Table of Contents

1. Executive Summary ・・・・・・・・・・・・・・・・・・・ 2
2. Summary of Kansai Area・・・・・・・・・・・・・・・・・ 15
3. External Growth Strategies・・・・・・・・・・・・・・・・ 21
4. Internal Growth Strategies・・・・・・・・・・・・・・・・ 30
5. Financial Strategies・・・・・・・・・・・・・・・・・・・ 41
6. Overview of Financial Results for 24th Fiscal Period・・・・・ 44
7. APPENDIX・・・・・・・・・・・・・・・・・・・・・・・ 50
This material includes forward-looking statements based on present assumptions and future outlook.
Actual results may differ from the forward-looking statement values due to various factors.
Since investment securities of Hankyu REIT are closed-end type which do not make redemption of units demanded by unitholders, the only means forunitholders to convert the investment securities is to sell to third parties. Market value of the investment securities is affected by supply/demand at theexchange and also fluctuates affected by interest rate environment, economic situations, real estate market trends and various other factors
surrounding the market. Therefore, the unitholders may not be able to sell the investment securities at the price of acquisition incurring loss.
This material is not intended as a solicitation to acquire investment securities of Hankyu REIT nor is it intended as a solicitation to sign contracts
relating to transactions of other financial instruments. When undertaking any investment, please do so based on your own judgment and responsibility
as an investor.
Before purchasing investment securities of Hankyu REIT, please consult with a securities company that is a “Type I Financial Instruments Business
Operator.”
This material is an English translation of the original, which was issued in the Japanese language.
There are sections that display property names in abbreviated form.
"(Site)" is added after the name of properties for which Hankyu REIT owns only its land.

11. Executive Summary2

1-1. Medium-term Objectives(Objectives indicated in the Financial Results Briefing Materials for the 23rd Fiscal Period)

Aim for sustainable growth and improvement of portfolio quality,
while aiming to increase distributions
1

Aim to achieve asset scale of JPY 200 billion during 2020
(place emphasis on medium-to-long-term fair value)

2

Aim to achieve a distribution level of JPY 2,900 on an ongoing basis in the
26th fiscal period (ending May 2018) and subsequent fiscal periods

3

Systematically implement repairs and CAPEX to maintain and improve
property value

4

Consider and implement asset replacement to improve portfolio quality

5

Eliminate future risk factors

6

Implement fund procurement in light of interest rate trends(in principle, procurement mainly on a long-term and fixed basis)31-2. Results for 24th Fiscal Period(Achievement Status of Medium-term Objectives)

1• Promoted utilization of the comprehensive strength of the sponsor group and diversification ofproperty acquisition methods.
• Promoted expansion of the asset management company’s own property information sourcing
channels.

2• As for OASIS Town Itami Konoike (site), the rent collectable became 100% from July 3, 2017
(the 25th FP) (2 months earlier than initial assumption), in line with the opening.
• Realized a significant increase in occupancy rate for Sphere Tower Tennozu (52.5%⇒88.1%).
• Maintained a high total portfolio occupancy rate (99.6%).

3• Promoted repair/renovation systematically from the perspective of preventive maintenance inorder to secure stable revenues over the medium-to-long-term.

45• Continuously discussed measures to improve portfolio quality and eliminate future risk factors

6• For refinancing borrowings, used both long-term borrowings with fixed interest rates and shortterm borrowings with variable interest rates from the perspective of stability of fundprocurement, contribution to distribution, etc.
• LTV remained on an ongoing basis (43.0% ⇒ 42.2%)
4

1-3. Financial Highlights for 24th Fiscal Period（Unit:JPY mn）
Item

Forecast for 24th Fiscal Period (A) Results for 24th Fiscal Period (B)(as of January. 24, 2017)(Dec. 1, 2016 to May. 31, 2017)182

Operation period (days)

182(Main factors for increase/decrease)

Change(B)-(A)(1)
Income related to tenant move-outs―(Yamada, Kitano)

Operating revenues

4,731

4,740

8

Operating income

1,945

1,979

33

Ordinary income

1,573

1,625

52

Net income

1,571

1,623

52

Total number of outstanding
investment units at end of
fiscal period (units)597,500

597,500―

Distribution per unit (JPY)

2,630

2,717

87

FFO per unit (JPY)

4,053

4,133

79

JPY +9 mn

(1)
(2)
(2)

(3) Decrease in repair expense

JPY +16 mn
Decrease in utilities expense
JPY +8 mn
Decrease in depreciation
JPY +4 mn
Change in item classification of non-deductible
consumption taxes
JPY -8 mn(3)
Decrease in other non-operating expenses(Change in item classification of non-deductible consumption taxes
etc.)

JPY +16 mn

Net assets per unit
Net assets per unit
after reflecting unrealized income/loss

JPY 122,649
JPY 152,118

Results for 24th fiscal period (ended May 2017)
Distribution per unit

JPY 2,7175

1-4. Distribution Forecast for 25th Fiscal Period and 26th Fiscal Period（Unit: JPY mn）
Item

Results for 24th Fiscal Period (B)(Dec. 1, 2016 to May. 31, 2017)

Forecast for 25th Fiscal Period ②(Jun. 1, 2017 to Nov. 30, 2017)

Change②-①Forecast for 26th Fiscal Period③(Dec.1, 2017 to May 31, 2018)

Change③-②Operation period(days)

182

183

1

182

-1

Operating revenues

4,740

4,873

132

4,956

83

Operating income

1,979

2,052

73

2,104

51

Ordinary income

1,625

1,674

49

1,734

59

Net income

1,623

1,673

49

1,732

59

597,500

597,500―

597,500―

Distribution per unit (JPY)

2,717

2,800

83

2,900

100

FFO per unit (JPY)

4,133

4,212

79

4,340

127

Total number of outstanding
investment units at end of
fiscal period (units)[Forecast for 25th Fiscal Period]
Main factors for increase/decrease from 24th fiscal period• Increase in income from lease of Itami
JPY +100 mn(*rent collection: 25% up to July 2, 2017, 100% on July 3, 2017 and after)• Increase in income from lease of Tennozu
JPY +15 mn• Decrease on the rebound of income related to tenants’ move-ins and move-outs(Yamada, Kitano, Ueroku, Kita-Aoyama)
JPY -20 mn[Forecast for 26th Fiscal Period]
Main factors for increase/decrease from 25th fiscal period• Increase in income from lease of Tennozu
JPY +97 mn• Increase in income from lease of Itami
JPY +21 mn(100% rent collection for full period)• Difference between income and expenditure of utilities expense
JPY +20 mn• Difference between income and expenditure of utilities expense
JPY -24 mn• Increase in repair expense
JPY -52 mn(LAXA -41, Takatsuki -30, etc.)• Increase in tax and public dues for Itami and Onohara
JPY -7 mn• Increase in BM costs
JPY -31 mn

Forecast for 25th Fiscal Period (ending November 2017)
Distribution per unit

Forecast for 26th Fiscal Period (ending May 2018)
Distribution per unit

JPY 2,800

JPY 2,900[Main preconditions]・There will be no transfer of portfolio properties from the presently held 23 properties
・There will be no additional issuance of investment units to the present 597,500 units in total number of outstanding investment units through to the end of the 26th fiscal period61-5. Trends of Asset Scale
Place emphasis on medium-to-long-term fair value andaim to achieve asset scale of JPY 200 billion during 2020
Improved financialbase throughasset replacement

Returned to growth paththrough
resuming external growth

Continued growththrough
PO for 2nd consecutive year

Enhanced portfolio quality
throughasset transfer

19 properties
JPY 127.8 bn

JPY 13.0
bn

JPY 41.2
bn

JPY 17.3
bn

JPY 44.6
bn

JPY 13.0bn
JPY 18.8
bn

JPY 54.6
bn

JPY 39.7
bn

JPY 13.0bn

JPY 37.6
bn

JPY 37.8
bn

JPY 10.9
bn

JPY 10.9bn

JPY 20.9bn

JPY 20.7
bn

JPY 72.0
bn

JPY 72.0
bn

JPY 36.9
bn

JPY 39.3
bn

JPY 41.1
bn

JPY 13.0bn
JPY 50.9
bn

JPY 39.3
bn

23 properties
JPY 141.6 bn

21 properties
JPY 132.8 bn

19 properties
JPY 127.8 bn

16 properties
JPY 116.1 bn

Acquired assets

JPY 30.9bn

Transferred assets

15 properties
JPY 121.3 bn

23 properties
JPY 141.6 bn

23 properties
JPY 139.3 bn

23 properties
JPY 139.3 bn

Sustainable growththroughacquiring properties atappropriate prices

JPY 13.0bn

JPY 13.1
bn

JPY 11.0
bn

JPY 23.4
bn

JPY 23.0bn

JPY 21.6
bn

JPY 63.3
bn

JPY 63.3
bn

JPY 63.3bn

End of 19th period(End of Nov. 2014)

End of 21st period(End of Nov. 2015)

Aim to achieve
asset scale of JPY
200 billion during
2020

JPY 20.7
bn

JPY 54.6
bn

JPY 26.3
bn

End of 15th period(End of Nov. 2012)

End of 16th period(End of May 2013)

End of 17th period(End of Nov. 2013)

End of 18th period(End of May 2014)

Community-based retail facilities

Urban retail facilities

End of 22nd period(End of May 2016)

HotelsEnd of 23rd period(End of Nov. 2016)

End of 24th period(End of May 2017)

Office-use zones / Other

During 20207

1-6. Trends of Distribution per Unit
Distribution is amidst a step-up phase
Aim to achieve distribution level of JPY 2,900 on an ongoing basis in
the 26th fiscal period and subsequent fiscal periods
Aim for
JPY 2,900 level inand after 26th period(JPY)█ Distribution per unit (results)

3,000

2,900

█ Distribution per unit (forecast)
2,800

2,775*

2,800

2,717
2,620

2,597
2,600

2,537

2,626

2,567

2,492
2,445
2,361

2,400

2,200

2,000

第15期
2012.1115th period
Nov. 2012

第16期
2013.516th period
May 2013

第17期
2013.1117th period
Nov. 2013

第18期
2014.518th period
May 2014

第19期
2014.1119th period
Nov. 2014

第20期
2015.520th period
May 2015

第21期
2015.11

21st period
Nov. 2015

第22期
2016.522nd period
May 2016

第23期
2016.1123rd period
Nov. 2016

第24期
2017.524th period
May 2017

第25期
2017.1125th period
Nov. 2017

第26期
2018.526th period
May 2018*Including net income on transfer of 2 properties

Result for 23rd FP

Result for 24th FP

Forecast for 25th FP

Forecast for 26th FP(Results for FP ended Nov. 2016)(Results for FP ended May 2017)(Forecast for FP ending Nov. 2017)(Forecast for FP ending May 2018)

2,626 yen

2,717 yen

2,800 yen

2,900 yen8

1-7. Profitability and Financial Status● Profitability of Portfolio
End of 21st period(End of Nov. 2015)

End of 22nd period(End of May 2016)

End of 23rd period(End of Nov. 2016)

End of 24th period(End of May 2017)

Average NOI yield(Note)

4.8%

4.8%

4.8%

4.8%

Average NOI yield
after depreciation(Note)

3.4%

3.5%

3.7%

3.6%

Unrealized income/loss(Note)

JPY 8.4 bn

JPY 12.6 bn

JPY 14.6 bn

JPY 17.6 bn● Stability of Financial Foundation
End of 21st period(End of Nov. 2015)

End of 22nd period(End of May 2016)

End of 23rd period(End of Nov. 2016)

End of 24th period(End of May 2017)

LTV(Note)

43.2%

41.9%

43.0%

42.2%

Interest-bearing
debt ratio

43.0%

43.0%

44.5%

44.6%

Averagedebt financing costs

1.06%

1.04%

0.92%

0.94%

4.8 years

4.4 years

4.4 years

4.4 years(including investment corporation bonds)

Average remaining years on
long-term borrowings payable
and investment corporation
bonds(Note) Details of the calculation method for “Average NOI yield,” “Average NOI yield after depreciation,” “Unrealized income/loss” and “LTV”
are presented on page 66.

91-8. Opening of OASIS Town Itami Konoike (site)
Rent Collectable Reached 100% (2 months earlier than initial assumption) (25th FP)

Property nameOASIS Town Itami Konoike (site)

Location

Konoike, Itami City, Hyogo Prefecture

Site area

17,997.10 m2

Acquisition price

JPY 7,100 mn

NOI yield
after depreciation

4.3% (Note 1)

Acquisition dateNovember 25, 2016

Form of facility

Community-based retail facility that housesa grocery store, apparel stores, drugstores, etc.

