920 17,815,690 Cash flows from investing activities Purchase of property and equipment (655,627) (1,132,302) Purchase of property and equipment in trust (68,554,039) (132,546,611) Purchase of intangible assets (1,876) (99,467) Proceeds from sale of intangible assets 692,720 － Payments of reserve fund for repairs and maintenance (20,312) (21,933) Proceeds from security deposits － 20 Proceeds from tenant leasehold and security deposits － 3,667 Proceeds from tenant leasehold and security deposits in trust 216,752 9,375 Repayments of tenant leasehold and security deposits in trust (136,656) (182,168) Net cash provided by (used in) investing activities (68,459,040) (133,969,421) Cash flows from financing activities Proceeds from long-term loans payable 72,350,000 85,750,000 Repayments of long-term loans payable (8,000,000) (17,830,000) Repayments of investment corporation bond － (3,000,000) Proceeds from issuance of investment units － 61,539,397 Dividends paid (20,060,322) (25,785,185) Net cash provided by (used in) financing activities 44,289,677 100,674,211 Net increase (decrease) in cash and cash equivalents (5,569,442) (15,479,519) Cash and cash equivalents at beginning of period 36,029,120 41,981,128 Cash and cash equivalents at end of period *1 30,459,678 *1 26,501,609
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- 25 - (5) Notes on going concern assumption Not applicable. (6) Notes on matters concerning significant accounting policies 1. Method of depreciation and amortization of noncurrent assets (1) Property and equipment (including trust accounts) Property and equipment are amortized using the straight -line method. The useful lives of major property and equipment components are as follows: Machinery and equipment 2 to 17 years Tools, furniture and fixtures 2 to 26 years Buildings in trust 2 to 64 years Structures in trust 2 to 64 years Machinery and equipment in trust 2 to 32 years Tools, furniture and fixtures in trust 2 to 27 years (2) Intangible assets Intangible assets are amortized using the straight -line method. The amortization period of major intangible assets is as follows. Software (internal use) 5 years Fixed-term leasehold rights in trust are amortized using the straight -line method based on the remaining period (41 years) of the contract. (3) Long-term prepaid expenses Long-term prepaid expenses are amortized using the straight-line method. 2. Accounting for deferred assets (1) Investment unit issuance costs Investment unit issuance costs are amortized using the straight-line method over three years. (2) Investment corporation bond issuance costs Investment corporation bond issuance costs are amortized using the interest method over the respective term of the bond. 3. Accounting for recognition of revenues and expenses (1) Revenue recognition The details of main performance obligations concerning revenue generated from contracts with JHR’s customers and the ordinary time to fulfill such performance obligations (ordinary time to recognize revenue) are as follows. (a) Sale of real estate properties For the proceeds from sale of real estate properties, JHR recognizes revenue when the purchaser who is a customer obtains control of the relevant real estate properties, etc. , as a result of the seller fulfilling its delivery obligations stipulated in the transaction agreement of the real estate, properties, etc. The amount obtained by deducting “Cost of sale of properties,” which is the book value of real estate properties, etc. sold, and “Other selling expenses,” which are the various expenses directly required in the sale, from “Proceeds from sale of properties,” which are the sales proceeds of real estate properties, etc., is indicated as “Gain on sales of real estate properties” or “Loss on sales of real estate properties” in the statements of income. There is no gain or loss on sales of real estate properties in the previous and current midterm periods under review. (b) Utilities income For utilities income, JHR recognizes revenue in accordance with the supply of electricity, water, etc. to the lessee who is a customer based on the lease contracts of real estate properties, etc. and agreements incidental to it. (2) Treatment of property taxes and other taxes For taxes imposed on properties, etc., under management, such as property taxes, city planning taxes, and depreciable asset taxes, the imposed amounts are allocated to the midterm period and expensed as “Real estate operating costs.” Cash paid for property taxes and city planning taxes, etc. , to the transferor of real estate properties, etc., at acquisition is not recorded as “Real estate operating costs” but capitalized as part of the acquisition cost of the relevant property. The amount of such taxes capitalized in the acquisition cost of real properties, etc. was ¥294,794 thousand for the previous midterm period and was ¥568,869 thousand for the current midterm period under review.
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- 26 - 4. Method of hedge accounting (1) Method of hedge accounting Deferred hedge accounting is applied (2) Hedging instruments and hedged items Hedging instruments Interest rate swaps Hedged items Interest rates on loans payable (3) Hedging policy JHR enters into certain derivative transactions in accordance with its financial policy in order to manage risks, which are defined in the Articles of Incorporation. (4) Method for assessing hedge effectiveness JHR evaluates hedge effectiveness by comparing the cumulative changes in cash flow of hedging instruments and the hedged items and assessing the ratio between the changes. 5. Scope of funds (cash and cash equivalents) in the semi-annual statements of cash flows Cash and cash equivalents in the semi-annual statements of cash flows consist of cash on hand, cash in trust accounts, bank deposit and trust deposit, which can be withdrawn at any time, and short -term investments with a maturity of three months or less wh en purchased, which can easily be converted to cash and subject to minimal risk of change in value. 6. Other significant matters serving as the basis for preparing semi-annual financial statements Accounting treatment of beneficial interests in trust with real estate, etc., as their assets For trust beneficial interests in real estate, etc., under management, all assets and liabilities held in trust accounts as well as all income generated and expenses incurred from assets in trust are presented in the accompanying semi-annual balance sheet and income statement accounts accordingly. The following material items of the trust accounts recorded in the relevant accounts are presented separately on the semi-annual balance sheets. (a) Cash and deposits in trust (b) Buildings in trust; Structures in trust; Machinery and equipment in trust; Tools, furniture and fixtures in trust; Land in trust; Construction in progress in trust (c) Leasehold rights in trust; Fixed-term leasehold rights in trust; Leasehold and security deposits in trust (d) Tenant leasehold and security deposits in trust
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- 27 - (7) Notes to semi-annual financial statements Disclosure of notes on “securities” and “share of (profit) loss of entities accounted for using equity method” is omitted bec ause there is thought to be no significant need for disclosure in the midterm financial report. [Notes to semi-annual balance sheets] *1. T he accumulated advanced depreciation of property and equipment deducted from acquisition costs due to government subsidies received, etc. (Unit: thousands of yen) As of December 31, 2025 As of June 30, 2026 Buildings in trust 230,645 230,645 *2. P rovision and reversal of reserve for temporary difference adjustment As of December 31, 2025 (Unit: thousands of yen) Original amount Balance at beginning of period Amount of provision during period Amount of reversal during period Balance at end of period Rationale for provision or reversal Dividend reserve (Note) 13,127,153 8,754,629 － 1,795,584 6,959,044 Allocation for dividend (Note) Dividend reserve indicates the remaining balance of the amount subdivided into gain on negative goodwill, which was recorded as a dividend reserve before the fiscal year ended December 2016, and is scheduled for reversal every fiscal year starting from the fiscal year following the fiscal year in which the reserve was made in an amount that shall be no less than that in equal amounts every fiscal year over a period of no more than 50 years. As of June 30, 2026 (Unit: thousands of yen) Original amount Balance at beginning of period Amount of provision during period Amount of reversal during period Balance at end of period Rationale for provision or reversal Dividend reserve (Note) 13,127,153 6,959,044 － 468,716 6,490,327 Allocation for dividend (Note) Dividend reserve indicates the remaining balance of the amount subdivided into gain on negative goodwill, which was recorded as a dividend reserve before the fiscal year ended December 2016, and is scheduled for reversal every fiscal year starting from the fiscal year following the fiscal year in which the reserve was made in an amount that shall be no less than that in equal amounts every fiscal year over a period of no more than 50 years. *3. Minimum net assets as required by Article 67, Paragraph 4 of the Investment Trust Act (Unit: thousands of yen) As of December 31, 2025 As of June 30, 2026 ¥50,000 ¥50,000
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- 28 - [Notes to semi-annual statements of income] *1. Components of real estate operating revenue and real estate operating costs (Unit: thousands of yen) For the six months ended June 30, 2025 For the six months ended June 30, 2026 A. Real estate operating revenue Real estate operating revenue Fixed rent 9,459,850 10,924,677 Variable rent 8,191,836 10,031,774 Income from management contracts 934,246 1,052,119 Total 18,585,934 22,008,571 Other real estate operating revenue Parking lots 72,241 79,521 Other incidental revenue 28,331 21,543 Utilities 374,453 385,307 Other 74,118 73,197 Total 549,145 559,569 Total real estate operating revenue 19,135,079 22,568,140 B. Real estate operating costs Real estate operating costs Land lease and other rent expenses 429,497 429,495 Property taxes 1,101,197 1,247,055 Outsourcing expenses (Note) 222,055 281,772 Nonlife insurance 82,160 93,060 Depreciation and amortization 3,157,991 3,782,355 Loss on retirement of noncurrent assets 110,094 4,172 Repairs 7,006 6,918 Utilities 396,980 407,195 Trust fees 24,914 26,515 Other 12,456 6,759 Total real estate operating costs 5,544,352 6,285,301 C. Net real estate operating income (A-B) 13,590,726 16,282,838 (Note) Outsourcing expenses include management contract fees of ¥54,728 thousand for the six months ended June 30, 2025 , and ¥81,703 thousand for the six months ended June 30, 2026. *2. Breakdown of gain on sale of real estate properties For the year ended June 30, 2025 (Unit: thousands of yen) Washington Hotel Plaza Hakata, Nakasu Proceeds from sale of properties 4,610,000 Cost of sale of properties 2,094,427 Other selling expenses 169,342 Gain on sale of real estate properties 2,346,230 For the year ended June 30, 2026 Not Applicable.
