<Provisional translation>
November 28, 2017

For Immediate Release
REIT Issuer
Hankyu REIT, Inc. (Securities Code: 8977)
19-19 Chaya-machi, Kita-ku, Osaka
Yoshiaki Shiraki, Executive Director
Asset Management Company
Hankyu REIT Asset Management, Inc.
Yoshiaki Shiraki, President & Representative Director
Contact:
Hiroshi Yoshida
General Manager, IR and Public Relations Department
Email: hankyureit-ir@hankyu-rt.jp

Notice Concerning Acquisition of Domestic Real Estate Trust Beneficiary Interests
Hankyu REIT, Inc. (hereafter “Hankyu REIT”) hereby notifies Hankyu REIT Asset Management, Inc., the asset
management company that Hankyu REIT has selected to manage its assets (hereafter the “Asset Management
Company”), today decided to make the following acquisition of asset.

Details1.

Overview of Acquisition(1) Asset to be acquired:Real estate trust beneficiary interests(Trustee: Shinsei Trust & Banking Co., Ltd.)(2) Property name:

Vessel Inn Hakata Nakasu(3) Proposed acquisition price:

2,760,000,000 yen(excluding acquisition-related expenses, property tax, city planning tax
and consumption tax, among others)(4) Appraisal value:

2,780,000,000 yen (Date of appraisal: October 1, 2017)(5) Proposed acquisition date:

March 29, 2018(6) Seller:

Domestic corporation (Please refer to “5. Overview of Seller” below) (Note)(7) Acquisition fund:Cash on hand, etc.

(Note) The name of the seller is not disclosed as their consent was not obtained.

2.

Reason for Acquisition
Hankyu REIT will acquire the above hotel (hereafter the “Property”) utilizing the Asset Management
Company’s own network, in order to build a well-balanced portfolio and attain steady growth, based on thetarget and policy of asset management stipulated in its Articles of Incorporation. This will be Hankyu REIT’s
first acquisition of a property in Fukuoka area. With this acquisition, the ratio of hotels in the portfolio will be
9.5% (Note), and therefore regional/use diversification will be enhanced. Going forward, Hankyu REIT will
work to improve the quality and stability of the portfolio considering regional/use diversification, under theinvestment policy of retaining an investment ratio of 50% or more (based on acquisition price) for Kansai
Region and 50% or more (based on acquisition price) for retail-use zones (including hotel-use portion).
(Note) The maximum investment ratio for hotel-use portion is 20%.

1

The portfolio status for the past two years and after the acquisition of the Property is as follows. Average
NOI yield and the average yield after depreciation of the entire portfolio after the acquisition are expected tobe maintained at the current level. Since the Property is located in a privileged location as described below
and holds strong competitiveness into the future, Hankyu REIT has judged that the Property will contributeto enhancement of the quality of the portfolio with its expected stable revenue and such.
[Status of Portfolio]
End of 21stfiscal period

Already-transferred(end ofproperty

Already-acquired
property

November(Note 3)(Note 4)2 properties

2 properties

5,430
million yen

8,731
million yen

End of 24th
fiscal period(end of May
2017)

The Property

23 properties

1 property

Afteracquisition(Note 5)2015)
Number of
23 properties

24 properties

properties
Transfer/acquisition(planned) priceAsset scale
Average NOI yield(Note 1)

Average yield after
depreciation

2,760
million yen
144,388
million yen

141,628
million yen

139,307
million yen
4.8%

3.8%

4.5%

4.8%

4.3%

4.8%

3.4%

0.6%

4.4%

3.6%

2.7%

3.6%

8,479
million yen-587
million yen-68
million yen

17,607
million yen-50
million yen

17,557
million yen(Note 1)

Unrealized income/loss (Note 2)