(Note 1) The figure is calculated based on the operating revenues and operating costsin the second year with an assumption of 100% rent collection, using the DCF
method described in the appraisal report.
(Nov. 25, 2016 – Jul. 2, 2017: 25% rent collection, Jul. 3, 2017 - : 100% rent collection)(Note 2)

Prepared by processing the Basic Resident Registers in 2015.

Property Featuresl Itami City is located in an area dominated by the Hankyu Hanshin
Holdings Group, bounded by Hankyu Kobe Line, Takarazuka Line andImazu Line. Close to the centers of Osaka City and Kobe City withexcellent access, it is popular as a commuter town. The Property is
located in an area where many families live.
l Trade area population by required time from the property when using acar (Note 2) is approximately 58,000 within 5 minutes, approximately
254,000 within 10 minutes and approximately 599,000 within 15
minutes, enjoying an abundant population.
l HANKYU OASIS, the main tenant, has 85 stores (as of July 2017) in
Kansai region. The Itami Konoike store focuses on “pursuit of delicacy
and beauty/health/natural” to draw customers from a several areas,and has introduced initiatives unique to the store, such as installing a
coffee roasting machine and a grill section as well as making sweets inthe store.

10

1-9. View of the building and inside the store at
OASIS Town Itami Konoike (site)

External view of the facility

Agricultural products section

Marine products section

Coffee roasting machine

Kitchen stage

Livestock products section

Sweets section11

1-10. OASIS Town Itami Konoike (site) and Properties in the Vicinity
Chugoku Expressway

Prefectural Road 335 Nakano-Nakasuji Route

Municipal Road Konoike-Ogino Route

Itami Sports Center Field
OASIS Town Itami Konoike (site)

Super Viva Home Itami Store

Prefectural Road 331 Ubagajaya-Itami Route

Aerial photograph taken from southwest side facing northeast12

1-11. Status of Sphere Tower Tennozu
Occupancy Rate Increased to 88.1%

In 2016, achieved seven leasing contracts,
including a large tenant, boosting occupancy
rate to 88.1% in December
Tenant occupancy status

Intend to conduct future leasing activities with ahigher rent target in light of the rising occupancy rateof the building as well as the lower vacancy rate in
the area
Vacancies: Office floor Approx. 1,300 m2 (equivalent to 1.5 floors)
Retail floor Approx. 1,700 m2
Lunchtime bustle at Sphere Garden (common-use portion)

Establish Close Relationship with the New Quasi Co-Owner• Premier Investment Corporation acquired 67% quasi coownership of Sphere Tower Tennozu on June 21, 2017
• Work to enhance property value by closely communicatingbased on the quasi co-owner agreement for future
management and leasing

Change in Vacancy Rate of Higashi-Shinagawa Area
(Tennozu area/Shinagawa seaside area)

20.0%
16.0%
12.0%

5.0%

8.0%
4.0%

平成25年
2013

平成26年
2014

平成27年
2015

平成28年
2016

平成29年
(year)
2017
1Q(Jan.-Mar.)(Source) Prepared by Hankyu REIT Asset Management, Inc. basedon materials from real estate research companies131-12. Initiatives toward Strengthening Financial Foundation
Continued stable financial operations by striking a balance between reduction of debt financing costs, and extensionof borrowing periods and diversification of debt repayment dates
Trends of Debt Financing Costs and Average Remaining Years
1.50%

Overview of Refinancing
Refinancing date

6.0 years

5.1 years
1.40%

(1)

4.8 years

1.34%

(2)

4.4 years

4.4 years

Borrowing
periodFixed/variable

JPY 2.8 bn

10 years

Fixed

JPY 3.2 bn

1 yearVariable

JPY 2.5 bn

1 yearVariable

May 31, 2017

5.0 years

4.4 years

Amount ofdebt financing

1.30%
4.0 years

1.23%

1.20%

3.4 years
1.08%

1.10%

3.0 years
1.07%

1.06%

2.7 years
1.00%

End of17th period

End of19th period

End of20th period

End of21st period

End of22nd period

End of23rd period

2.0 years

As of:

Long-term debt
ratio

Fixed debt ratio

End of24th period

1.0 years

End of 24th FP (As of May 31, 2017)

95.1%

85.7%

As of July 24, 2017 (planned)

91.4%

85.7%

Ave. debt financing cost (including investment corporation bonds)

Status of Ratings

Ave. remaining years on loans payable and investment corporation bonds

Diversification of Debt Repayment Dates (As of July 19, 2017)（JPY bn）

RatingJCR (Japan Credit Rating Agency, Ltd.)AA- (Stable)

R&I (Rating and Investment Information, Inc.)

A+ (Stable)

Investment
corporation bonds
JPY 2.0 bn

8.0

(2)

(3)

Investment
corporation bonds
JPY 2.0 bn

2.5

4.0

3.2

7.0
6.0

6.0

2.0

Rating agency

(1)

10.0

6.0

Long-Term Debt Ratio and Fixed Debt Ratio

0.94%

0.92%
End of18th period

July 24, 2017 (planned)

1.04%

2.1 years

0.90%

(3)

4.5

2.5
2.0

5.5

5.0

4.0
2.0

1.0

5.2

5.0

5.0

2.0

2.8
1.2

2.0

0.0
24th 25th 26th 27th 28th 29th 30th 31st 32nd 33rd 34th 35th 36th 37th 38th 39th 40th 41st 42nd 43rd 44th 45th 46th 47th 48th 49th 50th 51st 52nd 53rd
period period period period period period period period period period period period period period period period period period period period period period period period period period period period period period

14

2. Summary of Kansai Area15

2-1. Status of Offices in Osaka
Decreasing Trend of Office Vacancy Rate Continuing in Osaka• Renewal in the Osaka office market and concentration of city functions are advancing• Outlook is that the decreasing trend for vacancy rate will continue(Vacancy rate of Umeda area is at a level below the most recent lowest figure for Tokyo’s business areas (3.39% in April 2017))• New contract rent for Umeda area has risen due to the ongoing decline of the vacancy rate

• Advancement of relocation of offices from Yodoyabashi and Hommachi area, etc., into Umeda area, especially into high-spec buildings→ Drop in vacancy rate in Umeda area
• Most recently, more proactive relocation for expansion is seen due to higher overall demand backed by the improved employment situation→ Drop in overall vacancy rate
• New office supply in the future is limited

Change in Vacancy Rate of
Osaka’s Major Business Areas

Vacancy Rate as of may 2017
Umeda area

12.0%

Change in New Contract Rent in Umeda Area

Yodoyabashi
Shinsaibashi Shin-Osaka areaand Hommachi andNamba area
area

2.52%

4.51%

4.41%

(Relative value based on figures in March 2014 set as 100)
115

4.44%

10.0%

110

8.0%
105
6.0%
梅田地区
Umeda area
淀屋橋・本町地区
Yodoyabashi and Hommachi area
心斎橋・難波地区
Shinsaibashi and Namba area
新大阪地区
Shin-Osaka area

Vacancy rate increased dueto the impact from openingof GRAND FRONT OSAKA

4.0%
2.0%

2013.1Jan.
2013

2013.5May
2013

2013.9Sep.
2013

2014.1Jan.
2014

2014.52014.92015.1

May
2014

Sep.
2014

Jan.
2015

2015.5May
2015

2015.9Sep.
2015

2016.1

Jan.
2016

100
Grade A buildings
Aグレードビル
Grade B buildings
Bグレードビル95
2016.52016.9

May
2016

Sep.
2016

2017.1Jan.
2017

2017.5May
2017

Change in Floor Area of Major New Office Supply in Osaka
20
200

2015.32016.32017.3

Mar.
2015

Mar.
2016

Mar.
2017

(Source) Prepared by Hankyu REIT Asset Management,
Inc. based on materials from real estate researchcompanies(Source) Miki Shoji Co., Ltd. “Office Data”（thousand ㎡）

2014.3Mar.
2014

今後の新規供給は限定的
New supply
in the future are limited

Approx. 600,000 m² newly supplied (2010 - 2016)

15
150

Nakanoshima Festival
Tower West
Approx. 70,000m²

100
10

5
50

Umeda 1-Chome
1-Banchi Project
Approx. 140,000m²

Shin Nankai Kaikan
Building(tentative name)Approx. 37,000m²

0
2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

(Source) Calculated by Hankyu REIT Asset Management, Inc. based on materials from office brokerage companies (include some estimates) (July 2017)2022 (year)16

2-2. Status of Retail Facilities in Osaka
Department Store Sales Turned Upward while Supermarket Sales Remained Strong• Sales of department stores in 2017 showed an increasing trend due to greater purchases by Japan’s high-net-worth individuals and foreign tourists visiting
Japan who benefitted from the depreciation of the yen and high stock prices• Sales of supermarkets in central areas are on an increasing trend due to return of the population to the city center, and the outlook is that this trend will continue
into the future• Population increase/decrease is becoming clearer in certain areas, leading to a state of progress in polarization• Sales of department stores in Osaka (January to May 2017) increased 3.5% year-on-year• Duty-free sales of department stores in Kansai region (January to May 2017) increased 43.4% year-on-year• (April 2017 renewed a record for duty-free sales for a single month) (Note 1)• Sales of supermarkets in Osaka City continued to remain strong (Note 2)⇒ Due to supermarkets yet being opened one after another in central areas

Sales of Department Stores by District

Sales of Supermarkets by District(change over the previous year*)(change over the same month of the previous year)

6.0%

Rebound of last minute demand dueto the consumption tax rate hike

25.0%

Osaka City’s figure significantly
surpasses nationwide and Tokyo’s
figures

20.0%

4.0%

3.5%
15.0%

2.0%

10.0%
0.0%

-1.3%

4.5%
1.3%

-1.4%

-2.0%

0.0%
Renovation of two stores (Note 3) beinga main factor

-4.0%
-6.0%

5.6%
5.0%

2011

2011

2012

2012

2013

2013

2014

2014

-5.0%
2015

2015

2016

2017

2016

2017* (year)-10.0%

2014年
4月

2014年
10月

2015年
4月

2015年
10月

2016年
4月

2016年
10月

2017年
4月

Apr.
2014

Oct.
2014

Apr.
2015

Oct.
2015

Apr.
2016

Oct.
2016

Apr.
2017

大阪市
Osaka
東京（特別区）
Tokyo (special wards)
全国
Nationwide

Osaka
大阪
Tokyo
東京
Nationwide
全国

Source: Japan Department Stores Association*Comparison based on January to May cumulative total in the case of 2017

Source: Ministry of Economy, Trade and Industry “Current Survey of Commerce”(Note 1) Source: Bank of Japan Osaka Branch “Department Store Duty-Free Sales (Kansai Region)”(Note 2) Source: Ministry of Economy, Trade and Industry “Current Survey of Commerce”(Note 3) Hanshin Department Store Umeda Main Building (from February 2015) and Daimaru Shinsaibashi Store (from January 2016)17

2-3. Status of Inbound Tourists in Kansai Region
Foreign Tourists Visiting Osaka Continue to Increaseu The number of foreign tourists visiting Osaka reached 9.41 million in 2016,
marking a new record.
The figure for January to March 2017 also surpassed that of the previous
year, and the annual total is expected break the 10-million mark. (Note 1)
u Visitation rate by prefecture of foreign tourists visiting Japan: The mostrecent visitation rate for Osaka Prefecture comparable to Tokyo (Note 2)

Change in Number of Foreign Tourists Visiting Osaka(million people)

10.00

9.41

年間
AnnualJanuary to March
1〜3月

8.00

7.16

6.00
3.76

4.00

Visitation Rate by Prefecture of Foreign Tourists Visiting Japan
year

2013

2014

2015

2016

2017(Note 3)

Osaka Prefecture

30.2%

34.1%

41.9%

44.7%

45.3%

Tokyo

43.2%

48.5%

48.2%

44.5%

45.1%

(Note 1) Source: Osaka Convention & Tourism Bureau(Note 2) Source: “Consumption Trend Survey for Foreigners Visiting Japan”(Japan Tourism Agency)(Note 3) Average values of January to March 2017 survey results

2.63

2.35
1.70

2.00

1.58

2.03

2.03
0.71

0.47

0.00

2.36

1.30

2009

2010

2011

2012

2013

2014

2015

2016

2009

2010

2011

2012

2013

2014

2015

2016

2017

2017 (year)

Source: Osaka Convention & Tourism Bureau

Number of Foreign Passengers
Using Kansai International Airport Hits Record-High(million people)

u International flight passengers at Kansai International Airport for fiscal 2016
was 12.42 million marking a new record (Note 1)
u Number of foreigners from nearby Asian countries (China, South Korea,
Taiwan and Hong Kong) using LCC is on the rise due to a shift from group
tours to independent travels (Note 2)

14.0

Status of International Flight Passengers at
Kansai International Airport

1,4 0012.42 mn

Foreign passengers

12.0

1,2 0010.0

1,0 00Japanese passengers

8.0

800

6.51 mn
600

6.0
400

(Note 1) Source: Kansai Airports Co., Ltd.
(Note 2) Source: Development Bank of Japan Inc.