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- 29 - [Notes to semi-annual statements of changes in net assets] *1. Total number of investment units authorized, issued and outstanding For the six months ended June 30, 2025 For the six months ended June 30, 2026 Total number of investment units authorized 20,000,000 units 20,000,000 units Total number of investment units issued and outstanding 5,097,006 units 5,904,006 units [Notes to semi-annual statements of cash flows] *1. Relation of the balance of cash and cash equivalents at the end of the period and the amount in semi -annual balance sheet accounts (Unit: thousands of yen) For the six months ended June 30, 2025 For the six months ended June 30, 2026 Cash and deposits 16,347,995 9,633,606 Cash and deposits in trust 14,111,682 16,868,002 Cash and cash equivalents 30,459,678 26,501,609 [Notes on lease transactions] Operating leases (as lessor) Minimum rental revenue under non-cancellable operating leases (Unit: thousands of yen) As of December 31, 2025 As of June 30, 2026 Due within one year 693,654 825,490 Due after one year 2,389,301 2,580,462 Total 3,082,955 3,405,952
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- 30 - [Notes on financial instruments] Matters concerning fair value, etc., of financial instruments. Carrying amounts of financial instruments on the (semi -annual) balance sheets, their fair values, and the differences were as follows. Furthermore, notes on “Cash and deposits,” “Cash and deposits in trust,” “Operating accounts receivable” and “Short- term loans payable” are omitted as these are settled with cash and within a short period of time, and thus, the fair value approximates the book value. As of December 31, 2025 (Unit: thousands of yen) Carrying amount Fair value Difference (1) Current portion of investment corporation bonds payable 13,100,000 12,999,497 (100,503) (2) Current portion of long-term loans payable 22,780,000 22,780,000 － (3) Investment corporation bonds 20,600,000 19,910,398 (689,602) (4) Long-term loans payable 212,901,000 212,631,125 (269,874) Total liabilities 269,381,000 268,321,020 (1,059,979) (5) Derivative transactions (*) 4,992,259 4,992,259 ― As of June 30, 2026 (Unit: thousands of yen) Carrying amount Fair value Difference (1) Current portion of investment corporation bonds payable 10,100,000 10,051,419 (48,581) (2) Current portion of long-term loans payable 40,400,000 40,419,321 19,321 (3) Investment corporation bonds 20,600,000 19,921,268 (678,732) (4) Long-term loans payable 263,201,000 262,865,367 (335,632) Total liabilities 334,301,000 333,257,376 (1,043,623) (5) Derivative transactions (*) 6,973,069 6,973,069 ― (*) Receivables and payables arising from derivative transactions are presented on a net basis and amounts in parentheses denote net payables. (Note) Methods to measure fair value of financial instruments, and derivative transactions (1) Current portion of investment corporation bonds payable; (3) Investment corporation bonds The fair value of these instruments is measured based on the market price. (2) Current portion of long-term loans payable; (4) Long-term loans payable For long-term loans payable with floating interest rates, the book value is recognized as the fair value because the interest rate is periodically revised, which results in the fair value approximating the book value. For long-term loans payable with fixed interest rates, the present value is calculated by discounting the total principal and interest at the assumed rate for similar new borrowings. (5) Derivative transactions The information on the fair value of derivative transactions is presented in “Notes on derivative transactions” below.
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- 31 - [Notes on derivative transactions] 1. Derivative transactions to which hedge accounting is not applied As of December 31, 2025 Not applicable. As of June 30, 2026 Not applicable. 2. Derivative transactions to which hedge accounting is applied For derivative transactions in which hedge accounting is not applied, the contract amounts or the principal amounts equivalent to the principal provided in the contracts. etc., as of the interim and year-end account closing dates were as follows: As of December 31, 2025 (Unit: thousands of yen) Method of hedge accounting Type, etc., of derivative transaction Main hedged item Contract amount, etc. Fair value Method to measure the fair value Of which, due after one year Deferral method Interest rate swaps (fixed rate payment, floating rate receipt) Long-term loans payable 171,389,000 167,139,000 4,992,259 The fair value is measured at the quoted price, etc., obtained from the counterparty financial institutions. As of June 30, 2026 (Unit: thousands of yen) Method of hedge accounting Type, etc., of derivative transaction Main hedged item Contract amount, etc. Fair value Method to measure the fair value Of which, due after one year Deferral method Interest rate swaps (fixed rate payment, floating rate receipt) Long-term loans payable 198,889,000 183,089,000 6,973,069 The fair value is measured at the quoted price, etc., obtained from the counterparty financial institutions. [Notes on asset retirement obligations] Asset retirement obligations recognized on the balance sheet 1. Outline of the subject asset retirement obligations JHR recognizes asset retirement obligations as it is obliged to restore the land of Oriental Hotel Fukuoka Hakata Station (former name: Hotel Centraza Hakata), acquired on April 1, 2016 to the original state in accordance with the fixed -term leasehold agreement. 2. Calculation method of the subject asset retirement obligations Calculated the amount of asset retirement obligations by estimating the expected useful period of use of 34 years based on the remaining useful lives of the period of buildings and using the discount rate of 0.484%. 3. Increase and decrease of the subject asset retirement obligations (Unit: thousands of yen) For the year ended December 31, 2025 For the six months ended June 30, 2026 Balance at beginning of period 341,696 343,350 Adjustment due to passage of time 1,653 830 Balance at end of midterm period (fiscal period) 343,350 344,181
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- 32 - [Notes on segment and related information] 1. Segment information The segment information has been omitted because JHR has no segments other than the investment and management of hotel real estate. 2. Related information For the six months ended June 30, 2025 (1) Information about products and services Information about products and services has been omitted because operating revenue from external customers in a single product/service category accounted for more than 90% of total operating revenue on the semi-annual statements of income. (2) Information about geographical areas (i) Operating revenue Information about geographical areas has been omitted because operating revenue from external customers in Japan accounted for more than 90% of total operating revenue on the semi-annual statements of income. (ii) Property and equipment, at cost Information about property and equipment has been omitted because the amount of property and equipment located in Japan accounted for more than 90% of net property and equipment on the semi-annual balance sheets. (3) Information about major customers (Unit: thousands of yen) Name of customer Operating revenue Name of related segment Hotel Management Japan Co., Ltd. (Note) 11,867,655 Investment and management of hotel real estate (Note) Operating revenue includes the operating revenue from customers belonging to the same company group as said customers. For the six months ended June 30, 2026 (1) Information about products and services Information about products and services has been omitted because operating revenue from external customers in a single product/service category accounted for more than 90% of total operating revenue on the semi-annual statements of income. (2) Information about geographical areas (i) Operating revenue Information about geographical areas has been omitted because operating revenue from external customers in Japan accounted for more than 90% of total operating revenue on the semi-annual statements of income. (ii) Property and equipment, at cost Information about property and equipment has been omitted because the amount of property and equipment located in Japan accounted for more than 90% of net property and equipment on the semi-annual balance sheets. (3) Information about major customers (Unit: thousands of yen) Name of customer Operating revenue Name of related segment Hotel Management Japan Co., Ltd. (Note) 15,146,914 Investment and management of hotel real estate (Note) Operating revenue includes the operating revenue from customers belonging to the same company group as said customers.
