Hankyu REIT, Inc.（8977）
Presentation Material Concerning Transfers of Assets, etc.

October 27, 2009

Table of Contents
1. Purpose of Various Measures Including Transfers of Assets
2. Transfers of Hankyu Corporation Head Office Buildingand HEP Five (Partial Transfer)
3. Loan to Value Control
4. Forecasts of Operations
5. Portfolio Status
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1. Purpose of Various Measures Including Transfers of Assets
Strategies for sustained growth in medium- tolong-term and current issues to be addressed

Rapidly changing external environment● Capital market: There was rapid deterioration in the market; the impact of(J-REIT market) the U.S. originated financial crisis became widespread, andthe first J-REIT collapse occurred.
Since April 2009 switching of sponsor companies in several
J-REITs and the establishment of real estate market
stabilization funds have turned the market towards recovery.
There hasn’t been any actual cases of capital increase by
public offering since August 2008, but Nippon
Accommodations Fund Inc. made the decision to issue on
October 16, 2009.

Growth strategies“Steady, sure and sound”●Secure stable revenues in the medium- to long-term and maximize
unitholders’ interests.

●

By leveraging the cooperation with Hankyu Hanshin Holdings Group,acquire excellent properties and achieve internal growth from existing
properties to expand the scale of assets and improve the portfolio quality.

● Real estate market: The trend of falling rent income, rising vacancy rates andfalling appraisal values is continuing.
Market prices of excellent properties, however, are tending
not to fall any lower.

Issues to be addressed●The LTV (Loan to Value) has risen due to sharp drop in appraisal values.

●Tendencies in the retail business: Consumers are increasingly defensive intheir purchases, and there is a trend towards purchasing
daily necessities and low-price goods.

●LTV at the end of 8th fiscal period (ended May 31, 2009): 57.9%
LTV may exceed 60% (prescribed upper limit) at the end of 9th fiscal period(ending November 30, 2009).

Execute measures to resolve current financial issues and achieve sustained growth in medium- to long-term

Measures
Execute measures to lower LTV by approx. 5 points(1) Transfer of Hankyu Corporation Head Office Building(2) Transfer of HEP Five (partial transfer) (10% of Hankyu REIT’sinterest)(3) Cash management (more efficient fund management, etc.)

9th fiscal period: Large part of the loss on transfer of (1) will be
offset by the gain on transfer of (2).
(However, distribution forecast has been
downwardly revised.)
10th fiscal period onwards: By keeping the transfer ratio of (2)to a minimum, we aim to maintain distributions
and portfolio quality and strive for future growth.

22. Transfers of Hankyu Corporation Head Office Building and HEP Five (Partial Transfer)

Property nameHankyu Corporation Head Office
Building

HEP Five (partial transfer)

Type of specific asset
to be transferred（equity ratio）

Real estate trust beneficiary interest

10% of real estate trust beneficiaryinterests (quasi co-ownership: equityratio 50%) (Note 1)

Acquisition date

May 16, 2008

February 1, 2005

Proposed transfer price

10,200 millions of yen

2,870 millions of yen

13,070 millions of yen

Appraisal value

10,200 millions of yen（as of September 30, 2009）

2,800 millions of yen（as of September 30, 2009）

13,000 millions of yen

Appraisal organization

Daiwa Real Estate Appraisal Co., Ltd

Tanizawa Sogo Appraisal Co., Ltd.

Book value (Note 2)

11,205 millions of yen

2,230 millions of yen

date of conclusion of agreement

October 27, 2009

October 27, 2009

Proposed date of agreement

November 20, 2009

November 27, 2009

Proposed transfer dateNovember 25, 2009

November 27, 2009

Transferee

Kairos Funding GK(Note 3)

Hankyu Realty Co., Ltd. (Note 4)

Total

13,435 millions of yen（Note 1）Hankyu REIT’s interest in quasi co-ownership shall change from 50% to 45%.
（Note 2）The book value is the value at the end of 8th fiscal period and different to the actual value at the time of transaction.
（Note 3） Kairos Funding GK is a special purpose company in which ZEKUTO Holdings GIA has made investments andHankyu Corporation and others have invested for the part of anonymous associations.
Should it sell the property, Kairos Funding GK has granted Hankyu REIT priority negotiation rights for purchase.
(Note 4) Hankyu Realty Co., Ltd. and Hankyu REIT each have 50% share in quasi co-ownership trust beneficiary interests.
＊ No intermediary service fees shall be paid.