4.0
200

2.0
0
H6

0.0 1994

H8

H10

H12

H14

H16

H18

H20

H22

H24

H26

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

Source: Kansai Airports Co., Ltd.

H28

2016 (Fiscal year)18

2-4. Changes and Current Status of Central Osaka
Renewal in central Osaka is advancing

1

Aging of office buildings in Yodoyabashi and Hommachi area
(central business area of Osaka for more than 50 years) is progressing

Office Trend

Nakatsu Sta.

Hankyu Umeda Sta.
Umeda subway Sta.

JR Osaka Sta.

2

Higashi-Umeda Sta.

Hanshin Umeda Sta.

In Umeda area, construction of large and highspec buildings including Umeda Hankyu Building
and GRAND FRONT OSAKA have completed
steadily and relocations of tenants from
Yodoyabashi and Hommachi area are advancing

3

Old buildings away from the center of office
districts and that have fallen into secondary
vacancies are converted into tower
condominiums and hotels

2

Nishi-Umeda Sta.
Fukushima Sta.

For leased office area, Umeda area
surpassed Yodoyabashi and Hommachi area

Yodoyabashi Sta.
Higobashi Sta.

Kitahama Sta.

1

3

Population Trend

3

Hommachi Sta.
Chuo-Odori
Boulevard

Population of central Osaka has increased
Change in Population of Osaka City
(relative value based on 2006 (100))

Change in Leased Office Area of Umeda Area andYodoyabashi and Hommachi Area
(thousand m2)
2,600
260
Umeda area surpasses
with the opening of
GRAND FRONT OSAKA
2,400
240

Population significantly
increased in Chuo-ku (around
Yodoyabashi and Hommachi)
and Kita-ku (around Umeda)

140
130

120

120
110

220
2,200

100

200
2,000
Shinsaibashi Sta.

— Umeda area
— Yodoyabashi and Hommachi area

2006
H18

H15
2003 H172005 H19
2007 H21
2009 H23
2011 H25
2013 H27
2015 2016
梅田地区
淀屋橋・本町地区
Source: Miki Shoji
Co., Ltd. “OfficeData”

JR Namba Sta.

Uehommachi Sta.
Nankai Namba Sta.

— Kita-ku, Osaka city
— Chuo-ku, Osaka city

90

180
1,800
Namba Sta.
(Hanshin, Kintetsu and subway)

134(year)

2008
H20

2010
H22

2012
H24

2014
H26

2016
H28 (year)

Source: Japan
Geographic Data Center
大阪市北区
大阪市中央区“Population Summary of the Basic Resident Registers”

Openings of supermarkets in central Osaka
has accelerated

19

2-5. Main Investment Area of Hankyu REIT “Umeda”

Aerial photograph takenfrom southeast side facing northwest(shot in December 2015)
Hotel New
Hankyu Osaka

LAXA Osaka

HERBISOSAKAGRAND FRONTOSAKA

Kita-Hankyu
Bldg.

HERBIS ENT
Dai Hanshin Bldg.
(Hanshin Department Store)(under construction)

ＮＵ chayamachi
ＮＵ chayamachi Plus

Chayamachi
Applause

Kitano Hankyu
Bldg.

HankyuCorporation
Head Office
Bldg.

HANKYUTERMINAL Bldg.

Hankyu GrandBldg.

ＪＲ Osaka Sta.

Hankyu Umeda Sta.
Hankyu-Sanbangai

HEP Navio

Umeda OSBldg.

Osaka Nikko
Bldg.

Shin Hankyu
Bldg.
(underconstruction)■Property owned by Hankyu REIT

Umeda Hankyu
Bldg.
(Hankyu
Department
Store)OS Bldg.

HEP Five

Higashi Hankyu
Bldg.

Umeda Center
Bldg.

■Major property developed and owned by Hankyu Hanshin Holdings Group20

3. External Growth Strategies213-1. Acquisition Strategy and Investment Targets
Investment Targets

Investment Target Areas

Target real estate with retail-use and office-use zones
Especially focus investment on retail-use zones

Target real estate across Japan
Investment target areas are Tokyo metropolitan area,
nationwide government ordinance-designated cities
and other comparable major cities
Of these, investment is focused on Kansai region

Retail-use
facilities

Retail-use
zones
50%
or moreOffice-use
facilities

Mixed-use(complex)facilities

Utilize information sourcing capabilities
and network of the Hankyu Hanshin
Holdings Group that has deeply rooted
connections in the community

Office-use
zones
Retail-use
zones

Zones forother uses

Office-use
zones

Zones forother uses

Retail-use
zones

Kansairegion50%
or moreZones forother uses

* In principle, the maximum investment ratio for hotel-use portion (part ofretail-use zones) is 20% of all assets under management

Portfolio Status (end of 24th fiscal period)

Kansai region:
Osaka, Kyoto, Hyogo, Nara, Shiga and Wakayama

Other
1.0%
Urban
retail facilities
14.6%

Total acquisition price:

Office25.8%

JPY 141.62 bn
Total number of properties：
23 properties

Hotel
7.7%

Community-based
retail facilities
50.9%

Other region
1.5%

Retail-use
zone
73.3%
Other
Kansai region
7.9%

Umeda area
17.2%

Tokyo
24.2%

KansairegionAreas along
Hankyu andHanshin lines
49.1%

74.3%

22

3-2. Securing Opportunities to Acquire Properties
Status of Property Acquisition Activities
Promoting consideration of property acquisitions that can contribute to improvement of portfolio profitability and stability amidst heatedcompetition for property acquisition, and continuing to obtain quality property information utilizing the comprehensive strength of the sponsor
group through joint efforts, such as holding a weekly forum to share property information and considerations with the sponsor group.
In addition, will continue to aim for further expansion of the asset management company’s own property information sourcing channels.

Trends of Information Leads（leads）

Information leads checked

Information leads considered

1,000
800
600
400
200
0

1st
2nd
3rd
4th
5th
6th
7th
8th
9th
10th
11th
12th
13th
14th
15th
16th
17th
18th
19th
20th
21st
22nd
23rd
24th
period period period period period period period period period period period period period period period period period period period period period period period period

Diverse Property Acquisition Methods
Acquisition method
Sponsor group’s property

Property developedby sponsor group

On-balance bridge

SPC bridge

Direct acquisition
from outside

HEP Five

Shiodome East Side Building

MANDAI Toyonaka Honan Store (site)

Hankyu Corporation Head Office Building

Takatsuki-Josai Shopping Center

Kitano Hankyu Building

Hotel Gracery Tamachi

Ueroku F Building

Kohnan Hiroshima Nakano-Higashi Store (site)

Dew Hankyu Yamada

KOHYO Onohara StoreDAILY QANAT Izumiya Horikawa
Marutamachi Store (site)

AEON MALL SAKAIKITAHANADA (site)

Sphere Tower Tennozu

Nitori Ibaraki-Kita Store (site)
LaLaport KOSHIEN (site)

MANDAI Gojo Nishikoji Store (site)
LIFE Shimoyamate Store (site)

Kita-Aoyama San cho-me Building
OASIS Town Itami Konoike (site)

LAXA Osaka
HANKYU NISHINOMIYA GARDENS
kotocross Hankyu Kawaramachi

23

3-3. Information Leads and Leads Considered (24th Fiscal Period)* Outer circle: Information leads

Inner circle: Leads actually considered

City center

Use

1

OfficeMixed(Complex)

17

Other*

75

11

68

7

3

1

3

17

16

24

Urban vicinity
1

17

16

2

6

42

2

2

1

1

0

5

1

3

6

45

15

1

2

3

90

48

134

4

29

1

3

2

12

13

5

8

17

Suburban1

11Retail

Hotel

Area

18

1

6

10

0

0

5

3

6

6

2

* Properties anticipating property development by the sponsor group such as at old buildings and former sites of factories, etc.
Kansai region

Tokyo metropolitan area

(Osaka, Kyoto, Hyogo, Nara, Shiga, Wakayama)(Tokyo, Kanagawa, Saitama, Chiba)

Other areas

Leads considered were primarily in Kansai region, Tokyo metropolitan area andregional major cities, such as Nagoya, Fukuoka and Hiroshima, etc.

243-4. Population Dynamics of Kansai Region and Acquisition Target (1)l Areas in Kansai with concentration of population(Resident population per 1 km²: 5,000 or more)• Concentration of population is notable in the central parts of the cities of Osaka, Kobe and Kyoto and in the vicinity ofmajor stations between the three cities as well as in areas along Hankyu/Hanshin lines• Retail facilities of Hankyu REIT are located in areas with concentration of population(Most are in areas with notable concentration)<Resident population per 1 km²> (2015)
Kyoto Pref.
Shiga Pref.

Osaka Pref.
Hyogo Pref.

Nara Pref.

Owned assets
Hankyu/Hanshin lines<Resident population per 1 km²>
15,000 or more

Source:Prepared by processing “National
Census 2015” by Statistics Bureau,
Ministry of Internal Affairs andCommunications

10,000 or more but less than 15,000
5,000 or more but less than 10,00025

3-4. Population Dynamics of Kansai Region and Acquisition Target (2)l Increase/decrease in areas in Kansai with concentration of population(Increase/decrease in resident population per 1 km²)
• Polarization of population increase/decrease is progressing based on convenience and living environment• Upon acquisition of retail facilities, discuss mainly areas with high retail potential, such as those expecting population
growth (including individual factors such as location and form of facilities)<10-year population increase/decrease rate>
Kyoto Pref.
(Comparison of 2005 and 2015)

Shiga Pref.

Osaka Pref.
Hyogo Pref.

Nara Pref.
Owned assets
Hankyu/Hanshin lines<Resident population increase/decrease rate per 1 km²>
Large increase (+5% or more)
Small increase (+2% to < +5%))
About the same (±2%)

Source:Prepared by processing“National Census 2015” and“National Census 2005” by
Statistics Bureau, Ministry ofInternal Affairs andCommunications

Small decrease (-5% to ≦ -2%)
Large decrease (-5% or more)26

3-5. Retail Facilities (1)Investment in community-based retail facilities and urban retail facilities
Community-based retail facilities

Urban retail facilities

Provides products and services
to serve needs of daily life

Provides extraordinary urban
entertainment space

Core area (Note)
Excellent trade areas such as
areas along Hankyu and Hanshin lines

Core area (Note)
Umeda area

HANKYUNISHINOMIYAGARDENS

Dew Hankyu
YamadaDAILY QANAT
Izumiya Horikawa
Marutamachi Store(site)

Urban vicinity areas in Kansai region

HEP Five
Maximize
opportunities toacquire quality
properties by settingareas other than coreareas as investmentareas, too
Utilize the know-how
of the sponsor group in
not only Umeda area
and areas along
Hankyu and Hanshinlines, but also areas
centering on rail
stations of major cities
nationwide

Other urban vicinity areas(Note) “Core area” refers to an area that is currently a focus of investment considerations at Hankyu REIT.