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- 33 - [Notes on rental properties, etc.] JHR owns rental properties for hotels to earn lease income and income from management contracts. The carrying amounts, changes in such balances, and fair values of such properties were as follows: (Unit: thousands of yen) Use For the year ended December 31, 2025 For the six months ended June 30, 2026 Hotel Carrying amount Balance at beginning of period 451,231,225 516,511,273 Net increase (decrease) during period 65,280,048 127,487,914 Balance at end of midterm period (fiscal period) 516,511,273 643,999,188 Fair value at end of midterm period (fiscal period) 703,630,000 923,670,000 (Note 1) For the year ended December 31, 2025 , the increase was principally due to acquisition of Hilton Fukuoka Sea Hawk (¥65,186,395 thousand), and the decrease was principally due to disposition of Washington Hotel Plaza Hakata, Nakasu (¥2,094,427 thousand), and depreciation. For the six months ended June 30, 2026, the increase was principally due to acquisition of HYATT REGENCY TOKYO (¥127,227,960 thousand), and the decrease was principally due to depreciation. (Note 2) Fair value at end of midterm period (fiscal period) is the appraisal value determined by licensed real estate appraisers from outside. Regarding the Fair value at the end of the midterm period for the six months ended June 30, 2026, the fair value of The Beach Tower Okinawa, which was sold on July 31, 2026, was valued at the sale price. [Notes on revenue recognition] For the six months ended June 30, 2025 Breakdown of information on revenue generated from contracts with customers For the breakdown of information on revenue generated from contracts with customers, please refer to “*1. Components of real estate operating revenue and real estate operating costs” and “*2. Breakdown of gain on sale of real estate properties” in [Notes to semi-annual statements of income]. “*1. Components of real estate operating revenue and real estate operating costs” include revenue based on the “Accounting Standard for Lease Transactions” (Corporate Accounting Standard No. 13). In addition, the revenue generated from contracts with major customers is ”Proceeds from sale of properties” and “Utilities income.” For the six months ended June 30, 2026 Breakdown of information on revenue generated from contracts with customers For the breakdown of information on revenue generated from contracts with customers, please refer to “*1. Components of real estate operating revenue and real estate operating costs” in [Notes to semi-annual statements of income]. “*1. Components of real estate operating revenue and real estate operating costs” include revenue based on the “Accounting Standard for Lease Transactions” (Corporate Accounting Standard No. 13). In addition, the revenue generated from contracts with major customers is “Utilities income.”
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- 34 - [Notes on per unit information] Net assets per unit is as follows: As of December 31, 2025 As of June 30, 2026 Net assets per unit (JPY) 57,507 57,969 Net income per unit and the basis of computation of net income per unit for midterm are as follows: For the six months ended June 30, 2025 For the six months ended June 30, 2026 Net income (loss) per unit (JPY) 2,504 2,103 [Basis of computation] Net income for midterm (JPY 1,000) 12,764,682 11,789,373 Amount not attributable to common unitholders (JPY 1,000) ― ― Net income for midterm attributable to common investment units (JPY 1,000) 12,764,682 11,789,373 Average number of investment units during period (units) 5,097,006 5,605,282 (Note) Net income per unit for midterm is computed by dividing net income for midterm by the average number of investment units during the midterm period. Net income per unit for midterm after the adjustment of potentially dilutive units is not presented since there are no potentially dilutive units. [Notes on significant subsequent events] 1. Sale of asset JHR sold the following asset on July 31, 2026. Name of sold asset The Beach Tower Okinawa Asset category Real estate beneficial interest in trust Asset type Hotel Location 8-6 Aza Mihama, Chatan-cho, Nakagami-gun, Okinawa Sale price (Note 1) ¥30,900 million Gain on sale (forecast) (Note 2) ¥24,071 million Closing date July 31, 2026 Buyer Mihama Terroir TMK (Note 1) The sale price does not include selling expenses, settlement of property tax, city planning tax, etc., and consumption tax and local consumption tax. (Note 2) The amount obtained by deducting the book value (forecast) and selling expenses (forecast) from the sale price is indicated. 2. Acquisition of asset JHR acquired the following asset on August 3, 2026. Name of acquired asset Candeo Hotels Osaka Namba Asset category Real estate beneficial interest in trust and movable assets associated with the hotel Asset type Hotel Location 2-2-5, Higashi-shinsaibashi, Chuo-ku, Osaka city, Osaka Acquisition date August 3, 2026 Seller GK Hikari Hotel Acquisition price (Note) ¥14,320 million (Note) The acquisition price does not include expenses for acquisition, settlement of property tax, city planning tax, etc., and con sumption tax and local consumption tax.
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- 35 - (8) Changes in the total number of investment units issued and outstanding The following is the status of increase (decrease) in the total number of investment units issued and outstanding and unitholders’ capital for the past five years through to the end of the midterm period under review. Date Capital transaction Total number of investment units issued and outstanding (Units) Unitholders’ capital (JPY1M) Note Increase (Decrease) Balance Increase (Decrease) Balance September 21, 2023 Capital increase through public offering of investment units 170,000 4,637,006 11,857 199,051 (Note 1) July 3, 2024 Capital increase through public offering of investment units 451,641 5,088,647 33,045 232,097 (Note 2) July 30, 2024 Capital increase through third-party allotment of investment units 8,359 5,097,006 611 232,708 (Note 3) March 9, 2026 Capital increase through public offering of investment units 807,000 5,904,006 61,803 294,511 (Note 4) (Note 1) New investment units were issued through public offering with an issue price per unit of ¥72,030 (issue value of ¥69,751) in order to procure funds for the acquisition of new properties, etc. (Note 2) New investment units were issued through public offering with an issue price per unit of ¥75,558 (issue value of ¥73,167) in order to procure funds for the acquisition of new properties, etc. (Note 3) New investment units were issued through third-party allotment with an issue value per unit of ¥73,167 in order to procure funds for allocation to part of future acquisitions of specified assets or capital expenditures to maintain or improve competitiveness of existing properties. (Note 4) New investment units were issued through public offering with an issue price per unit of ¥79,086 (issue value of ¥76,584) in order to procure funds for the acquisition of new properties, etc.