Note 1: Average NOI yield is calculated by dividing the sum total of (a) the difference between the real estate lease
operation income and real estate lease operation expenses and (b) depreciation, by total acquisition price. Average
yield after depreciation is calculated by dividing the sum total of difference between the real estate lease operation
income and real estate lease operation expenses, by total acquisition price. Average NOI yield and Average yield
after depreciation are based on the actual figures for the 20th and 21st fiscal periods for End of 21st fiscal periodand Already-transferred property; the actual figures for the 24th fiscal periods(*) for End of 24th fiscal period; thefigures stated in the appraisal reports for Already-acquired property and The Property; and figures by adding thefigures in the appraisal reports of The Property and the actual figures for the 24th fiscal period(*) for Afteracquisition.
(*) For KOHYO Onohara Store and OASIS Town Itami Konoike (site), figures other than depreciation are calculatedusing figures stated in the appraisal reports ; and figures for depreciation calculated pursuant to the accounting
policy of Hankyu REIT.
Note 2: Unrealized income/loss indicates the difference between the appraisal value and the book value. The figure for
Already-transferred property indicates a figure at the end of the 21st fiscal period; for Already-acquired property, afigure at the end of the 24th fiscal period; for The Property, a figure calculated based on the book value (expectedvalue) which is the total of the proposed acquisition price and acquisition expenses that is to be recorded as asset
pursuant to the accounting policy of Hankyu REIT; and for After acquisition, a figure obtained by adding/subtracting
unrealized income/loss of The Property to/from unrealized income/loss at the end of the 24th fiscal period.
Note 3: “Already-transferred property” refers to Namba-Hanshin Building and Richmond Hotel Hamamatsu that weretransferred on April 8, 2016. For the details of Already-transferred property, please refer to “Notice Concerning
Transfer of Domestic Real Estate Trust Beneficiary Interests (Namba-Hanshin Building and Richmond Hotel
Hamamatsu)” dated March 10, 2016.
Note 4: “Already-acquired property” refers to KOHYO Onohara Store acquired on July 1, 2016 and OASIS Town Itami
Konoike (site) acquired on November 25, 2016. For the details of Already-acquired property, please refer to “NoticeConcerning Acquisition of Domestic Real Estate” dated June 24, 2016 and “Notice Concerning Acquisition ofDomestic Real Estate” dated October 25, 2016.
Note 5: The figures for After acquisition are figures considering only asset acquisition of The Property since End of the 24th2

fiscal period and may differ from actual figures.

Hankyu REIT evaluated the following points upon deciding on the acquisition of the Property.
(1) Location
The Property stands in an excellent location being an approximately 1-minute walk fromNakasu-Kawabata Station of the Fukuoka City Subway. Nakasu-Kawabata Station is highly convenient
as it takes only around 9 minutes to Fukuoka Airport, around 3 minutes to JR Hakata Station, andaround 1 minute to Tenjin Station via direct subway line. In addition, Nakasu area where the Property
is situated is a highly-bustle area, and there are a number of facilities within walking distance from theProperty that can draw customers, including a retail complex, CANAL CITY HAKATA. Furthermore, inTenjin area, which is adjacent to Nakasu area, the Tenjin Big Bang Project led by Fukuoka City isunderway aiming to rebuild existing buildings and create employment. Therefore, it is an area wherestronger demand for both leisure and business fields can be expected.
On top of these, the number of inbound tourists coming to Fukuoka Prefecture has increased overthreefold in four years since 2011. Moreover, regarding the number of international conventions,
Fukuoka City ranked second following Tokyo 23 wards for seven consecutive years since 2009,indicating even stronger demand for hotels.

(2) Property features
The Property is a hotel that is mainly for accommodation and was rebranded as Vessel Inn Hakata
Nakasu in October 2014 after having opened as Best Western Fukuoka Nakasu Inn in February 2010.
Vessel Hotel Development Co., Ltd., the tenant of the Property, operates a total of 18 hotels under
three hotel brands across the country. The Property has a total of 166 rooms, mainly singles, andoffers attractive services for reasonable rates such as placing Simmons beds in all rooms andpreparing abundant amenities for female guests, and thus is considered as a highly competitive
lodging facility.

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3.

Details of Asset to be Acquired
Property name

Vessel Inn Hakata Nakasu

Specified asset type

Trust beneficiary interests

Trustee

Shinsei Trust & Banking Co., Ltd.