Rail terminals and other bustling areas
in Kansai region
Kita-Aoyama San
cho-me Building

Other bustling areas27

3-5. Retail Facilities (2)Points to Investment Decisions and Management of Retail Facilities
Community-based retail facilities

Utilizing real estate know-how
and experience accumulatedby the sponsor group over theyears

Excellent trade areas with strong consumer demand

Excellent trade areas such as areas along
Hankyu and Hanshin lines where the population
is increasing and where strong consumer demandcan be expected in the medium-to-long-term

Competitive bustling areas

1

2

Oriented toward stable income

With trade areas believed to be excellent in themedium-to-long-term as a base, secure ongoingrevenues and stability through the operational
management of the sponsor group

Provision of
products andservices that matchthe trade area andflow of people＋

Adapt to change of needsof the trade area

Implementation of reviews of products, services
and tenant compositions as well as renewals andsuch in order to adapt to any change of needs ofthe trade area

Analysis of tradearea and flow ofpeople＋Tenant compositions, products and services
that match the features of the trade area

• Tenant compositions that match the population
dynamics, family composition, household income
and other features and needs of the trade area
• Provision of daily necessities, fresh foods andother products and services necessary for daily life

Urban retail facilities

3

Operational
management of thesponsor group

Aim for stable income andimprovement of profitability
in the medium-to-long-termby making decisions on
investment in retail facilities
based on the analysis above

Competitive bustling areas concentrated aroundcore stations, etc. where a certain number ofincoming and outgoing passengers can be expected
Tenant compositions, products and services
that match the target customer base

• Plan the concept and direction for retail facilities
overall and tenant compositions through accurate
targeting based on the flow of people• Provide products and services that match thetarget customer base
Adapt to shift in preferencesof the target customer base

• Promptly catch any shift in preferences of thetarget customer base and reflect in tenantcompositions, products and services• While retaining freshness by conducting sales
promotions as appropriate, conduct renewals andother revitalization if there is any obsolescence
Seek upside rent

While consistently confirming the concept anddirection for retail facilities overall, seek
maximization of revenues through adequate
business category and tenant compositions(Note) This is not intended as a guarantee that all assets owned by Hankyu REIT classified as community-based retail facilities or urban retail facilities feature the qualities above.
Notably, there are assets among these that employ a fixed-type master lease method and, in the case of such assets, Hankyu REIT cannot receive upside rent. Communitybased retail facilities or urban retail facilities from which Hankyu REIT may be able to receive upside rent are limited to those that employ a pass-through-type master leaseor direct lease method, those that employ a fixed-type master lease method but have introduced a certain level of variable rent, etc.

28

3-6. Concrete Property Acquisition Policy for Future

Area

OfficeCity center
Ueroku F Building
Hankyu Corporation Head Office Building
Sphere Tower Tennozu
Shiodome East Side Building

Urban vicinity

SuburbanCommunity-based
retail facilities

Urban
retail facilities

RSC (regional shopping centers)
LaLaport KOSHIENHANKYU NISHINOMIYA GARDENSAEON MALL SAKAIKITAHANADAHEP Five

RetailDepartment stores

Kitano Hankyu Building
Large specialty shops

Kita-Aoyama San cho-me Building
kotocross Hankyu Kawaramachi

GMS (general merchandise stores) / SM (supermarkets)
DAILY QANAT Izumiya Horikawa Marutamachi Store
LIFE Shimoyamate StoreKOHYO Onohara StoreSpecialty shops
Nitori Ibaraki-Kita Store
Street-level shops

Hotel*

Use

Urban SCNSC (neighborhood shopping centers)
Dew Hankyu Yamada
Takatsuki-Josai Shopping Center
MANDAI Toyonaka Honan Store
Kohnan Hiroshima Nakano-Higashi StoreMANDAI Gojo Nishikoji StoreOASIS Town Itami Konoike

LAXA Osaka
Hotel Gracery Tamachi

Outlet centers* Business hotels and city hotels are main targets of investment

Primary investment target zone29

4. Internal Growth Strategies30

4-1. Operational Management

Achieving a WIN-WIN-WIN-WIN relationship in operations

Consumers

Unitholders
Boosting stakeholder satisfaction
Maintaining and improving rent income
Improving attractiveness to consumers
and sojourn time
Invitation of competitive “in vogue” tenants

Tenants

Hankyu REIT

31

4-2. Occupancy Rate for Individual Properties (Occupancy by End-Tenants)
Stable occupancy rates maintained since 1st fiscal period
（％）

100
95

99.5 100.0 99.3 98.5

99.3 98.8

98.1

98.5

98.7

98.4

98.7

99.0

99.4 98.5

99.0

99.5 98.6

98.6

98.7

98.7

98.8

98.8

99.1

99.6

1st
period'05/115th
period'07/11

7th
period'08/118th
period'09/059th
period'09/1110th
period'10/0511th
period'10/1112th
period'11/0513th
period'11/1115th
period'12/1116th
period'13/0518th
period'14/0519th
period'14/1120th
period'15/0521st
period'15/1122nd
period'16/0523rd
period'16/1124th
period
'17/5

90
85
80

2nd
period'06/053rd
period'06/114th
period'07/056th
period'08/0514th
period'12/0517th
period'13/11

Total portfolio occupancy rate at 99.6% (as of the end of 24th period)(%)
100
Total portfolio

90

HEP

80

Tennozu
88.1%

70(December 2016)

Kitano Hankyu
Hankyu Yamada
Ueroku F Bldg.
Tennozu

60

Shiodome
50

Kita-Aoyama

40
30
End of
End of
May 2016 Jun. 2016

End ofJul. 2016

End of
End of
End of
End of
End ofAug. 2016 Sept. 2016 Oct. 2016 Nov. 2016 Dec. 2016

End of
End of
End of
End of
End ofJan. 2017 Feb. 2017 Mar. 2017 Apr. 2017 May 2017

・ The graph excludes the 16 properties (Takatsuki-Josai, Nitori Ibaraki, Kohnan Hiroshima, Tamachi, LaLaport KOSHIEN, LAXA Osaka, NISHINOMIYAGARDENS, Hankyu Corporation Head Office, AEON MALL SAKAIKITAHANADA, MANDAI Toyonaka Honan, Izumiya Horikawa Marutamachi, kotocross,
LIFE Shimoyamate, MANDAI Gojo Nishikoji, KOHYO Onohara and OASIS Town Itami Konoike) leased to single tenants (occupancy rates of 100%).

32

4-3. Topics on Properties Owned (1)HANKYU NISHINOMIYA GARDENS

Dew Hankyu Yamada

Reopening of the fully renovated 1F food court(April 2017)

Attracting tenants that
accommodate customer needs• Contributed to further vitalization of the facility through enhancementof the food court by attracting 11 restaurants including four appearingin Kansai for the first time.
• Counter seating and kids space for the convenience of parents are
newly placed for an easy drop-in.

• Attracted a 100-yen shop, which many visitors requested in
the questionnaire. (Opening in June 2017 (25th FP))
• Aim to raise the frequency of visits and draw more customers
by further strengthening competitiveness as a communitybased retail facility with the opening of the above store, in
addition to having a food supermarket, drug store and clothing
store for everyday use.

<Kids space><Inside the store>

Kitano Hankyu Building
Reinforcement of operational management• Value-enhancement work has been implemented in the building sincethe 22nd FP.
• Intend to conduct proactive leasing activities to improve
competitiveness of the facility by replacing out-of-fashion shops withtrendy shops upon expiration of fixed-term leasing agreements, etc.
• According to the above, after terminating contracts with three tenantsin the 24th FP, one tenant was attracted in the 25th FP (as of June2017). Leasing activities are underway to raise the occupancy rate.

<Inside the store> (image)

Kita-Aoyama San cho-me Building
Attracting tenants at higher rent levels
than in the past
• Attracted a flagship shop of a hair salon, which delivers awide range of hair-style trends from basic to the latest, without
downtime through tenant replacement.
• Aim to further raise the competitiveness of the property byattracting tenants that have a close affinity with other tenants.

33

4-3. Topics in Properties Owned (2)Case Examples of Repair/Updating in the 24th FP<Kitano Hankyu Building>Efforts on maintaining/improving
asset value

Conducted beautification work,
etc. of common-use portions, etc.

Promoted repair/renovation
systematically from the perspectiveof preventive maintenance in order
to secure stable revenues over the
medium-to-long-term

Conducted beautification work of the entrance on the 1F and renovationof the bathrooms on the B1F and 2F.

<Entrance on 1F><Lady’s bathroom on 2F><LAXA Osaka><Ueroku F Building>

Promoted repair work on exterior wall

Completed elevator modernization

Repair work on exterior wall has been underway over four
fiscal periods. Conducted repair of some tiles of the southbuilding and resealing in 24th FP.

Replaced operation panels in the elevator cars in addition to conducting
modernization of hoisting gear, control panel, etc.

<Control panel><Hoisting gear>34

4-4. Rent Systems and Present Condition of 23 Portfolio Properties (1)(End of 24th Fiscal Period)
Properties Mainly Using the Fixed-rent System
Property nameMain rent system

Present conditions

HANKYU NISHINOMIYAGARDENS
RSC (Note 1)

Long-term, fixed

Rent income is stable based on a fixed-type master lease method (Note 2) with Hankyu Corporation.
At JPY 79.6 billion in fiscal 2016, sales increased for the eighth consecutive year since opening in
2008. Sales in fiscal 2017, too, are going strong. The fully renovated food court on 1F reopened in
April 2017.

Dew Hankyu Yamada
NSC (Note 1)

Long-term, fixed(partly overage)

Occupancy rate at the end of 24th FP was down by 2.2 percentage points due to a move out by asingle tenant, but a 100-yen shop wanted by many customers was attracted as a successor in June2017 (25th FP). Countermeasures against LaLaport EXPOCITY will implement measures to retain
local daily customers, such as holding events in which customers can earn bonus loyalty program
points and kid-friendly events.

Kitano Hankyu Building
Specialty shop building(urban SC)

Fixed(partly overage)

Occupancy rate at the end of 24th FP was down by 2.3 percentage points due to move outs by threetenants, but one new tenant started operations in June 2017 (25th FP). Value-enhancement work on
common-use portions is underway. Leasing activities will be continued and conducted mainly for
tenants that will create synergy with existing tenants and be able to contribute to increasing
customers.

Takatsuki-Josai
Shopping Center
NSC (Note 1)

Long-term, fixed

Rent income is stable based on a fixed-type master lease method (Note 2) with Kohnan Shoji Co., Ltd.
As a community-based store, it houses shops that fulfill the needs of nearby residents, such as ahome center, grocery store, home electronics retailer and sporting goods shop.

Event at HANKYU NISHINOMIYA GARDENS

Event at Dew Hankyu Yamada(Note 1) RSC: Regional Shopping Center; NSC: Neighborhood Shopping Center(Note 2) Fixed-type master lease method: Hankyu REIT receives a certain amount of rent from the master lessee(sublessor), regardless of fluctuations in end-tenant rent.

35

4-4. Rent Systems and Present Condition of 23 Portfolio Properties (2)(End of 24th Fiscal Period)
Properties Mainly Using the Sales-based, Overage-rent System
Property nameMain rent system

HEP Five
Specialty shop building(urban SC)

Overage(fixed + variable)

Present conditions
Along with retaining customers through group facilities acting as one by implementing joint events,
HEP FIVE internal marketing, etc., continuing aim to attract more customers and boost sales.
With a greater number of foreign tourists visiting Japan, sales from the Ferris wheel in the 24th FP
increased 17% year-on-year (increase for the 10th consecutive fiscal period).

Properties Using the Fixed-rent System
Property nameMain rent system

Present conditions

Kita-Aoyama San cho-me
Building
Urban retail facility

Fixed

Occupancy rate continues to be 100%. Successfully replaced a tenant in one section on 2F in March2017 at a higher rent level than in the past.

kotocross Hankyu
Kawaramachi
Specialty shop building(urban SC)

Long-term, fixed

Rent income is stable based on the fixed-type master lease method (Note 2) with Hankyu Corporation.
As a retail facility that features the characteristics of a landmark facing the Shijo-Kawaramachi
crossing, the building houses merchandise shops, restaurants and service shops. Tenants of 1F and2F attracted in March 2016 continue to have strong sales, buoyed by robust demand from foreign
tourists visiting Japan.

KOHYO Onohara StoreSM (Note 1)

Long-term, fixed

Rent income is stable based on the fixed-type master lease method (Note 2) with KOHYO Co., Ltd.
Opened in May 2016, this community-based retail facility houses not only a grocery store, but also
other shops closely related to daily life, such as a 100-yen shop.

OASIS Town Itami Konoike(site)NSC (Note 1)

Long-term, fixed

Rent income is stable based on a contract for a fixed-term land lease for business purposes with
HANKYU OASIS Co., Ltd.

The core tenant is THREE AOYAMA, the flagship store of THREE, a natural cosmetics brandoperated by an affiliate of Pola Orbis Holdings Inc.

In line with the store opening , the rent collectable became 100% from July 3, 2017 (25th FP). The
facility houses shops closely related to daily life, such as a grocery store, apparel store and drugstore.