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- 36 - 3. Reference information For detailed information on each property, the operating result of hotels and the income statements for individual properties , please see the reference information below as well as the Financial Results Briefing dated today and the website of JHR (https://www.jhrth.co.jp/en/ir/library.html). (1) Information on values of assets under management, etc. A. Investment status The following outlines the investment status of JHR as of the end of the midterm period under review. Total amount held (JPY1M) (Note 2) Ratio to total assets (%) (Note 3) Total amount held (JPY1M) (Note 2) Ratio to total assets (%) (Note 3) HYATT REGENCY TOKYO － － 126,687 18.4 Hilton Tokyo Odaiba 62,821 10.9 63,291 9.2 Hilton Fukuoka Sea Hawk 64,493 11.2 64,198 9.3 Oriental Hotel Fukuoka Hakata Station 7,761 1.3 7,597 1.1 Oriental Hotel Tokyo Bay 17,691 3.1 17,552 2.5 Hilton Tokyo Narita Airport 12,978 2.3 12,884 1.9 International Garden Hotel Narita 8,682 1.5 8,616 1.3 Hotel Francs 3,266 0.6 3,256 0.5 Okinawa OKINAWA HARBORVIEW HOTEL 25,737 4.5 26,238 3.8 ACTIVE-INTER CITY HIROSHIMA (Sheraton Grand Hiroshima Hotel) (Note 4) 16,659 2.9 16,576 2.4 Oriental Hotel Hiroshima 3,906 0.7 3,913 0.6 Aichi Hilton Nagoya 15,341 2.7 15,275 2.2 Nara Hotel Nikko Nara 9,912 1.7 9,860 1.4 Hy ogo Kobe Meriken Park Oriental Hotel 9,466 1.6 9,385 1.4 Kanagawa Mercure Yokosuka 1,663 0.3 1,722 0.3 260,383 45.2 387,056 56.2 MIMARU Tokyo S hinjuku West 9,982 1.7 9,968 1.4 HOTEL AMANEK Shinjuku-Kabukicho. 9,154 1.6 9,142 1.3 Hotel Oriental Express Ginza West (Note 5) 8,435 1.5 8,452 1.2 t he b ikebukuro 6,648 1.2 6,636 1.0 CANDEO HOTELS Ueno Koen 6,497 1.1 6,480 0.9 Comfort Hotel Tokyo Higashi Nihombashi 3,399 0.6 3,430 0.5 the b hachioji 2,653 0.5 2,636 0.4 Smile Hotel Nihombashi Mitsukoshimae 2,005 0.3 1,994 0.3 Washington R&B Hotel Ueno-hirokoji 1,770 0.3 1,776 0.3 Chisun Hotel Kamata 1,437 0.2 1,454 0.2 t he b suidobashi 1,148 0.2 1,135 0.2 dormy inn EXPRES S Asakusa 915 0.2 916 0.1 Chisun Inn Keikyu Kamata 757 0.1 760 0.1 Holiday Inn Osaka Namba 26,374 4.6 26,329 3.8 Namba Oriental Hotel 15,284 2.7 15,234 2.2 Hotel Oriental Express Osaka Shinsaibashi 2,746 0.5 2,741 0.4 La’gent S tay S apporo Odori 10,753 1.9 10,734 1.6 ibis Styles Sapporo 6,163 1.1 6,128 0.9 Mercure Sapporo 5,460 0.9 5,462 0.8 Hotel Oriental Express Fukuoka Tenjin 5,677 1.0 5,653 0.8 Hotel Oriental Express Fukuoka Nakasukawabata 4,581 0.8 4,569 0.7 the b hakata 2,304 0.4 2,294 0.3 Toyoko Inn Hakata-guchi Ekimae 1,310 0.2 1,302 0.2 Limited- service hotel Name Fukuoka Chiba Hiroshima As of June 30, 2026 As of December 31, 2025 Tokyo Osaka Hokkaido Fukuoka Subtotal Asset category Hotel type (Note 1) Prefectural location Real estate in trust Tokyo Full- service hotel
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- 37 - (Note 1) Hotels are categorized as limited-service hotels, full-service hotels or resort hotels according to the manner of operation. (Note 2) For real estate in trust, “Total amount held” shows the amount calculated by deducting accumulated depreciation from the acquisition price (including expenses incidental to acquisition). (Note 3) “Ratio to total assets” shows the ratio of the total amount of each asset held to total assets, rounded off to one decimal place. (Note 4) ACTIVE-INTER CITY HIROSHIMA is classified in accordance with the business category of Sheraton Grand Hiroshima Hotel, its main facility. (Note 5) Sotetsu Fresa Inn Shimbashi -Karasumoriguchi changed its name to Hotel Oriental Express Ginza West on April 1, 202 6. The same shall apply hereinafter. (Note 6) The Beach Tower Okinawa was sold on July 31, 2026. (Note 7) Includes machinery and equipment, tools, furniture and fixtures, construction in progress in trust, and intangible assets (excluding leasehold rights in trust and fixed-term land lease rights in trust). Total amount h eld (JPY1M) (Note 2) Ratio to total assets (%) (N ote 3) Total amount h eld (JPY1M) (Note 2) Ratio to total assets (%) (N ote 3) ibis S tyles Kyoto S tation 6,511 1.1 6,497 0.9 Oriental Hotel Kyoto Rokujo 4,506 0.8 4,492 0.7 Kanagawa Hotel JAL City Kannai Yokohama 3,983 0.7 3,973 0.6 Okinawa Mercure Okinawa Naha 2,655 0.5 2,650 0.4 Kumamoto dormy inn Kumamoto 2,121 0.4 2,102 0.3 Ishikawa UAN kanazawa 2,017 0.3 2,008 0.3 Nara Washington Hotel Plaza Nara 1,709 0.3 1,694 0.2 158,969 27.6 158,654 23.0 Hotel Nikko Alivila 17,568 3.0 17,705 2.6 Southern Beach Hotel & Resort OKINAWA 16,076 2.8 15,976 2.3 Oriental Hotel Okinawa Resort & Spa 16,059 2.8 15,899 2.3 The Beach Tower Okinawa (Note 6) 6,359 1.1 6,304 0.9 Chiba Hilton Tokyo Bay 26,022 4.5 26,155 3.8 Osaka Oriental Hotel Universal City 7,087 1.2 7,041 1.0 Kanagawa Hakone Setsugetsuka 3,416 0.6 3,378 0.5 92,589 16.1 92,461 13.4 511,942 88.8 638,173 92.7 64,740 11.2 50,597 7.3 576,683 100.0 688,770 100.0 Amount (JPY1M) Ratio to total assets (%) Amount (JPY1M) Ratio to total assets (%) 283,568 49.2 346,519 50.3 293,114 50.8 342,250 49.7 As of December 31, 2025 As of June 30, 2026 Kyoto SubtotalReal estate i n trust Limited- service hot el Deposits and other assets (Note 7) Total assets Total liabilities Total net assets Asset category Resort hotel Okinawa Subtotal Real estate in trust －Total Hotel type (N ote 1) Prefectural location Name
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- 38 - B. Assets under management (A) Major issues of investment securities Not applicable. (B) Real estate properties under management Not applicable. (C) Other major assets under management (i) Summary of real estate properties (in trust) under management The following summarizes the real estate properties (in trust) under management by JHR as of the end of the midterm period under review. a. Details of assets under management (acquisition price, etc.) Property No. Name Grade (Note 1) Acquisition price (JPY1M) (Note 2) Carrying amount at end of period (JPY1M) (Note 3) Appraisal value at end of period (JPY1M) (Note 4) Appraisal agency (Note 5) Investment ratio (Acquisition price) (%) (Note 6) Collateral (Note 7) 1 Kobe Meriken Park Oriental Hotel Upper-middle 10,900 9,600 15,800 N 1.7 Unsecured 2 Oriental Hotel Tokyo Bay Upper-middle 19,900 18,103 40,900 N 3.1 Unsecured 3 Namba Oriental Hotel Mid-price 15,000 15,376 33,700 N 2.3 Unsecured 4 Hotel Nikko Alivila Luxury 18,900 17,921 29,800 N 2.9 Unsecured 5 Oriental Hotel Hiroshima Upper-middle 4,100 3,966 4,290 N 0.6 Unsecured 8 The Beach Tower Okinawa (Note 8) Mid-price 7,610 6,306 30,900 N 1.2 Unsecured 9 Hakone Setsugetsuka Mid-price 4,070 3,383 9,110 N 0.6 Unsecured 10 dormy inn Kumamoto Mid-price 2,334 2,102 6,320 N 0.4 Unsecured 12 the b suidobashi Mid-price 1,120 1,142 2,890 N 0.2 Unsecured 13 dormy inn EXPRESS Asakusa Economy 999 916 1,290 J 0.2 Unsecured 15 Washington Hotel Plaza Nara Mid-price 2,050 1,694 2,420 N 0.3 Unsecured 16 Washington R&B Hotel Ueno-hirokoji Economy 1,720 1,776 1,800 J 0.3 Unsecured 18 Comfort Hotel Tokyo Higashi Nihombashi Economy 3,746 3,435 6,670 J 0.6 Unsecured 22 Smile Hotel Nihombashi Mitsukoshimae Economy 2,108 1,994 3,220 J 0.3 Unsecured 24 Toyoko Inn Hakata-guchi Ekimae Economy 1,652 1,302 2,730 T 0.3 Unsecured 25 Chisun Hotel Kamata Economy 1,512 1,457 2,360 T 0.2 Unsecured 26 Chisun Inn Keikyu Kamata Economy 823 763 1,600 T 0.1 Unsecured 29 Oriental Hotel Universal City Upper-middle 6,753 7,160 25,600 R 1.1 Unsecured 31 Hilton Tokyo Bay Luxury 26,050 26,158 47,900 D 4.1 Unsecured 32 ibis Styles Kyoto Station Mid-price 6,600 6,504 10,200 D 1.0 Unsecured 33 ibis Styles Sapporo Mid-price 6,797 6,173 11,300 N 1.1 Unsecured 34 Mercure Sapporo Mid-price 6,000 5,511 13,400 N 0.9 Unsecured 35 Mercure Okinawa Naha Mid-price 3,000 2,696 7,440 N 0.5 Unsecured 37 the b ikebukuro Mid-price 6,520 6,653 8,600 N 1.0 Unsecured 39 the b hachioji Mid-price 2,610 2,644 2,740 N 0.4 Unsecured 40 the b hakata Mid-price 2,300 2,306 6,180 N 0.4 Unsecured 41 Hotel Francs Mid-price 3,105 3,258 6,690 D 0.5 Unsecured 42 Mercure Yokosuka Upper-middle 1,650 1,765 3,710 D 0.3 Unsecured 43 Oriental Hotel Okinawa Resort & Spa Upper-middle 14,950 16,416 21,500 N 2.3 Unsecured 44 ACTIVE-INTER CITY HIROSHIMA (Sheraton Grand Hiroshima Hotel) Luxury 17,320 16,774 23,100 D 2.7 Unsecured 45 CANDEO HOTELS Ueno Koen Mid-price 6,705 6,488 7,270 D 1.0 Unsecured 46 Oriental Hotel Fukuoka Hakata Station Upper-middle 7,197 7,687 18,300 D 1.1 Unsecured 47 Holiday Inn Osaka Namba Mid-price 27,000 26,374 27,300 N 4.2 Unsecured 48 Hotel Oriental Express Fukuoka Tenjin Mid-price 5,248 5,697 8,600 D 0.8 Unsecured 49 Hilton Nagoya Luxury 15,250 15,327 15,800 D 2.4 Unsecured 50 Hilton Tokyo Narita Airport Upper-middle 13,175 13,097 13,200 N 2.1 Unsecured 51 International Garden Hotel Narita Mid-price 9,125 8,708 9,650 N 1.4 Unsecured