Period of trust

From September 28, 2007 to March 28, 2028 (Note)

Proposed acquisition price

2,760,000,000 yen

Appraisal value

2,780,000,000 yen (Date of appraisal: October 1, 2017)(Appraisal organization: Japan Real Estate Institute)

Location Address

5-1-12 Nakasu, Hakata-ku, Fukuoka City

Land

Building coverage

Floor area ratio

Building

80%

built
Structure/

700%

FloorsZone use

Commercial district

Site area

405.98m

Form ofownership

Total floor
area

Construction company

Taisei Corporation

Property manager
Earthquake PML(Evaluators)
Collateral

Form ofRight of ownership
Taisei Corporation

organization

Use

2

Design company

Building recognition

Month/Yearownership

July 2009
Steel-frame reinforced
concrete structure withflat roof / 14 floors
Hotel2,776.49m

2

Right of ownershipJAPAN ERI CO., LTD.
Vessel Hotel Development Co., Ltd.
0.2% (Engineering and Risk Service Corporation and OYO RMS Corporation)
None
・The sale agreement regarding the acquisition of the Property falls under thedefinition of forward commitment, etc. (contracts for forward and futuretransactions, for which settlement and delivery take place one or more month(s)after their signing, and other contracts of similar nature) as defined in the“Comprehensive Guidelines for Supervision of Financial Instruments Business

Other matters to note

Operators, etc.” In the event of a material breach of provisions of the saleagreement by Hankyu REIT (including cases where errors or inaccuracy was
found in material matters concerning representation and warranty based on thesale agreement), the seller may terminate the agreement. In the event of atermination of the agreement due to the above reason, Hankyu REIT has agreed
to pay penalty up to 10% of the sale price to the seller.

(*) Planned period of trust is indicated as of the time of the acquisition by Hankyu REIT.

4. Overview of Leasing
Total number of tenants

1

Principal tenant

Vessel Hotel Development Co., Ltd.

Contract format

Fixed rent4

Annual rentNot disclosed (Note 1)

Leasable area

2,776.49m2 (Note 2)

Leased area

2,776.49m2 (Note 2)

Occupancy rate

100% (Note 3)

Security deposits

Not disclosed (Note 1)

Note 1: Annual rent, etc., is not disclosed as consent has not been obtained from the tenant.
Note 2: The areas specified in the lease agreement as of today are indicated.
Note 3: The ratio of leased area to leasable area.

5. Overview of Seller
The name, etc., are not disclosed as consent has not been obtained from the seller, which is a domestic
corporation. Please note that there are no capital, personnel or business relationships to be specially noted
between Hankyu REIT or the Asset Management Company and the Seller. In addition, the seller does not fallunder the definition of “related party.”

6. Status of Property Acquirers, etc.
Details are omitted as the acquisition of the Property is not acquisition from parties with special interests ofHankyu REIT or the Asset Management Company.
7. Transactions with Interested Parties, etc.
Not applicable.
8. Overview of Intermediaries
Name

Nomura Securities Co., Ltd.

Location

1-9-1 Nihonbashi, Chuo-ku, Tokyo

Title and name ofrepresentative

Toshio Morita, President (Representative Executive Officer)

Business activities

Securities business

Capital10,000 million yen (as of March 31, 2017)

Date of establishment

December 25, 1925

Relationship between Hankyu REIT or the Asset Management Company and the Company
Capital relationships
Personnel
relationships
Business

There are no capital relationships to be stated between Hankyu REIT or the AssetManagement Company and the Company.
There are no personnel relationships to be stated between Hankyu REIT or the AssetManagement Company and the Company.
There are no business relationships to be stated between Hankyu REIT or the Asset

relationships

Management Company and the Company

Applicability as

The Company does not fall under the definition of “related party” of Hankyu REIT or

related party, etc.

the Asset Management Company.

Brokerage fees

Not disclosed (Note)(Note) Brokerage fee is not disclosed as consent has not been obtained from the intermediary.