(Note 1) NSC: Neighborhood Shopping Center; SM: Supermarket(Note 2) Fixed-type master lease method: Hankyu REIT receives a certain amount of rent from the master lessee(sublessor), regardless of fluctuations in end-tenant rent.

36

4-4. Rent Systems and Present Conditions of 23 Portfolio Properties (3)(End of 24th Fiscal Period)
Properties Mainly Using the Fixed-rent System
Property nameMain rent system

Present conditions

Ueroku F Building
OfficeFixed

Occupancy rate stood at 93.8% after a move out by a single tenant in 23rd FP. While tapping needs
for expansion of floor area within the same property, will proactively conduct outward leasing
activities in 24th FP, such as holding viewing of vacant sections.

Sphere Tower Tennozu
OfficeFixed

Achieved seven leasing contracts, including a large tenant, in 2016, strongly boosting occupancy rate
to 88.1% in December 2016. Will continue to promote leasing activities backed by an environment
where vacancy rate in Tokyo metropolitan area is decreasing, and thereby lead to further
improvement in occupancy rate. The quasi co-owner was changed to Premier Investment
Corporation on June 21, 2017. Will cooperate and carry out future management and leasing as a
REIT having the same medium-to-long-term perspective.

Shiodome East Side Building
OfficeFixed

Occupancy rate continues to be 100%. Will continue to strive to improve level of satisfaction by
pursuing relations with existing tenants.

Hankyu Corporation
Head Office Building
OfficeLong-term, fixed

Rent income is stable based on the fixed-type master lease method (Note 2) with Hankyu Corporation.
The building serves as the main base of Hankyu Hanshin Holdings Group, and Hankyu Corporation
uses it as its head office building.

Hotel Gracery Tamachi
HotelLong-term, fixedLong-term and fixed lease contract with Fujita Kanko Inc. Both guest room occupancy rate and guest
room unit price remain at high levels.
Fujita Kanko Inc., the lessee, filed an action for reduction in the amount of rent against Hankyu REIT
in October 2014, but Hankyu REIT filed a counterclaim in July 2015 for increase in the amount of rent
and it is currently pending.

LAXA Osaka
Hotel

Long-term, fixed

Rent income is stable based on the fixed-type master lease method (Note 2) with Hanshin Electric
Railway Co., Ltd. Guest room occupancy rate and guest room unit price of Hotel Hanshin, which isunder a sublease contract, remain at a high level.

Nitori Ibaraki-Kita Store (site)
Specialty shop

Long-term, fixed

Rent income is stable based on a contract for a fixed-term land lease for business purposes withNitori Holdings Co., Ltd. Development of residential land is underway nearby and the trade area
population is increasing. The tenant is also maintaining strong performance.

Kohnan Hiroshima NakanoHigashi Store (site)
NSC (Note 1)

Long-term, fixedContract for a fixed-term land lease for business purposes with Kohnan Shoji Co., Ltd.
This retail facility offers high transportation convenience, and has a home center and a grocery store
as tenants. Joint efforts will continue to be made for reduction of costs, effective utilization of parking
space, etc. in order to improve the management balance sheets of tenants.

(Note 1) NSC: Neighborhood Shopping Center(Note 2) Fixed-type master lease method: Hankyu REIT receives a certain amount from the master lessee (sublessor), regardless of fluctuations in end-tenant
rent.

37

4-4. Rent Systems and Present Conditions of 23 Portfolio Properties (4)(End of 24th Fiscal Period)
Properties Mainly Using the Fixed-rent System
Property nameMain rent system

Present conditions

LaLaport KOSHIEN(site)RSC (Note)

Long-term, fixed

Rent income is stable based on a contract for a fixed-term land lease for business purposes with
Mitsui Fudosan Co., Ltd.

AEON MALL
SAKAIKITAHANADA (site)
RSC (Note)

Long-term, fixed

Hankyu REIT owns the site only, and there is a contract for a long-term, fixed-term land lease withthe building owner Sumitomo Mitsui Trust Bank, Limited for the shopping center land with landleasehold right, which occupies most of the site. Sakai Kitahanada Hankyu, which has a store in
AEON MALL (based on subleasing from AEON MALL Co., Ltd., which is in a tenant contract with
Sumitomo Mitsui Trust Bank, Limited), is scheduled to move out of the end of July 2017. AEON
MALL Co., Ltd. announced in April 2017 that it will conduct large-scale renovation, including the site
to be vacated by Sakai Kitahanada Hankyu, in three phases (the first phase was completed at theend of April 2017).

MANDAI Toyonaka Honan
Store (site)
NSC (Note)

Long-term, fixed

Rent income is stable based on a contract for a fixed-term land lease for business purposes with
MANDAI Co., Ltd.

DAILY QANAT Izumiya
Horikawa Marutamachi Store(site)SM (Note)

Long-term, fixed

MANDAI Gojo Nishikoji Store(site)NSC (Note)

Long-term, fixed

LIFE Shimoyamate
Store (site)
SM (Note)

Long-term, fixedWith the renewal in spring 2017, 44 shops, including some appearing in Kansai region for the firsttime, are newly opening or reopening after renovation.

Sales have been strong since the property’s opening in October 2013. As a community-based store,
it houses shops closely related to daily life, such as a grocery store, drugstore and 100-yen shop.
Rent income is stable based on a contract for a fixed-term land lease for business purposes with
Izumiya Co., Ltd.
The store is becoming more well-known and the business continues to be strong.
With more foreign tourists visiting Japan coming to the store, tax-free shopping has been madeavailable. The morning market has also been going well.
Rent income is stable based on a contract for a fixed-term land lease for business purposes with
MANDAI Co., Ltd.
Strong sales as the store is bustling mainly with local customers who come on bicycle.
Rent income is stable based on a contract for a fixed-term land lease for business purposes with Life
Corporation. Strong business performance as evidenced in nationally top-class sales of personaldelivery service, etc.

(Note) RSC: Regional Shopping Center; NSC: Neighborhood Shopping Center; SM: Supermarket

38

4-5. Appraisal Value

Appraisal value increased by 1.7%, generating unrealized income of JPY 17.6 bn
Cap rate decreased for 22 properties excluding Itami

JPY 17,607 mn

Change in Unrealized income/Loss and Cap Rate
・Asset replacement
Acquired 2 properties,
transferred 2 properties

・Asset acquisition
Acquired 3 properties

・Asset acquisition
Acquired 4 properties

・Asset transfer
Transferred 2 properties

・Asset acquisition
Acquired 2 properties(JPY mn)
20,000

5.4%

10,000

5.1%

0

4.8%

-10,000

4.5%-20,000

第15期
2012.11

第16期
2013.5

第17期
2013.1115th period

16th period

17th period

Nov. 2012

May 2013

Nov. 2013

第18期
2014.5

第19期
2014.11

第20期
2015.5

第21期
2015.1118th period

19th period 20th period

21st period

May 2014

Nov. 2014

Nov. 2015

May 2015

第22期
2016.5

第23期
2016.1122nd period 23rd period
May 2016 Nov. 2016

第24期
2017.5

4.2%

24th period
May 2017

Unrealized income/loss
Weighted average cap rate (right axis) (Note)(Note) Cap rates are the weighted average based on appraisal values

394-6. List of Appraisal Values(Unit：JPY mn)

Acquisition
price① End of previous period(23rd fiscal period)
Appraisalvalue

Cap rate(Note)② End of current period(24th fiscal period)
Appraisal value

Cap rate(Note)③ValueChangerecorded on the Unrealized(②-①)/① balance sheet at income/loss(Note)
end of current②-③
periodChange(②-①)(Note)

Value to book
ratio
②/③

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

6,468

Kitano Hankyu Building

7,740

6,970

4.7%

7,140

4.6%

170

2.4%

7,732

-592

92.3%

Dew Hankyu Yamada

6,930

8,530

4.6%

8,630

4.5%

100

1.2%

5,568

3,061

155.0%

8,736

3.7%

8,862

3.6%

126

1.4%

5,574

3,287

159.0%

Takatsuki-Josai Shopping Center

8,600

8,160

5.1%

8,320

5.0%

160

2.0%

7,071

1,248

117.7%

Nitori Ibaraki-Kita Store (Site)

1,318

1,690

4.9%

1,710

4.8%

20

1.2%

1,340

369

127.6%

Kohnan Hiroshima Nakano-Higashi Store (Site)

2,175

1,890

5.7%

1,890

5.6%

0

0.0%

2,280

-390

82.9%

Hotel Gracery Tamachi

4,160

4,390

4.5%

4,420

4.4%

30

0.7%

3,686

733

119.9%

LaLaport KOSHIEN (site)

7,350

7,650

4.4%

7,720

4.3%

70

0.9%

7,748

-28

99.6%

HANKYU NISHINOMIYAGARDENS (28% of the quasi co-ownership of
the trust beneficiary interests)

18,30023,996

4.4%

24,472

4.3%

476

2.0%

17,486

6,985

139.9%AEON MALL SAKAIKITAHANADA (site)

8,100

9,540

4.4%

9,750

4.3%

210

2.2%

8,189

1,560

119.1%

MANDAI Toyonaka Honan store (site)

1,870

2,260

4.5%

2,290

4.4%

30

1.3%

1,889

400

121.2%DAILY QANAT Izumiya Horikawa Marutamachi
Store (site)

3,100

3,490

4.4%

3,550

4.3%

60

1.7%

3,127

422

113.5%

kotocross Hankyu Kawaramachi

2,770

3,230

4.5%

3,270

4.4%

40

1.2%

2,688

581

121.6%

LIFE Shimoyamate Store (site)

1,421

1,590

4.4%

1,610

4.3%

20

1.3%

1,434

175

112.3%

MANDAI GOJO Nishikoji Store (site)

4,182

4,600

4.5%

4,660

4.4%

60

1.3%

4,213

446

110.6%KOHYO Onohara Store

1,631

1,670

5.1%

1,710

5.0%

40

2.4%

1,656

53

103.2%OASIS Town Itami Konoike (site)

7,100

7,120

4.2%

7,270

4.2%

150

2.1%

7,391

-121

98.4%

Shiodome East Side Bldg.

19,025

14,1004.1%

14,400

4.0%

300

2.1%

17,287-2,887

83.3%

Hankyu Corporation Head Office Building

10,20011,7004.2%

11,900

4.1%

200

1.7%

9,600

2,299

123.9%

Ueroku F Building

2,980

2,700

5.3%

2,740

5.2%

40

1.5%

2,628

111

104.2%

Sphere Tower Tennozu (33% of the quasi coownership of the trust beneficiary interests)

9,405

6,765

4.2%

6,831

4.0%

66

1.0%

8,575

-1,744

79.7%

LAXA Osaka

5,122

5,600

4.9%

5,670

4.8%

70

1.3%

4,275

1,394

132.6%

Kita-Aoyama San cho-me Buiding

1,680

1,940

3.6%

1,970

3.5%

30

1.5%

1,729

240

113.9%

141,628

148,3174.4%

150,785

4.3%

2,468

1.7%

133,177

17,607113.2%

Total(Note) Cap rates are cap rates and discount rates based on the direct capitalization method used for appraisal value calculations (Nitori Ibaraki-Kita Store (site), Kohnan
Hiroshima Nakano-Higashi Store (site), LaLaport KOSHIEN (site), AEON MALL SAKAIKITAHANADA (site) and LIFE Shimoyamate Store (site) are allocated a
discount rate using the DCF method) and the total is the weighted average cap rate based on appraisal values.
405. Financial Strategies415-1. Basic Financial Policy / Debt Outstanding
Basic Financial Policy

Debt Outstanding by Lender (JPY mn)● Maintain sound financial position● Maintain favorable trading relationship with financial institutions● Realize lower fund procurement costs(effective use of security deposits/guarantees)● Reduce financing risks (diversification of debt repayment dates)● Reduce interest rate fluctuation risks (focus on long-term, fixed-rateborrowings)

Interest-bearing debt

As of end of
23rd period

As of end of
24th period

JPY 65.9 bn

JPY 65.9 bn

Avg. funding cost（interest-bearing debt＋utilized
amount of security deposits andguarantees)

0.90%

0.92%

Avg. debt financing cost (including
investment corporation bonds)

0.92%

0.94%

4.4 years

4.4 years

Long-term debt ratio

90.9%

95.1%

Fixed debt ratio

81.5%

85.7%

LTV (Note)

43.0%

42.2%

Interest-bearing debt ratio

44.5%

44.6%

JPY 4 bn

JPY 4 bn

Investor rating(R&I)

A+（stable）

A+（stable）

Investor rating(JCR)

AA（stable）

AA（stable）

Avg. remaining years
on long-term loans payable andinvestment corporation bonds

Investment corporation bonds

3,400
5.2%

1,500
2.3%

As of May 31, 2017

4,000
6.1%
12,200
18.5%

6,900
10.5%
6,900
10.5%

11,500
17.5%
9,300
14.1%

10,20015.5%

Mitsubishi UFJ Trust and Banking Corporation
Development Bank of Japan Inc.
Sumitomo Mitsui Banking Corporation
Sumitomo Mitsui Trust Bank, Limited
Mizuho Bank, Ltd.
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
The Senshu Ikeda Bank, Ltd.
Mizuho Trust and Banking Co., Ltd
Investment corporation bonds

Total JPY 65.9 bn
Registration for Issuance ofInvestment Corporation Bonds
Planned value of issuance (upper limit): JPY 100,000 mn
Planned issuance period: Dec. 19, 2015 to Dec. 18, 2017

(Note) Details of the calculation method for “LTV” are presented on P66.