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- 39 - Property No. Name Grade (Note 1) Acquisition price (JPY1M) (Note 2) Carrying amount at end of period (JPY1M) (Note 3) Appraisal value at end of period (JPY1M) (Note 4) Appraisal agency (Note 5) Investment ratio (Acquisition price) (%) (Note 6) Collateral (Note 7) 52 Hotel Nikko Nara Upper-middle 10,373 9,960 10,200 D 1.6 Unsecured 53 Hotel Oriental Express Osaka Shinsaibashi Mid-price 2,738 2,751 3,000 D 0.4 Unsecured 54 Hilton Tokyo Odaiba Upper-middle 62,400 64,635 74,900 N 9.7 Unsecured 55 UAN kanazawa Upper-middle 2,050 2,013 2,340 N 0.3 Unsecured 56 Hotel Oriental Express Ginza West Mid-price 8,400 8,489 11,800 D 1.3 Unsecured 57 La’gent Stay Sapporo Odori Mid-price 10,020 10,912 13,000 N 1.6 Unsecured 58 Oriental Hotel Kyoto Rokujo Mid-price 4,446 4,533 7,000 N 0.7 Unsecured 59 Hotel Oriental Express Fukuoka Nakasukawabata Mid-price 4,460 4,601 6,760 N 0.7 Unsecured 60 Hotel JAL City Kannai Yokohama Mid-price 4,000 4,001 4,690 N 0.6 Unsecured 61 MIMARU Tokyo Shinjuku West Upper-middle 9,645 9,968 15,200 D 1.5 Unsecured 62 HOTEL AMANEK Shinjuku-Kabukicho. Mid-price 8,845 9,142 13,400 D 1.4 Unsecured 63 OKINAWA HARBORVIEW HOTEL Upper-middle 21,562 26,862 24,200 N 3.4 Unsecured 64 Southern Beach Hotel & Resort OKINAWA Mid-price 16,200 16,117 20,300 N 2.5 Unsecured 65 Hilton Fukuoka Sea Hawk Upper-middle 64,350 64,376 76,600 D 10.0 Unsecured 66 HYATT REGENCY TOKYO Upper-middle 126,000 126,986 156,000 N 19.6 Unsecured Total 641,391 643,999 923,670 100.0 (Note 1) JHR categorizes hotels into the four grade classes of “Luxury,” “Upper-middle,” “Mid-price” and “Economy” mainly from the perspective of average daily rate, etc. (Note 2) “Acquisition price” is the acquisition price stated on the purchase and sale agreement for beneficial interest in trust, etc. (consumption tax, local consumption tax and the acquisition expense such as broker’s fee are not included). The acceptance prices are indicated for the properties that have been accepted through the Merger. (Note 3) “Carrying amount at end of period” is the book value at the end of the midterm period under review and includes not only the amounts for real estate in trust, but also for machinery and equipment, tools, furniture and fixtures, construction in progress in trust and intangible assets. (Note 4) “Appraisal value at end of period” is the appraisal value at the end of the midterm period under review as the date of appraisal, in accordance with the asset valuation methods and standards provided in JHR’s Articles of Incorporation and the regulations s et forth by the Investment Management Association of Japan. (Note 5) Under “Appraisal agency,” the letters indicate the appraisers for the properties as follows: N: Nihon Fudosan Kenkyusho (Japan Real Estate Institute) J: JLL Morii Valuation & Advisory K.K. T: The Tanizawa Sogo Appraisal Co., Ltd. R: Rich Appraisal Institute Co., Ltd. D: DAIWA REAL ESTATE APPRAISAL CO., LTD. (Note 6) “Investment ratio” is the ratio of acquisition price of the respective asset held at the end of the midterm period under revi ew to the total amount of acquisition price of all assets held at the end of the midterm period under review, rounded off to one decimal place. (Note 7) “Collateral” is whether or not a pledge has been established for the beneficial interest in trust. (Note 8) The Beach Tower Okinawa was sold on July 31, 2026. Appraisal value at end of period indicates the sale price. (Note 9) The omitted property numbers are the property numbers of assets that have been sold. b. Details of assets under management (change in tenants of portfolio) The following is the total number of tenants, total leasable area, total leased area and occupancy rate of real estate properties (in trust) under management for the past five years. End of 22nd period December 2021 End of 23rd period December 2022 End of 24th period December 2023 End of 25th period December 2024 End of 26th period December 2025 End of midterm of 27th period June 2026 Total number of tenants (Note 1) 116 110 117 118 144 148 Total leasable area (Note 2) 733,995.61m2 733,995.61m2 767,700.44m2 832,486.39m2 963,054.12m2 1,034,883.02m2 Total leased area (Note 3) 732,764.69m2 732,251.49m2 765,875.99m2 831,261.48m2 962,556.92m2 1,034,245.79m2 Occupancy rate (Note 4) 99.8% 99.8% 99.8% 99.9% 99.9% 99.9% (Note 1) Total number of tenants indicates the total number of tenants based on the lease contracts for respective real estate in trust (excluding tenants of parking lots, etc.) as of the end of each fiscal period or midterm period. However, for properties for which master lease contracts under the pass-through scheme are concluded in which the trustee receives the same amounts of rents, etc. from end tenants as is in principle, the total number of end tenants (excluding tenants of parking lots, etc.) is indicated. (Note 2) In principle, total leasable area represents leasable area of the building, which does not include leasable area of land (including parking lots on ground), based on a lease contract or plan for each real estate in trust. For properties in which the leased area is not described in the lease contract, leasable area represents the area described in the registration of the building. Furthermore, when the leasable area in the lease contract is indicated in tsubo units, the figure in the table has been converted to the area in metric units (3.30578m2 per one tsubo). The same shall apply hereinafter. (Note 3) In principle, total leased area represents the leased area described in the lease contract of the building. For properties in which the leased area is not described in the lease contract, leased area shows the area described in the registration of the building. Furthermore, when the leased area in the lease contract is indicated in tsubo units, the figure in the table has been converted to the area in metric units (3.30578m 2 per one tsubo). However, for
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- 40 - properties for which master lease contracts under the pass-through scheme are concluded in which the trustee receives the same amounts of rents, etc. from end tenants as is in principle, the total area for which lease contracts have been concluded with end tenants and which are actually leased is indicated. The same shall apply hereinafter. (Note 4) Occupancy rate indicates the percentage of leased area of leasable area of respective real estate properties in trust as of the end of each fiscal period or midterm period. The same shall apply hereinafter. c. Details of assets under management (information on major real estate) The following is the information on major real estate of which total annual rent accounts for 10% or more of the total annual rent of the entire portfolio. Property name Total number of tenants Total annual rent Total leased area Total leasable area Change in occupancy rate for the past five years (Note 2) HYATT REGENCY TOKYO 1 Fixed rent ¥3,600 million Variable rent ¥3,248 million 71,828.90 m2 71,828.90 m2 June 2026 100.0% (Note 1) “Total annual rent” refers to the total amount calculated by multiplying the monthly fixed rent (rent of the building itself only, excluding common area maintenance charges and signage and parking usage fees without factoring in any change in rent during the fiscal year) in lease contracts at the end of the midterm period under review is multiplied by 12, adding assumed amounts of revenue sharing, variable rent and income from management contracts for the full fiscal year. (Note 2) “Change in occupancy rate for the past five years” are presented only for the period after the property was acquired by JHR.