5

9. Settlement Method, etc.
Hankyu REIT plans to pay the sellers the acquisition price in full on the planned acquisition date.
10. Acquisition Schedule
November 28, 2017

Resolution of acquisition of the Property at the Asset Management Company’sboard of directors meeting

November 29, 2017Conclusion of agreement (proposed)

March 29, 2018

Payment and acquisition of the Property (proposed)

11. Future Outlook
Since the proposed acquisition date of the Property is March 29, 2018, the acquisition will have no impact
on the expected conditions surrounding the management of Hankyu REIT’s assets for the fiscal period
ending November 2017 (25th fiscal period: June 1, 2017 to November 30, 2017) announced in the“Financial Results for the 24th Fiscal Period Ended May 2017” dated July 14, 2017, and the impact on the
expected conditions surrounding the management of Hankyu REIT’s assets for the fiscal period ending May
2018 (26th fiscal period: December 1, 2017 to May 31, 2018) will be minimal. Therefore, there is no revision
to the forecasts.
••

The Japanese original document was distributed to press clubs within the Tokyo Stock Exchange (Kabuto Club), Osaka Securities
Exchange, and the Ministry of Land, Infrastructure, Transport and Tourism, and to the press club of the construction trade
newspaper of the Ministry of Land, Infrastructure, Transport and Tourism.
Hankyu REIT website: http://www.hankyu-reit.jp/eng/<Attached Materials>
・Reference Material 1

Overview of Appraisal Report

・Reference Material 2

Table of Real Estate Portfolio After Acquisition

・Reference Material 3

Property Photograph and Map of Location

6

・Reference Material 1<Overview of Appraisal Report>
Property name

Vessel Inn Hakata Nakasu

Appraisal value

2,780,000,000 yen

Appraisal organization

Japan Real Estate Institute

Date of appraisal

October 1, 2017
Item

Value indicated by the income approach
Value using the direct capitalization method

Value

Basis for valuation

2,780,000,000 yen

Adjustment of values obtained using the direct
capitalization method and the DCF method

2,820,000,000 yen－(1) Operating revenues (a + b − c)－a. Income from rental fees, etc.
b. Other income

Not disclosed (Note)c. Loss from non-occupancy,etc.
－(2) Operating costs (a + b + c + d + e + f + g)）
a. Maintenance/Administrative
fees, etc.
b. Utilities
c. Repairs
d. Property Management fees

Not disclosed (Note)e. Public charges and taxes
f. Casualty insurance
premiums
g. Other expenses(3) Net operating income (NOI = (1) − (2))

117,660,000 yen(4) Operating profit on deposit and security

630,000 yen(5) Capital expenditures(6) Net cash flow (NCF = (3) + (4) − (5))

0 yen
118,290,000 yen(7) Capitalization rate

Value using the discounted cash flow (DCF) method

4.2%

2,730,000,000 yen－
Assessment assuming a 1.0% investment
management yieldNo recording as paid by the lessee－
Assessment taking into consideration
property-specific features of the appraised realestate, etc., with the investment yields of similar
real estate as reference－

Discount rate

4.2%

Assessment taking into consideration
property-specific features of the appraised realestate, etc., with the investment yields of similar
real estate as reference

Terminal capitalization rate

4.3%

Assessment taking into account age-relateddegradation, uncertainties of rental market trends,
decline in liquidity, etc.

1,740,000,000 yen－

Land ratio

55.4%

－

Building ratio

44.6%

－

Value indicated by the cost approach

Special items to consider
at the time of making
adjustments to provisional
calculations and deciding
the appraisal value

The appraised real estate is located in Nakasu, one of the most famous entertainment quarters in Kyushu, andis an approximately one-minute walk from the nearest station, also having good access to the airport and the
JR station. In addition, it is close to Tenjin district and the district surrounding Hakata Station, which are thecenter of Fukuoka City. For these reasons, it fully enjoys locational characteristics required for drawing
customers.
Upon appraisal, assessment of the value indicated by the income approach using both the direct capitalization
method and the DCF method was judged to be more credible taking into account the attributes of real estate,such as locational characteristics, use of building, etc., of the appraised real estate, as well as main
consumers, etc. Accordingly, the value indicated by the income approach was adopted as the appraisal value
while using the value indicated by the cost approach only as reference.

The appraisal value of real estate is no more than an indication of the opinion of the value of the appraised real estate at the time of theappraisal conducted by the real estate appraiser in accordance with the Act on Real Estate Appraisal, Real Property Appraisal Standards,
etc. There are cases where another appraisal of the same real estate may result in a different appraisal value, depending on the real estateappraiser conducting the appraisal and the method or timing of the appraisal. Furthermore, the appraisal of real estate is neither a guarantee
nor an obligation, now or into the future, of a sale or purchase at that appraisal value.