42

5-2. Asset Scale and LTV (Loan to Value)

Capital increaseby 2nd public offering

Total acquisition priceTotal appraisal value at the end of period
LTV at end of period (based on management guidelines)

Capital increaseby 3rd public offering

Interest-bearing debt ratio at the end of period(JPY bn)

Capital increaseby 1st public offering

270
240

46.1
210

57.9

150

60.0

53.5
48.6 47.3
45.4

180
28.8

55.6 56.1 55.9 56.0 55.9 55.8

46.0

45.6

49.4
31.0 30.0 30.7

（％）
55.2

46.9 46.2 45.4 45.5
45.2 45.5 45.5 46.7

40.8 40.3

44.4 43.2
43.0 44.5 44.6

50.0

43.2 43.4 42.9 42.9 43.0
41.9 43.0 42.2

40.0

39.1

30.0

120
20.0

90
60

18.0

21.3

18.2 18.9

10.0
30
0

0.0
1st
2nd
3rd
4th
5th
6th
7th
8th
9th
10th 11th 12th 13th 14th 15th 16th 17th 18th 19th 20th 21st 22nd 23rd 24th
period period period period period period period period period period period period period period period period period period period period period period period period'05/11 '06/05 '06/11 '07/05 '07/11 '08/05 '08/11 '09/05 '09/11 '10/05 '10/11 '11/05 '11/11 '12/5 '12/11 '13/05 '13/11 '14/05 '14/11 '15/05 '15/11 '16/05 '16/11 '17/5

Number of5
properties

6

7

8

9

11

11

16

15

15

15

15

15

15

15

16 19

19

23

23 23

21

23

23

LTV remains on an ongoing basis
43

6. Overview of Financial Results for 24th Fiscal Period446-1. Income Statement / Cash Distribution Statement
Income Statement

Cash Distribution Statement（Unit: JPY mn）

Item

23rd Fiscal Period

24th Fiscal Period(Operation period:183 days)(Operation period:182 days)

Jun. 1, 2016 to Nov. 30, 2016
AmountPercentage

AmountInterest due on investment corporation bonds

4,721
4,721
2,745
2,284
334
3
18
37
11
56
1,976
1
0
1
406
285
54
35

Amortization of investment corporation bondissuance costs

2

1

29
1,570
1,570

0
1,625
1,625

1. Operating revenues
Lease operating revenues
2. Operating expenses
Lease operating costs
Asset management remuneration
Officer remuneration
Asset consignment remuneration
Adminstrative agency remuneration
Auditor remuneration
Other operating expenses
Operating income
3. Non-operating revenues
Interest earned
Other non-operating revenues
4. Non-operating expenses
Interest expenses
Loan related expense

Other expenses
Ordinary income
Pretax Net income for current period

100.0

Dec. 1, 2016 to May 31, 2017

58.1

41.9
0.0

8.6

33.3

4,740
4,740
2,760
2,297
344
3
18
36
10
49
1,979
3
0
2
357
289
54
11

(Unit: JPY thousand)
Item

ChangePercentage

100.0

18

58.2

15

(1)

23rd Fiscal Period 24th Fiscal Period

Unappropriated income forcurrent period
Distributions(2)(Distribution per unit (JPY))
Retained earnings carried forward

ChangeAmountAmount

1,569,370

1,623,922

54,552

1,569,035(2,626)335

1,623,407(2,717)515

54,372(91)
179

Amount(Main factors for increase/decrease)(1) Operating revenues
Full-period contribution from properties acquired in the 23rd FP(Itami (25% rent collection), Onohara)
JPY +47 mn

Income related to tenant move-ins and move-outs
41.8
0.1

2
1

7.5

-49

(3)

(Yamada, Kitano, Ueroku, Kita-Aoyama)

JPY +20 mn

Decrease in utilities expense income

JPY -41 mn(2) Operating expenses
Increase in repair expense

JPY +44 mn

Increase in asset management remuneration

JPY +9 mn

Change in item classification of non-deductible consumption
taxes
JPY +8 mn
Decrease in utilities expense

34.3

JPY -40 mn

54(3) Non-operating expenses

Corporate, local and enterprise tax

1

1

Decrease in interest expenses

Adjustment for corporate tax, etc.

-0-0(refinancing of investment corporation bonds, and increase in interestJPY -19 mn
bearing debt)

Net income for current period
Retained earnings carried forwardfrom the previous period
Unappropriated income for current period

1,569
0
1,569

33.2

1,623
0
1,623

34.3

Lease operating revenues/costs
Breakdown: See pages 47 and 48

54

Decrease on the rebound of payment of non-deductible
consumption taxes for acquiring the Itami site and change initem classification of non-deductible consumption taxes
JPY -29 mn

45

6-2. Balance Sheet（Unit: JPY mn）
Item

23rd Fiscal Period

24th Fiscal Period(as of Nov. 30, 2016)(as of May 31, 2017)

Ratio (%)

AmountAmountRatio (%)

ChangeItem
AmountAssets23rd Fiscal Period

24th Fiscal Period(as of Nov. 30, 2016)(as of May 31, 2017)

AmountAmountRatio (%)

Ratio (%)

ChangeAmountLiabilities

I Current assets total

13,822

9.3

14,164

9.6

342

I Current liabilities total

14,744

10.0

13,832Currency and demand deposit

5,604

6,410

Operating accounts payable

572

539

Currency and demand depositin trust

7,722

7,424

Short term loans payable

6,000

3,200

Operational income receivable

77Long term loans payable(due within 1 year)

7,000

9,000

9.4

-911

80

98

Consumption taxes receivable258―

Accrued dividend

107Prepaid expense

144

221

Accrued expenses

167

166

3

2

1

1

Interest-bearing
debt
JPY 65,900 mn

Deposit paid

othersII Fixed assets total

134,11190.6

133,646

Income taxes payable

90.4

-464

1. Tangible fixed assets

Accrued consumption tax
Advance received

Buildings

2,224

2,157

Structures

219

211

Current deposit received

0

0

18,13018,143

Buildings in trust

25,84625,423Structures in trust

541

527

Long term loans payable

Machinery and equipment in trust

143

157

Tools, furniture and fixtures in trust

56

69

85,46685,46648

39

Land in trust
Trust construction accountTangible fixed assets total

132,67889.7

132,196(return within 1 year)

II Total noncurrent liabiliteies
Investment corporation bonds

OthersIntangible fixed assets total

957

957

67

63

1,024

0.7

1,020

1

0

218
59,985182
40.5

60,718

41.1

732

JPY 7,200 mn

4,000

4,000
49,700

Security deposits

1,391

1,344

JPY 1,438 mn

Security deposits in trust

5,694

5,674

was allocated forpropertyacquisitions

74,73050.5

74,551

50.4

I Unitholders capital

71,65948.4

71,65948.5

II Total surplus

1,569

1.1

1,623

1.1

-178

Net assets

89.4

-482

Unappropriated income for current
period

0.7

-4

Total
security deposits

48,900Liabilities total

2. Intangible fixed assets
Land leasehold

73
661

Security deposits

Land

Tools, furniture and fixtures

79
691

1,569

1,623

Net assets total

73,22849.5

73,283

49.6

54

Liabilities and net assets total

147,958

100.0

147,834

100.0

-123

3. Investments, other assets
Long-fiscal period prepaid expenses
Guarantee money deposit
Investment, other assets total

IIITotal deferred assets
Investment corporation bondissuance costs

Assets total

398

419

10

10

408

0.3

429

0.3

21

24

0.0

23

0.0

-1

100.0

-123

24
147,958

23
100.0

147,83446

6-3. Income and Expenditure by Property (1)（Unit： JPY mn）
HEP Five

Item(14% of the quasi
Kitano Hankyu
co-ownership of theBldg.
trust beneficiaryinterests)

Dew Hankyu
YamadaKohnanNitori IbarakiHiroshima
Hotel Gracery
Kita Store (site)
Nakano-Higashi
Tamachi(Note)Store (site)

TakatsukiJosai SC

Number of operating daysof 24th fiscal period

182

182

182

182

Lease operating revenues
total

310

548

373

Income from lease

245

379

Utilities expense income

14

Other incomes

182

LaLaport
KOSHIEN(site)NISHINOMIYAGARDENS(28% of thequasi coownership of
the trust
beneficiaryinterests)

AEON MALL
SAKAI
KITAHANADA(site) (Note)

MandaiToyonaka
Honan Store(site) (Note)

DAILY QANAT
IzumiyaHorikawa
MarutamachiStore(site) (Note)

182

182

182

182

182

182

182

284

68

121

257

618

259

283

68

116

257

617

109

43

―

―

―

―

―

51

59

70

0

0

4

0

0

180

400

223

154

6

51

106

209

Property/Facility
management fees

45

111

73

10

0

1

1

0

Utilities expense

21

122

44

0

―

―

―

―

3

0

1

22

―

―

0

6

28

1

2

―

―

―

―

―

Repair expense

8

19

6

25

―

―

―

1

Nonlife insurance
premium

0

1

0

1

―

0

0

2

Tax and public dues

24

49

26

26

6

14

102

58

7

6

4

0

―

1

1

0

―

32

0

139

Lease operating costs total

Rent paid
Advertising and promotion
expenses

Other expenses

41

86

63

68

NOI
(Lease operating income +Depreciation)

171

234

213

198

60

62

103

150

547

211

53

88

Lease operating income

130

147

150

129

60

62

70

150

408

211

53

88

8

159

45

―

―

―

1

―

17

―

―

―

Depreciation

Capital expenditure(Note) The Asset Management Company decided rent information is not disclosed as consent was not obtained from the tenants, and there is a possibility
disclosure may affect the competitiveness of Hankyu REIT and eventually damage the interests of unitholders.

476-3. Income and Expenditure by Property (2)（Unit： JPY mn）

Item

kotocross
HankyuKawaramachi

Number of operating daysof 24th fiscal period

182

Lease operating revenues
total
Income from lease
Utilities expense income
Other incomes
Lease operating costs
total
Property/Facility
management fees

LIFE
Shimoyamate
Store(site) (Note)

MANDAI Gojo
Nishikoji
Store (site)(Note)

182

182

KOHYO
OnoharaStore(note)182

OASIS Town
Itami Konoike(site)

182

HankyuCorporation
Head OfficeBldg.

Shiodome
East
Side Bldg.