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- 41 - d. Details of assets under management (NOI, etc.) Property No. Name Rent type (Note 1) Real estate operating revenue (JPY 1,000) NOI (Note 2) (JPY 1,000) NOI after depreciation (Note 3) (JPY 1,000) 1 Kobe Meriken Park Oriental Hotel Variable/Fixed 533,325 410,346 245,465 2 Oriental Hotel Tokyo Bay Variable/Fixed 1,173,613 1,105,884 860,217 3 Namba Oriental Hotel Variable/Fixed 725,386 664,971 575,823 4 Hotel Nikko Alivila Variable/Fixed 520,689 438,626 300,146 5 Oriental Hotel Hiroshima Variable/Fixed 132,735 109,387 69,474 8 The Beach Tower Okinawa Fixed 255,504 231,691 169,860 9 Hakone Setsugetsuka Fixed 147,469 134,741 84,815 10 dormy inn Kumamoto Variable/Fixed 114,713 102,673 74,914 12 the b suidobashi Variable/Fixed 90,355 84,659 71,123 13 dormy inn EXPRESS Asakusa Fixed 32,537 27,507 20,669 15 Washington Hotel Plaza Nara (Note 4) Fixed 75,000 66,000 49,000 16 Washington R&B Hotel Ueno-hirokoji Fixed 48,645 40,304 30,830 18 Comfort Hotel Tokyo Higashi Nihombashi Variable/Fixed (Note 5) 261,395 244,453 222,347 22 Smile Hotel Nihombashi Mitsukoshimae Variable/Fixed (Note 5) 120,668 111,839 100,447 24 Toyoko Inn Hakata-guchi Ekimae Fixed 70,519 62,366 53,451 25 Chisun Hotel Kamata Variable 96,349 88,812 73,321 26 Chisun Inn Keikyu Kamata Variable 52,032 48,276 42,281 29 Oriental Hotel Universal City Variable/Fixed 565,547 534,278 458,604 31 Hilton Tokyo Bay Variable/Fixed (Note 5) 990,009 847,128 732,338 32 ibis Styles Kyoto Station Management contract 234,486 204,165 188,552 33 ibis Styles Sapporo Management contract 284,387 226,085 185,057 34 Mercure Sapporo Management contract 459,097 344,284 296,537 35 Mercure Okinawa Naha Management contract 239,498 194,118 159,938 37 the b ikebukuro Variable/Fixed 217,936 202,760 183,479 39 the b hachioji Variable/Fixed 113,472 101,136 83,168 40 the b hakata Variable/Fixed 189,222 180,899 169,039 41 Hotel Francs Variable/Fixed 209,068 178,010 144,448 42 Mercure Yokosuka Variable 250,387 194,159 169,575 43 Oriental Hotel Okinawa Resort & Spa Variable/Fixed 588,651 541,645 288,409 44 ACTIVE-INTER CITY HIROSHIMA (Sheraton Grand Hiroshima Hotel) Variable/Fixed 983,514 733,962 606,610 45 CANDEO HOTELS Ueno Koen Fixed 174,985 160,980 136,725 46 Oriental Hotel Fukuoka Hakata Station Variable/Fixed 1,108,481 985,102 800,014 47 Holiday Inn Osaka Namba Variable/Fixed 588,830 562,774 496,067 48 Hotel Oriental Express Fukuoka Tenjin Variable/Fixed 547,991 484,262 450,210 49 Hilton Nagoya Variable 796,660 460,293 360,591 50 Hilton Tokyo Narita Airport Variable/Fixed 472,667 434,838 307,671 51 International Garden Hotel Narita Variable/Fixed 277,859 256,076 172,959 52 Hotel Nikko Nara Variable/Fixed 308,229 283,736 198,754 53 Hotel Oriental Express Osaka Shinsaibashi Variable/Fixed 71,895 64,126 56,009 54 Hilton Tokyo Odaiba Variable/Fixed 799,800 618,422 439,476 55 UAN kanazawa Variable/Fixed (Note 5) 64,392 58,958 48,766 56 Hotel Oriental Express Ginza West Variable/Fixed 404,571 371,383 356,996 57 La’gent Stay Sapporo Odori Variable 441,364 417,818 345,444 58 Oriental Hotel Kyoto Rokujo Variable/Fixed 185,328 174,528 155,133 59 Hotel Oriental Express Fukuoka Nakasukawabata Variable/Fixed 283,075 271,487 257,935 60 Hotel JAL City Kannai Yokohama Variable/Fixed 88,698 78,519 61,715 61 MIMARU Tokyo Shinjuku West Variable/Fixed 330,472 312,184 298,153 62 HOTEL AMANEK Shinjuku-Kabukicho. Variable/Fixed 293,718 280,584 268,368 63 OKINAWA HARBORVIEW HOTEL Variable/Fixed 525,000 501,048 225,817 64 Southern Beach Hotel & Resort OKINAWA Variable/Fixed 294,139 259,173 144,609 65 Hilton Fukuoka Sea Hawk Variable/Fixed 2,269,870 2,157,556 1,820,410 66 HYATT REGENCY TOKYO (Note 6) Variable/Fixed 2,463,470 2,420,256 2,171,011 Total 22,568,140 20,070,198 16,282,838 (Note 1) Under “Rent type,” “Fixed” is a property under a fixed rent structure, “Variable” is a property under a variable rent structure, “Management contract” is a property under a management contract structure, and “Variable/Fixed” is a property under a combination of fixed and variable rent structures. (Note 2) NOI = Real estate operating revenue – Real estate operating costs + Depreciation + Loss on retirement of noncurrent assets + Asset retirement obligations expenses (Note 3) NOI after depreciation (net real estate operating income) = Real estate operating revenue – Real estate operating costs (Note 4) For Washington Hotel Plaza Nara, consent on disclosure of rent in units of thousands of yen has not been obtained from the lessees and numbers are thus rounded down to the nearest millions of yen. (Note 5) Comfort Hotel Tokyo Higashi Nihombashi, Smile Hotel Nihombashi Mitsukoshimae, Hilton Tokyo Bay and UAN kanazawa have rent structures with
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- 42 - fixed rents and partial revenue sharing. (Note 6) HYATT REGENCY TOKYO was acquired on March 13, 2026. (Note 7) The property numbers of assets that were sold before the end of the previous fiscal year are intentionally omitted.