3３．Loan to Value Control●Financial conditions after execution of transfers●Changes in Asset Scale and LTV
Total acquisition priceTotal appraisal value at the end of period
LTV at the end of period

Measures will drop LTV by ~ 5 points（JPY bn）

70

160
57.9

140
45.6
120
46.1

80
31.0
60

30.0

30.7

60

46.0（Note）~ 54(estimatedvalue at time ofacquisition of 5properties)

100

28.8

As of end of 9th period(scheduled)

As of end of 8th period

50403040％

changeInterest-bearing debt ratio

JPY 71.2 bn

JPY 62.4 bn△ JPY 8.8 bn

Utilized amount ofsecurity deposits

JPY 9.2 bn

JPY 5.2 bn△ JPY 4.0 bn

Total

JPY 80.4 bn

JPY 67.6 bn△ JPY 12.8 bn

80.8%

92.1%

11.3 pt

Long-term & fixed debt ratio

As a result of the property transfers:
・Repayment of JPY 8.8 bn in short-term borrowings
Reduce interest-bearing debt and raise the long-term and fixeddebt ratio
・Reimbursement of JPY 4.0 bn in security deposits that are used
as a method of fund procurement to raise fluidity of cash on hand.

2020Repayment breakdown of JPY 8.8 bn in short-term borrowings
010
1stperiod

Number of 5Properties

2ndperiod

63rdperiod

74thperiod

85thperiod

96thperiod

117thperiod

118thperiod

9thperiod(Forecast)

16(Note) The LTV at the end of 9th fiscal period will depend on the appraisal value
and other factors at that point in time.

Loan to Value Ratio (LTV):(amount of outstanding debts + security deposits – matched money tosecurity deposits) ÷ (total amount of assets (*) – matched money tosecurity deposits)* appraisal value basis

15

JPY 8.8bn
JPY
0.5bn

JPY
2.0 bnJPY
6.3 bnRepaid on
Planned Repaid on
September 30
October 30

Planned early repayment
on November 30

Diversification of repayment dates(end of 9th fiscal period (scheduled))（JPY bn）

14
12
10
8
6
4
2010thperiod11th
period12th
period13th
period14th
period15th
period16th
period17th
period18th
period19th
period20th
period4

4. Forecasts of Operations●Trends of operating revenues, net income and distribution per unit ● Factors causing change to

distribution per unit forecast
Operating Revenues

Net Income

Distribution per unit（JPY）
16,000(JPY mn)
6,000
5,500
5,000
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0（JPY）
15,00020,000Capital increaseby public offering

17,50015,000●12,50010,0007,500

1stperiod

2nd
period3rd
period4th
period5th
period6th
period7th
period8th
periodIrregular period (303 days)●

JPY 2,900

11,20012,00011,00010,000
9,000
8,000

2,500

7,000

0

6,000

Prior Forecasts of
9th Fiscal Period

13,00013,000

5,000

9th10thperiodperiod(Revised (Forecasts)
forecasts)

14,10014,0005,00009ｔｈ period(Prior Forecast)

9ｔｈ period(Revised Forecast)

10th period(Forecast)（main factors for revision）
・Forecasted loss on transfer of Hankyu Corporation
Head Office Building
・Forecasted gain on transfer of HEP Five (partial transfer)

Although the distribution forecast for the 9th fiscal period
has been downwardly revised, in the 10th fiscal period
onwards, we will place considerable importance on
maintaining distribution amounts and the portfolio quality
and continue to strive for sustained growth in the mediumto long-term.

（Reference）
Difference between proposed transfer price and book value
as of May 31, 2009
Hankyu Corporation Head Office Building
HEP Five (partial transfer)△JPY 1,005 mn＋JPY 640 mn

Total△JPY 365 mn※The above forecasts assume the proposed amendment to the Articles of Incorporation concerning the abolishment of management
remuneration 4 (remuneration upon transfer) is approved at the 5th General Unitholders’ Meeting to be held on November 6, 2009 andmanagement remuneration 4 (remuneration upon transfer) is abolished.

5５．Portfolio Status
As of end of 8thfiscal period
Total
Total assets
assets acquisitionacquisition cost
cost ：JPY：JPY 134.81
134.81 bn
bn
Total
16
Total number
number ofof properties：
properties：
16
PML(ProbableMaximumLoss)：
2.9%
PML (Probable Maximum Loss) ：2.9%
Zones for other uses 0.4%

Investment
Investment ratio
ratio
byby use
use andand zonezone(Note(Note 1)1)(Note1)(Note2)

Total
Total assets
assets acquisitionacquisition cost
cost ：JPY：JPY 121.30
121.30 bn
bn
Total
15
Total number
number ofof properties：
properties：
15PML(ProbableMaximumLoss)：
3.1%
PML (Probable Maximum Loss) ：3.1%
Zones for other uses 0.5%

Office-use zone
31.1%

Retail-usezone
68.5%(included Hotel-use portion 9.6%)

Investment
Investment ratio
ratio
byby region
region(Note(Note 2)
2)

After transfer （forecasts）

Others27.3%
Kansai region
72.7%

Office-use zone
25.3%

Retail-use
zone
74.2%

(included Hotel-use portion 10.7%)

Others30.4%
Kansai region
69.6%

The ratios are calculated based on the acquisition price. . (For multiple-use zone properties, the amount is proportionate to the rent
income and common service fees for each zone during the 8th fiscal period.)
The ratios are calculated based on the acquisition price.

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