Sphere Tower
Tennozu
3% of the quasi
Ueroku F Bldg. co-ownership of
the trust
beneficiaryinterests)

LAXA Osaka

Kita-Aoyama
San cho-me
Bldg.
(Note)

182

Total(23 properties)

―

182

182

182

182

182

102

397

359

138

136

254

4,740

102

375

359

115

96

254

4,293

―

17

―

9

14

―

209

―

3

―

13

25

―

237

47

179

159

97

209

173

2,297

1

18

1

22

26

3

328

Utilities expense

―

22

―

10

45

―

266

Rent paid

12

0

―

―

―

17

65

Advertising and promotion
expenses

―

―

―

0

0

―

32

Repair expense

―

5

―

12

16

39

135

0

0

1

0

0

2

14

10

21

47

12

28

47

547

Nonlife insurance premiumTax and public dues
Other expenses
Depreciation

0

2

0

1

31

1

61

20

108

108

38

61

63

846

NOI
(Lease operating income +Depreciation)

75

34

109

47

37

326

308

79

-10

143

40

3,288

Lease operating income

54

34

109

38

37

217

199

41

-72

80

36

2,442

1

―

―

―

―

10

5

23

59

20

―

355

Capital expenditure(Main repair expense)
LAXA Osaka
Takatsuki-Josai Shopping Center(Main capital expenditure)
Repair work on the south building exterior wall
Repair work on the store building exterior wall

JPY 20 mn
JPY 23 mn

Kitano Hankyu Building

Renovation of B1/2F restrooms
Renovation of sign boards on all building
Escalator modernization
1F common-use portion beautification
Automatic fire alarm system upgrading
Parking control system upgrading
Elevator modernization

JPY 40 mn
JPY 34 mn
JPY 28 mn
JPY 14 mn
JPY 36 mn
JPY 17 mn
JPY 20 mn(Note) The Asset Management Company decided rent information is not disclosed as consent was not obtained from the tenants, and there is apossibility disclosure may affect the competitiveness of Hankyu REIT and eventually damage the interests of unitholders.

48

Sphere Tower Tennozu
Dew Hankyu Yamada
Ueroku F Building6-4. Financial Indicators

Item

23rd Fiscal Period

Remarks

24th Fiscal Period

Operation period

183

182

23rd fiscal period: Jun. 1, 2016 to Nov. 30, 2016
24th fiscal period: Dec. 1, 2016 to May. 31, 2017

Return On Assets (ROA)

1.1%

1.1%

Ordinary income / {(Total assets at beginning of period+ Total assets at end of period) /2 }

2.1%

2.2%

Calculated from duration of operation

2.1%

2.2%

Net income / {(Net assets at beginning of period + Net assets at end of
period) /2 }

4.3%

4.4%

Calculated from days of operation

49.5%

49.6%

Net assets / Total assets

43.0%

42.2%

(47.4%)(47.4%)(Amount of interest-bearing debt + Security deposits - Matched money to security deposits)/(Total assets(*) - Matched money to security deposits)*Appraisal-value basis (Ratios in brackets are based on book value)

44.5%

44.6%

8.5times

9.2times

Net Operating Income (NOI)

JPY 3,286 mn

JPY3,288 mn

Net lease operating income + Depreciation

Funds From Operation (FFO)

JPY 2,418 mn

JPY2,469 mn

Net income for current fiscal period +Depreciation - Income/loss onsale of real estate(per annum)
Return On Equity (ROE)(per annum)
Ratio of net assets at end of period

Loan To Value ratio at end of period (LTV)
Ratio of interest-bearing debts to total assets
at end of period
Debt Service Coverage Ratio (DSCR)Interest-bearing debt / Total assets
Pre-interest and pre-depreciation Net income for current fiscal period /Interest expenses49

7. APPENDIX

50

7-1. Portfolio List (As of End of 24th Fiscal Period) (1)As of May 31, 2017Classifi- Codecation (Note 1)

Name

Total leasablearea (m2)(Note 3)

Occupancy Total number
PML
rate
of tenants(Note 4)(Note 3)(Note 3)Kita-ku,
Osaka City

Nov. 1998

18.6

6,337.37

100.0%

1(2,958.94)(98.5%)(124)

Kitano Hankyu Bldg.

Kita-ku,
Osaka City

Jun. 1985

32.0

28,194.15

100.0%

2(18,477.35)(97.7%)

(23)

R3(K)

Dew Hankyu Yamada

Suita City,
Osaka Prefecture

Oct. 2003

13.7

13,027.28

97.8%

R4(K)

Takatsuki-Josai
Shopping Center

Takatsuki City,
Osaka Prefecture

Apr. 2003

14.2

31,451.81

R5(K)Nitori Ibaraki-Kita Store(site)

Ibaraki City,
Osaka Prefecture

―

―

R6

Kohnan Hiroshima NakanoHigashi Store (site)

Aki-ku,Hiroshima City―

R8

Hotel Gracery Tamachi

Minato-ku,
Tokyo

R9(K)

LaLaport KOSHIEN(site)HEP Five

Retail-use facilites

Location

Building
Completion dateage
(Note 2)R1(K)(14% of the quasi co-ownership of
the trust beneficiary interests)

R2(K)

R11(K)

HANKYU NISHINOMIYAGARDERNS(28% of the quasi co-ownership of
the trust beneficiary interests)

Date of acquisition

Acqusition price Investment(JPY mn )ratio

Appraisal value(JPY mn)

Cap rate(Note 5)5.0%

Feb. 1, 2005

6,468

4.6%

8,862

3.6%

10.1%

Feb. 1, 2005

7,740

5.5%

7,140

4.6%

26

4.7%

Feb. 1, 2005

6,930

4.9%

8,630

4.5%

100.0%

1

5.9%

Nov. 15, 2005

8,600

6.1%

8,320

5.0%

6,541.31

100.0%

1―

Mar. 29, 2006

1,318

0.9%

1,710

4.8%

―

25,469.59
60.14

100.0%

1―

Oct. 2, 2006
Apr. 9, 2007

2,170
5

1.5%

1,890

5.6%

Sep. 2008

8.7

4,943.66

100.0%

1

10.3%

Dec. 25, 2008

4,160

2.9%

4,420

4.4%

Nishinomiya City,
Hyogo Prefecture――

126,052.16

100.0%

1

6.4%

Jan. 22, 2009

7,350

5.2%

7,720

4.3%

Nishinomiya City,
Hyogo Prefecture

Oct. 2008

8.7

65,372.41

100.0%

1

9.2%

Apr.16, 2013

18,30012.9%

24,472

4.3%

R12(K)AEON MALL
SAKAIKITAHANADA(site)

Kita-ku,
Sakai City
Osaka Prefecture――

64,104.27

100.0%

2―

Jun. 27, 2013

8,100

5.7%

9,750

4.3%

R13(K)

MANDAI Toyonaka Honanstore (site)

Toyonaka city
Osaka Prefecture――

8,159.41

100.0%

1―Jun. 27, 2013

1,870

1.3%

2,290

4.4%

Kamigyo-ku,
Kyoto city――

3,776.15

100.0%

1―Jun. 4, 2014

3,100

2.2%

3,550

4.3%

DAILY QANAT Izumiya
R14(K) Horikawa Marutamachi Store(site)
R15(K)

kotocross Hankyu
Kawaramachi

Shimogyo-ku,
Kyoto city

Oct. 2007

9.7

4,400.13

100.0%

1

2.6%

Jun. 4, 2014

2,770

2.0%

3,270

4.4%

R16(K)

LIFE Shimoyamate Store(site)

Chuo-ku,
Kobe city――

2,397.83

100.0%

1―Jun. 4, 2014

1,421

1.0%

1,610

4.3%

R17(K)

MANDAI Gojo
Nishikoji Store (site)

Ukyo-ku
Kyoto city――

9,182.80

100.0%

1―Jun. 24, 2014

4,182

3.0%

4,660

4.4%

KOHYO Onohara Store

Minoh City,
Osaka Prefecture

May 2016

1.1

3,310.31

100.0%

1

5.3%

Jul. 1, 2016

1,631

1.2%

1,710

5.0%

―

―

17,997.10

100.0%

1―

Nov. 25, 2016

7,100

5.0%

7,270

4.2%

R18(K)
R19(K)OASIS Town Itami Konoike
Itami City,
Hyogo Prefecture(site)

51

7-1. Portfolio List (As of End of 24th Fiscal Period) (2)

Office-use
facilities
Mixed-use (complex)
facilities

Total leasablearea (m2)(Note 3)

Occupancy Total number
PML
rate
of tenants(Note 4)(Note 3)(Note 3)Name

Location

Completion date

Building
age(Note 2)

O1

Shiodome East Side Bldg.

Chuo-ku,Tokyo

Aug. 2007

9.8

9,286.58

100.0%

6

4.6%

Feb. 29, 2008

19,025O2(K)Hankyu Corporation Head
Office Building

Kita-ku,
Osaka City

Sep. 1992

24.7

27,369.37

100.0%

1

3.7%

Apr.10 2013

M1(K)Ueroku F Bldg.

Chuo-ku,
Osaka City

Sep. 1993

23.7

4,611.82

93.8%

11

3.2%

M2

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

Shinagawa-ku,
Tokyo

Apr. 1993(Note 6)24.2

8,818.09

88.1%

23

M3(K)

LAXA Osaka

Fukushima-ku,
Osaka City

Feb. 1999

18.3

30,339.91

100.0%

M5

Kita-Aoyama San cho-me
Building

Minato-ku,
Tokyo

Sep. 2013

3.7

619.7615.7

501,823.43(488,728.20)

Classifi- Codecation (Note 1)

Sphere Tower Tennozu

Total

Appraisal value(JPY mn)

Cap rate(Note 5)

13.4%

14,4004.0%

10,2007.2%

11,9004.1%

Nov. 1, 2005

2,980

2.1%

2,740

5.2%

2.7%

Oct. 2, 2007

9,405

6.6%

6,831

4.0%

1

3.7%

Jan. 22, 2009

5,122

3.6%

5,670

4.8%

100.0%

3

7.4%

Nov. 12, 2013

1,680

1.2%

1,970

3.5%

99.7%
(99.6%)

89
(233)

3.5%

―

141,628

150,785

4.3%

Date of acquisition

Acqusition price Investment(JPY mn )ratio

100.0%(Note 1) The properties owned by Hankyu REIT are assigned codes classified by facility (type of use) and region.
The letters 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 numerals are the numbers assigned to each facility in the chronological order of the acquisition.
The letter “K” in parentheses to the right of the numerals indicates that the property is located in Kansai region.
(Note 2) The portfolio total is the weighted average building age by acquisition price.
(Note 3) Figures in parenthesis indicate the total leasable area for end-tenants, the occupancy rate based on the said area, and the number of end-tenants, respectively.
For HEP Five, 14% quasi co-ownership of the trust beneficiary interests is indicated as the leasable area.
For Sphere Tower Tennozu, 33% quasi co-ownership of the trust beneficiary interests is indicated as the leasable area.
For HANKYU NISHINOMIYA GARDENS, 28% quasi co-ownership of the trust beneficiary interests is indicated as the leasable area.
(Note 4) PML of LaLaport KOSHIEN (site) is calculated for the parking garage space administration building (394.88 m2).
(Note 5) Cap rates and discount rates are based on the direct capitalization method used for appraisal value calculations (Nitori Ibaraki-Kita Store (site), Kohnan Hiroshima
Nakano-Higashi Store (site), LaLaport KOSHIEN (site), AEON MALL SAKAIKITAHANADA (site) and LIFE Shimoyamate Store (site) are allocated a discount rateusing the DCF method) and the portfolio total is the weighted average cap rate based on appraisal values.
(Note 6) The completion date for the office and store portions is indicated.

52

7-2. Portfolio View (1)Urban Retail Facilities
HEP Five

Community-based Retail Facilities (1)kotocross Hankyu Kawaramachi

HANKYU NISHINOMIYA GARDENS

Dew Hankyu Yamada

Kita-Aoyama San cho-me Building

Kitano Hankyu Building

KOHYO Onohara Store

53

7-2. Portfolio View (2)Community-based Retail Facilities (2)DAILY QANAT Izumiya Horikawa Marutamachi Store (site)

OASIS Town Itami Konoike (site)

MANDAI Gojo Nishikoji Store (site)

LIFE Shimoyamate Store (site)54

7-2. Portfolio View (3)Community-based Retail Facilities (3)LaLaport KOSHIEN (site)

MANDAI Toyonaka Honan Store (site)

Takatsuki-Josai Shopping Center

Kohnan Hiroshima Nakano-Higashi Store (site)

AEON MALL SAKAIKITAHANADA (site)

Nitori Ibaraki-Kita Store (site)55

7-2. Portfolio View (4)Hotel

OfficeLAXA Osaka

Hankyu Corporation
Head Office Building

Ueroku F Building

Shiodome East Side Building

Sphere Tower Tennozu

Hotel Gracery Tamachi

56

7-3. Trends of Distribution per Unit

Distribution per unit forecast

（JPY）

4,000

2,500
2,000

JPY 2,717

3,792

3,500
3,000

Distribution per unit

2,715 2,744
2,500 2,560

2,991

2,860

2,714

2,560

2,998

2,820

3,068

3,000

3,473
2,862

3,300
2,820

2,538
2,483

2,600

2,322

2,537 2,464

2,420 2,400 2,460

2,400

2,445 2,361
2,400
2,300

2,597 2,492 2,537 2,567 2,620

2,775

2,626 2,717

2,540 2,460 2,480 2,530 2,550 2,600 2,620 2,630

2,800 2,900

1,500
1,000
500
0
1st
2nd
3rd
4th
5th
6th
7th
8th
9th 10th 11th 12th 13th 14th 15th 16th 17th 18th 19th 20th 21st 22nd 23rd 24th 25th 26th
period period period period period period period period period period period period period period period period period period period period period period period period period period'05/11 '06/05 '06/11 '07/05 '07/11 '08/05 '08/11 '09/05 '09/11 '10/05 '10/11 '11/05 '11/11 '12/05 '12/11 '13/5 '13/11 '14/5 '14/11 '15/5 '15/11 '16/5 '16/11 '17/5 '17/11 '18/5

Irregular period (303 days)57

7-4. Income Ratio by Rent Category and Sales-Based Overage Rent System Mechanism
Income Ratio by Rent Category
and Variation Factors
24th period
Income Ratio
1.3%
Overage-rent
tenants

Fixed-rent
tenants

7.4%

91.3%

<Variable-rent portion>
Rent income varies
in accordance with the sales ofpart of shops in HEP Five, Dew
Hankyu Yamada, Kitano Hankyu
Building and others.
<Fixed-rent portion>
Rent income varies
in accordance with theoccupancy rates and rent levels
of HEP Five, Kitano Hankyu
Building and others.