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- 43 - e. Summary of analyses, etc. of earthquake risk The following is the PML value, etc. , of real estate properties (in trust) under management as of the end of the midterm period under review. Property No. Name Probable Maximum Loss (PML) ratio by earthquake risk analyses (%) (Note 1) Existence of earthquake insurance Provider of PML value (Note 2) 1 Kobe Meriken Park Oriental Hotel 11.6 None P 2 Oriental Hotel Tokyo Bay 14.2 None P 3 Namba Oriental Hotel 13.4 None P 4 Hotel Nikko Alivila 7.3 None P 5 Oriental Hotel Hiroshima 10.7 None O 8 The Beach Tower Okinawa 2.7 None S 9 Hakone Setsugetsuka 14.4 None P 10 dormy inn Kumamoto 5.6 None S 12 the b suidobashi 5.4 None S 13 dormy inn EXPRESS Asakusa 4.9 None S 15 Washington Hotel Plaza Nara 13.7 None P 16 Washington R&B Hotel Ueno-hirokoji 3.6 None S 18 Comfort Hotel Tokyo Higashi Nihombashi 6.7 None S 22 Smile Hotel Nihombashi Mitsukoshimae 7.5 None S 24 Toyoko Inn Hakata-guchi Ekimae Total: 3.8 None S 25 Chisun Hotel Kamata 9.0 None S 26 Chisun Inn Keikyu Kamata 4.2 None S 29 Oriental Hotel Universal City 8.7 None P 31 Hilton Tokyo Bay 3.2 None T 32 ibis Styles Kyoto Station 10.5 None T 33 ibis Styles Sapporo 1.0 None T 34 Mercure Sapporo 1.0 None T 35 Mercure Okinawa Naha 0.5 None T 37 the b ikebukuro 5.3 None T 39 the b hachioji 4.9 None T 40 the b hakata 3.3 None T 41 Hotel Francs 2.5 None T 42 Mercure Yokosuka 7.1 None T 43 Oriental Hotel Okinawa Resort & Spa 0.7 None T 44 ACTIVE-INTER CITY HIROSHIMA (Sheraton Grand Hiroshima Hotel) 2.0 None T 45 CANDEO HOTELS Ueno Koen 3.1 None T 46 Oriental Hotel Fukuoka Hakata Station 2.4 None T 47 Holiday Inn Osaka Namba 6.5 None T 48 Hotel Oriental Express Fukuoka Tenjin 3.3 None T 49 Hilton Nagoya 1.7 None T 50 Hilton Tokyo Narita Airport 2.4 None T 51 International Garden Hotel Narita 5.2 None T 52 Hotel Nikko Nara 7.5 None T 53 Hotel Oriental Express Osaka Shinsaibashi 7.3 None S 54 Hilton Tokyo Odaiba 4.3 None T 55 UAN kanazawa 10.0 None T 56 Hotel Oriental Express Ginza West 7.0 None S 57 La’gent Stay Sapporo Odori 2.6 None T 58 Oriental Hotel Kyoto Rokujo 12.2 None T
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- 44 - Property No. Name Probable Maximum Loss (PML) ratio by earthquake risk analyses (%) (Note 1) Existence of earthquake insurance Provider of PML value (Note 2) 59 Hotel Oriental Express Fukuoka Nakasukawabata 5.2 None T 60 Hotel JAL City Kannai Yokohama 7.9 None S 61 MIMARU Tokyo Shinjuku West 4.2 None T 62 HOTEL AMANEK Shinjuku-Kabukicho. 3.0 None T 63 OKINAWA HARBORVIEW HOTEL 4.5 None S 64 Southern Beach Hotel & Resort OKINAWA 10.5 None S 65 Hilton Fukuoka Sea Hawk Less than 0.1 None S 66 HYATT REGENCY TOKYO 4.8 None S (Note 1) PML (Probable Maximum Loss) represents damage caused by a major earthquake that may occur once every 475 years (estimated probability of such earthquake to occur during the 50 years is 10%.) during expected holding period (50 years = useful life of ordinary buildings). PML is the anticipated percentage of recovery cost against the building replacement cost. JHR will evaluate the possibility to acquire earthquake insurance for the property if the PML of the particular property exceeds 15%. As of the end of the midterm fiscal period under review, there is no property with a plan to be insured by earthquake insurance. (Note 2) Under “Provider of PML value,” the letters indicate the provider as follows. T: Tokio Marine dR Co., Ltd. P: Deloitte Tohmatsu Property Risk Solution Co., Ltd. O: OBAYASHI CORPORATION S: SOMPO Risk Management, Inc. (Note 3) The property numbers of assets sold are intentionally omitted.
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- 45 - (ii) Rent structures of hotels with variable rent, etc. Property No. Name Rent type Method of calculating variable rent and income from management contracts The 29 Hotels with Variable Rent, etc. 1 Kobe Meriken Park Oriental Hotel Variable/Fixed (Total AGOP of the Five HMJ Hotels (Note 1) – base amount (¥4,120 million/year (Note 2))) x 85.0% 2 Oriental Hotel Tokyo Bay 3 Namba Oriental Hotel 4 Hotel Nikko Alivila 5 Oriental Hotel Hiroshima 29 Oriental Hotel Universal City Variable/Fixed (AGOP – base amount (¥370 million/year)) x 95.0% 43 Oriental Hotel Okinawa Resort & Spa Variable/Fixed (AGOP – base amount (¥655 million/year)) x 95.0% 44 ACTIVE-INTER CITY HIROSHIMA (Sheraton Grand Hiroshima Hotel) Variable/Fixed (Note 3) (AGOP – base amount (¥360 million/year)) x 90.0% 46 Oriental Hotel Fukuoka Hakata Station Variable/Fixed (AGOP – base amount (¥442 million/year)) x 98.0% 47 Holiday Inn Osaka Namba Variable/Fixed (AGOP – base amount (¥580 million/year)) x 97.0% 48 Hotel Oriental Express Fukuoka Tenjin Variable/Fixed (AGOP – base amount (¥165 million/year)) x 97.0% 50 Hilton Tokyo Narita Airport Variable/Fixed (AGOP – base amount (¥450 million/year)) x 93.0% 51 International Garden Hotel Narita Variable/Fixed (AGOP – base amount (¥360 million/year)) x 98.0% 52 Hotel Nikko Nara Variable/Fixed (AGOP – base amount (¥440 million/year)) x 95.0% 53 Hotel Oriental Express Osaka Shinsaibashi Variable/Fixed (AGOP – base amount (¥128 million/year)) x 91.0% 58 Oriental Hotel Kyoto Rokujo Variable/Fixed (AGOP – base amount (¥183 million/year)) x 93.5% 59 Hotel Oriental Express Fukuoka Nakasukawabata Variable/Fixed (AGOP – base amount (¥189 million/year)) x 92.0% 60 Hotel JAL City Kannai Yokohama Variable/Fixed (AGOP – base amount (¥150 million/year)) x 95.0% 64 Southern Beach Hotel & Resort OKINAWA Variable/Fixed (AGOP – base amount (¥650 million/year)) x 93.0% 65 Hilton Fukuoka Sea Hawk Variable/Fixed (AGOP – base amount (¥2,100 million/year)) x 95.0% 32 ibis Styles Kyoto Station Management contract (Note 4) Amount equivalent to GOP 33 ibis Styles Sapporo 34 Mercure Sapporo 35 Mercure Okinawa Naha 42 Mercure Yokosuka Variable Amount linked to GOP (Note 5) 12 the b suidobashi Variable/Fixed Amount linked to AGOP (Note 5) 37 the b ikebukuro 39 the b hachioji 40 the b hakata Other hotels with variable rent or revenue sharing 10 dormy inn Kumamoto Variable/Fixed (GOP – base amount (¥250 million/year)) x 50.0% 18 Comfort Hotel Tokyo Higashi Nihombashi Fixed + Revenue sharing Amount that is a certain percentage of sales exceeding the threshold (Note 5) 22 Smile Hotel Nihombashi Mitsukoshimae Fixed + Revenue sharing Amount that is a certain percentage of sales exceeding the threshold (Note 5) 25 Chisun Hotel Kamata Variable Amount that is the monthly GOP multiplied by 88.0% (¥0 if the amount is below ¥0) (Note 6) 26 Chisun Inn Keikyu Kamata Variable Amount that is the monthly GOP multiplied by 86.0% (¥0 if the amount is below ¥0) 31 Hilton Tokyo Bay Fixed + Revenue sharing Amount that is a certain percentage of sales exceeding the threshold (Note 5) 41 Hotel Francs Variable/Fixed (GOP – base amount (¥350 million/year)) x 52.0% 49 Hilton Nagoya Variable Variable rents linked to hotel sales, etc. (Note 5) 54 Hilton Tokyo Odaiba Variable/Fixed (AGOP – base amount (¥1,660 million/year)) x 98.0% 55 UAN kanazawa Fixed + Revenue sharing (Room sales – base amount (¥270 million/year)) x 30.0% 56 Hotel Oriental Express Ginza West Variable/Fixed (AGOP – base amount (¥190.5 million/year)) x 