7

(Note)The Asset Management Company decided not to disclose these items as no consent has beenobtained from the tenants for the disclosure of rents, etc., and the assessment is based on actual
results for reference, so disclosing of these items may affect Hankyu REIT’s competitiveness anddamage the interests of unitholders.

8・Reference Material 2
Table of Real Estate Portfolio after Asset Acquisition
Property
Code(Note)

Property Name

Facility(Type of
Use)

RegionAcquisition Date

AcquisitionPrice(millions ofyen)

Investment
Ratio

HEP Five
R1 (K)(14% of the quasi co-ownership of thetrust beneficiary interests)

RetailKansaiFebruary 1, 2005

6,468

4.5%

R2 (K)

Kitano Hankyu Building

RetailKansaiFebruary 1, 2005

7,740

5.4%

R3 (K)Dew Hankyu Yamada

RetailKansaiFebruary 1, 2005

6,930

4.8%

R4 (K)

Takatsuki-Josai Shopping Center

RetailKansaiNovember 15, 2005

8,600

6.0%

R5 (K)

Nitori Ibaraki-Kita Store (site)

RetailKansaiMarch 29, 2006

1,318

0.9%

RetailOther

October 2, 2006

2,170

April 9, 2007

5

Hotel Gracery Tamachi

RetailOther

December 25, 2008

4,160

2.9%

R9 (K)

LaLaport KOSHIEN (site)
HANKYU NISHINOMIYA GARDENSRetailKansaiJanuary 22, 2009

7,350

5.1%

R11 (K)(28% of the quasi co-ownership of thetrust beneficiary interests)

RetailKansai

April 16, 2013

18,300

12.7%

RetailKansaiJune 27, 2013

8,100

5.6%

RetailKansaiJune 27, 2013

1,870

1.3%

RetailKansaiJune 4, 2014

3,100

2.1%

Kohnan Hiroshima Nakano-Higashi

R6

Store (site)

R8

R12 (K)R13 (K)R14 (K)

AEON MALL SAKAIKITAHANADA(site)
MANDAI Toyonaka Honan Store(site)DAILY QANAT Izumiya Horikawa
Marutamachi Store (site)

1.5%

R15 (K)

kotocross Hankyu Kawaramachi

RetailKansaiJune 4, 2014

2,770

1.9%

R16 (K)

LIFE Shimoyamate Store (site)

RetailKansaiJune 4, 2014

1,421

1.0%

R17 (K)

MANDAI Gojo Nishikoji Store (site)

RetailKansaiJune 24, 2014

4,182

2.9%

R18 (K)

KOHYO Onohara Store

RetailKansaiJuly 1, 2016

1,631

1.1%

R19 (K)OASIS Town Itami Konoike (site)

RetailKansaiNovember 25, 2016

7,100

4.9%

Vessel Inn Hakata Nakasu

RetailOther

March 29, 2018

2,760

1.9%

95,975

66.5%

R20

Subtotal
O1

Shiodome East Side Building

O2 (K)

Hankyu Corporation
Head Office Building

OfficeOther

February 29, 2008

19,025

13.2%

OfficeKansai

April 10, 2013

10,200

7.1%

29,22520.2%

Subtotal
M1 (K)M2
M3 (K)
M5

Ueroku F Building
Sphere Tower Tennozu

ComplexKansaiNovember 1, 2005

2,980

2.1%

(33% of the quasi co-ownership of thetrust beneficiary interests)

Complex

Other

October 2, 2007

9,405

6.5%

LAXA Osaka

ComplexKansaiJanuary 22, 2009

5,122

3.5%

Kita-Aoyama San cho-me Building

Complex

Other

November 12, 2013

1,680

1.2%

Subtotal

19,187

13.3%

Total

144,388

100.0%

Note: The properties owned by Hankyu REIT are assigned codes and numbers classified by facility (type of use) and region.
The alphabets on the left represent the facility (type of use): (“R” is for retail-use facility, “O” is for office-use facility and “M”
is for mixed-use (complex) facility.) The numbers are assigned to each facility in the chronological order of the acquisition.
Also, the letter “(K)” in parentheses to the right of the numerals indicates that the property is located in Kansai Region.

9

・Reference Material 3<Property Photograph><Map>10