95.0% (Note 6) 57 La’gent Stay Sapporo Odori Variable Amount linked to GOP (Note 5) 61 MIMARU Tokyo Shinjuku West Variable/Fixed Amount linked to GOP (Note 5) 62 HOTEL AMANEK Shinjuku-Kabukicho. Variable/Fixed Amount linked to GOP (Note 5) 66 HYATT REGENCY TOKYO Variable/Fixed (AGOP – base amount (¥2,980 million)) x 97.5% (Note 7) (Note 1) AGOP (adjusted GOP) is calculated by subtracting certain fees and other items from GOP. The same shall apply hereinafter. (Note 2) For the purpose of payments of variable rent from each hotel, etc. JHR has set individual GOP base amount for each hotel. The breakdown of the AGOP base amount of the Five HMJ Hotels (¥4,120 million/year) is as follows: ¥690 million for Kobe Meriken Park Oriental Hotel, ¥1,060 million for Oriental Hotel Tokyo Bay, ¥890 million for Namba Oriental Hotel, ¥1,250 million for Hotel Nikko Alivila and ¥230 million for Oriental Hotel Hiroshima. (Note 3) The indicated figures are for Sheraton Grand Hiroshima Hotel, the main facility of ACTIVE-INTER CITY HIROSHIMA. (Note 4) The management contract structure is a structure for hotel real estate owned by JHR in which JHR entrusts an operator to oper ate the hotel and takes
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- 46 - in the outcome of that business as real estate operating revenue. Specifically, JHR, the owner of the hotel real estate, concludes a management contract with an operator and entrusts the operator with the tasks necessary to run the hotel business. JHR rece ives the hotel revenue achieved from the hotel business (operation) by the operator and, at the same time, pays a management fee to the operator. This hotel revenue achieved is recognized as “real estate operating revenue through management contract” and is equivalent to the rent , which is the real estate operating revenue under the leasing structure. (Note 5) The detailed content of the contract is not disclosed as the consent for disclosure has not been obtained from the lessee. (Note 6) The hotel’s variable rent from January 2027 onward, will be calculated as follows. January 2027 and after: (AGOP – base amount (¥254 million/year)) x 95.0% (Note 7) The hotel’s variable rent from January 2027 onward, will be calculated as follows. January 2027 and after: (AGOP – base amount (¥3,720 million/year)) x 97.5% (Note 8) Additionally, the rent type of OKINAWA HARBORVIEW HOTEL will change from Fixed to Variable/Fixed from August 2026 onward. The hotel's variable rent will be calculated as follows. From August 2026 to December 2026: (AGOP – base amount (¥300 million)) x 95.0% FY 2027 and after: (AGOP – base amount (¥720 million/year)) x 95.0% Furthermore, the rent type of The Beach Tower Okinawa will change from Fixed to Variable/Fixed from July 2026 onward. The hotel's variable rent will be calculated as follows. July 2026 and after: (GOP – base amount (¥700 million/year)) x 10.0%
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- 47 - (2) Status of capital expenditures a. Planned capital expenditures (Note) The following table shows major estimated capital expenditure items for renovation work, etc. , planned as of today. Total capital expenditures for the second half of the year are planned to be ¥10,173 million. Together with the capital expenditures in the first half of the year, total capital expenditures for the full year are planned to be ¥12,954 million. Name of property, etc. (Location) Purpose Scheduled period Estimated construction costs (JPY1M) Total amount Total amount paid Chisun Hotel Kamata (Ohta-ku, Tokyo) Renovation of car parking garage From October 2026 to November 2026 62 ― Hilton Tokyo Bay (Urayasu city, Chiba) Renewal of elevators From October 2026 to November 2026 90 ― Mercure Sapporo (Sapporo city, Hokkaido) Renewal of air-conditioning equipment in common area (3rd and 4th floor) From May 2026 to October 2026 60 ― Hotel Francs (Chiba city, Chiba) Renovation of hot water supply system From February 2026 to September 2026 83 ― Oriental Hotel Fukuoka Hakata Station (Fukuoka city, Fukuoka) Renovation of rooftop bar From October 2026 to December 2026 80 ― Hilton Narita (Narita city, Chiba) Repair of central monitoring system, etc. From January 2026 to November 2026 85 ― Hilton Narita (Narita city, Chiba) Renovation of guest rooms From November 2026 to December 2026 106 ― Hilton Tokyo Odaiba (Minato-ku, Tokyo) Major renovation works for entire property/ Interior renovation works (Planned for the second half of 2026) From January 2026 to December 2026 6,068 1,146 OKINAWA HARBORVIEW HOTEL (Naha city, Okinawa) Exterior construction, renovation of pool (Planned for the second half of 2026) From July 2026 to October 2026 42 ― OKINAWA HARBORVIEW HOTEL (Naha city, Okinawa) Renovation of exterior wall (2 nd phase) From February 2026 to September 2026 175 84 Hilton Fukuoka Sea Hawk (Fukuoka city, Fukuoka) Renovation of guestrooms and executive lounge From June 2026 to September 2026 600 ― HYATT REGENCY TOKYO (Shinjuku-ku, Tokyo) Installment of LED lighting equipment in hotel common area From May 2026 to November 2026 60 ― Total 7,513 1,231 (Note) New construction and renewal work include those for buildings, attached facilities, etc. as well as items classified as furni ture and fixtures. The scheduled period of the above-planned renovation work and whether the renovation work will be performed may change. b. Capital expenditures during the period (Note) Major construction work conducted by JHR during the midterm period under review that represents capital expenditures is outlined below. Capital expenditures for the midterm period under review totaled ¥2,780 million, and repair expenses that were accounted for as expenses for the midterm period under review totaled ¥ 6 million. In aggregate, ¥ 2,787 million of construction work was carried out. Name of property, etc. (Location) Purpose Period Construction costs (JPY1M) Hotel Nikko Alivila (Nakagami-gun, Okinawa) Renewal of elevators From October 2025 to May 2026 240 Hilton Tokyo Bay (Urayasu city, Chiba) Renewal of electrical transmission and distribution system From January 2026 to January 2026 220 Mercure Yokosuka (Yokosuka city, Kanagawa) Renewal of self-controlled air conditioning equipment From October 2025 to January 2026 75 Hilton Tokyo Odaiba (Minato-ku, Tokyo) Renovation of electrical transmission and distribution system From February 2026 to February 2026 116
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- 48 - Hilton Tokyo Odaiba (Minato-ku, Tokyo) Renewal of air-conditioning facilities From December 2025 to February 2026 136 Hilton Tokyo Odaiba (Minato-ku, Tokyo) Major renovation works for entire property/ Interior renovation works (Completed in the first half of 2026) From January 2026 to June 2026 366 OKINAWA HARBORVIEW HOTEL (Naha city, Okinawa) Exterior construction, renovation of pool (Completed in the first half of 2026) From September 2025 to June 2026 601 OKINAWA HARBORVIEW HOTEL (Naha city, Okinawa) Renovation of plumbing and piping From February 2026 to June 2026 95 Other capital expenditures 930 Total 2,780 (Note) New construction and renewal work include those for buildings, attached facilities, etc. as well as items classified as furniture and fixtures.