Rent income varies
in accordance with theoccupancy rates and rent levelsof remaining properties

Concept Diagram ofGeneral Sales-Based Overage Rent System

Rent income

Variable-rent
portionFixed-rent
portionPoint from where
sales-based overagerent is generated

Tenant sales

Total rent income(excluding warehouse income)58

7-5. Change in Population in Areas along Hankyu/Hanshin Lines

The population in Kansai region is either remaining flat or trending downwards due to theaging population along with a decreasing birthrate, but areas along Hankyu/Hanshin lines are
relatively popular and the population in these areas has been increasing consistently after
bottoming out in 1996

106
105
104
103

Along Hankyu and Hanshin lines
Kansai region
Osaka
Great Hanshin-Awaji Earthquake
Hyogo
Kyoto

102
101
100
99
98
97

Population along Hankyu/Hanshin lines
has been increasing consistently
since the earthquake

96
95'91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16(Source) Japan Geographic Data Center “Population Summary of the Basic Resident Registers”(Note) The graph indicates the change in populations where the populations in 1991 are set at 100.

59

7-6. Hankyu/Hanshin Lines and Properties Owned

60

7-7. Overview of the Hankyu Umeda Area and the “Umeda 1-Chome 1-Banchi Project”

Umekita 2nd phase(Town opening in sequence from around spring 2023;
Infrastructure development scheduled to be completed
in fiscal 2026)

Perspective drawing of the completed “Umeda 1-Chome 1-Banchi Project”(Looking from Umeda Hankyu Building (Hankyu Umeda Main Store))
Location

1-1 Umeda, Kita-ku,
Osaka-shi, and other

Site area

Approx. 12,200m2

Floor area ratio

2,000%

B2F to 9F
Department
store zone

Total floor area:
Approx. 100,000m2
11F to 38F

Office zone
New JR station(Tentative name: Kita-umeda Station)(Scheduled to open in spring 2023)

Umeda 1-Chome
1-Banchi Project

Total floor area

Approx. 260,000m2

Number offloors38 floors above groundand 3 floors below

HeightApprox. 190m

Main use

Department store,
office, hall, etc.

Total floor area:
Approx. 143,000m2
11F
Conference
zone

Other (parking
space, etc.)

Total floor area:
Approx. 4,000m2
Total floor area:
Approx. 13,000m2

Overview of “Construction Plan”(Note 1) Includes properties jointly owned with the Hankyu Hanshin Holdings Group.
(Note 2) Includes properties jointly owned with other companies.

●1st phase work
July 2015: 1st phase new construction work has commenced
Spring 2018: Completion of 1st phase buildings(Shin-Hankyu Building, east section of Daihanshin Building)* Partial opening of new department store●2nd phase work
Spring 2018: Start demolition of west side of Daihanshin Building
Spring 2019: 2nd phase new construction work will commence
Fall 2021: Completion of 2nd phase building(New department store section)* Full opening of new department store
Spring 2022: Full completion* Opening of office-use zone61

7-8. Infrastructure Constructions/Redevelopment Projects in Kansai Regionl Full-fledged infrastructure construction and redevelopment in 2020 and onward
l Measures including development of Umekita 2nd phase, construction of
Nakanoshima Regenerative Medicine Center, attraction of the World Expo 2025
to Yumeshima Island and the integrated resorts (IR) scheme are underway orplannedl Enhancement of convenience with shorter travel time to Kansai International
Airport from Umeda area after the opening of the Naniwasuji Line

Osaka International Airport(Itami Airport)

Umekita 2nd phase

Kawaramachi

Kyoto

Naniwasuji Line/Naniwasuji Renraku Line*
Naniwasuji Line
Naniwasuji Renraku Line

Development project for
Nakanoshima Regenerative Medicine Center*To continue with research and discussion
Juso

Shin-Osaka

Umeda area

Kobe-sannomiya

USJ
Hankyu Railway

Kobe Airport Terminal
Namba Shinsaibashi area

Yumeshima Island Osaka World Expo(currently working to win the bid)
Integrated resorts (IR) scheme
Terminal exclusively for LCC
international flights(Operations started in Jan. 2017)(Note)
Prepared by Hankyu REIT AssetManagement, Inc. based on publicly
announced materials(including projections based onassumptions and outlook for the future
as of July 2017).

Hanshin Electric Railway
Properties owned by Hankyu REIT

Currently
approx.

60 minTo be shortened by around 20 to
25 minutes with the opening of the
Naniwasuji Line

Kansai International Airport<Plans and Events in Kansai Region (including plans and targets)>
2019

Rugby World Cup

2021

World Masters Games 2021 Kansai

2021

Opening of Nakanoshima Regenerative Medicine Center

2022

Completion of the entire Umeda 1-Chome 1-Banchi Project2025

Osaka World Expo (if the bid is won)

Fiscal 2026

Umekita 2nd phase (completion of infrastructure development)(Town opening in sequence from around spring 2023)

Spring 2031

Opening of the Naniwasuji Line

2037 (the earliest)

Launch of the Maglev bullet train service between Shin-Osaka and Nagoya

62

7-9. HANKYU NISHINOMIYA GARDENS and Properties in the Vicinity

Hankyu Imazu LineACTA NISHINOMIYAWest Bldg.

ACTA NISHINOMIYA
East Bldg.

Hankyu Kobe Line

HANKYU NISHINOMIYAGARDENS

Nishinomiya
Kitaguchi Sta.

Hyogo Performing
Arts Center

Konan University

Aerial photograph takenfrom south side facing north63

7-10. Dew Hankyu Yamada and Properties in the Vicinity

Kita-Senri Sta.

Osaka MonorailBampaku-kinen-koen
Chugoku Expressway
Osaka Central
Circular Route
Osaka Monorail
Yamada Sta.

Hankyu Yamada Sta.

Hankyu Senri Line
Tsukumodai housing estate

Dew Hankyu
YamadaAerial photograph taken from south side facing north64

7-11. KOHYO Onohara Store and Properties in the Vicinity

Shin-Meishin Expressway(scheduled to open in fiscal 2018)

Saito

Route 171

Madani residential district
Gein-no-sato residential district
Gein-Minami residential district

Onohara residential district

Osaka Monorail's
Saito Line

Nitori Ibaraki-Kita Store (site)
Minoh Onohara
Residence

Route 171
Onohara-Toyonaka Road
Toyokawa Sta.

Hapia Garden
Minoh Onohara

Osaka Prefectural Route 1

KOHYO Onohara Store
Aerial photograph taken from southeast side facing northwest

Residential districts developed by the sponsor group65

7-12. Details of Value Calculation Methods

Average NOI yield = [Total real estate lease operation income* - Real estate lease operation expenses* + Total depreciation*]concerning owned real estate or newly acquired assets as of each period ÷Total acquisition price
Average yield after depreciation = [Total real estate lease operation income* - Real estate lease operation expenses*]concerning owned real estate or newly acquired assets as of each period ÷Total acquisition priceUnrealized income/loss =Total appraisal value of owned real estate or newly acquired assets as of each period - Total book value** Figures are based on results. However, for OASIS Town Itami Konoike (site), the net operating revenues and operating
expenses in the second year based on the discounted cash flow (DCF) method recorded in the appraisal report are used. For
public charges and taxes, they are posted in expenses from the first fiscal year and yields on an on-going basis are calculated.

LTV ＝

Amount of outstanding debts + Security deposits or guarantees - Matched money
Total amount of assets - Matched moneyl When corporate bonds have been issued, the amount of outstanding debts shall include the amount of outstanding bonds.
l Matched money refers to cash or deposits reserved in the trust account to guarantee the deposit or security money for theassets owned by Hankyu REIT as the object of the trust beneficiary interests.
l The total amount of assets refers to the amount in the assets section of the most recent balance sheet for each period.
However, with respect to tangible fixed assets, the difference between appraisal value and book value at the end of the
fiscal period shall be added to or subtracted from the book value of the tangible fixed assets at the end of the fiscal period.
l Since Hankyu REIT implemented a five-for-one split of its investment units with December 1, 2014 as the effective date, thefigures that retrospectively reflect the implementation of the five-for-one split are indicated.

66

7-13. Portfolio PML and Anti-Seismic Measures
As of May 31, 2017Classification

Code
R1(K)
R2(K)
R3(K)
R4(K)

Retail-use facilities

R5(K)HEP Five(14% of the quasi co-ownership of the trust beneficiaryinterests)
Kitano Hankyu Bldg.
Dew Hankyu Yamada
Takatsuki-Josai
Shopping Center
Nitori Ibaraki-Kita Store(site)

PML(Note )
5.0%
10.1%
4.7%
5.9%
―

R6

Kohnan Hiroshima Nakano-Higashi Store (site)

―

R8

10.3%

R18(K)

Hotel Gracery Tamachi
LaLaport KOSHIEN(site)
HANKYU NISHINOMIYA GARDERNS(28% of the quasi co-ownership of the trust beneficiaryinterests)
AEON MALL SAKAIKITAHANADA(site)
MANDAI Toyonaka Honanstore (site)
DAILY QANAT Izumiya
Horikawa Marutamachi Store(site)
kotocross Hankyu Kawaramachi
LIFE Shimoyamate Store(site)
MANDAI Gojo
Nishikoji Store (site)
KOHYO Onohara Store

R19(K)OASIS Town Itami Konoike (site)―

O1

Shiodome East Side Bldg.

4.6%

O2(K)

Hankyu Corporation Head Office Building

3.7%

M1(K)

Ueroku F Bldg.
Sphere Tower Tennozu(33% of the quasi co-ownership of the trust beneficiaryinterests)

3.2%

M3(K)

LAXA Osaka

3.7%

M5

Kita-Aoyama San cho-me Building

7.4%

Total

3.5%

R9(K)
R11(K)
R12(K)
R13(K)
R14(K)
R15(K)
R16(K)
R17(K)

Mixed-use
Office-use(complex) facilities facilities

Name

M2

6.4%
9.2%
―
―
―
2.6%
―
―
5.3%

●What is PML?
PML (Probable Maximum Loss) refers to the estimatedamount of the maximum loss from earthquake damage
expressed as a percentage, and indicates the ratio of
projected maximum physical loss amount of a building
from a probable earthquake of maximum magnitude(assumed to happen once every 475 years, or a 10%
probability of occurring during any 50 year span) during
its use (a 90% non-exceedance probability) against theprice to reacquire it.
●Portfolio PML
The total PML value for multiple buildings scattering inwide areas is always smaller than the weighted average
PML value of each building. This is called the portfolio
effect. Hankyu REIT calculates the portfolio PML bytaking into account the geographical diversity ofbuildings across a wide range of areas.
As shown in the table to the left, the portfolio PML ofHankyu REIT is 3.5%.
●Policy on earthquake insurance coverage
Hankyu REIT will decide to cover earthquake insurancein accordance with the following standard set forth in its
management guidelines:“Hankyu REIT will investigate earthquake insurance
coverage when the PML of an individual property
exceeds 15%.”

2.7%(Note) PML of LaLaport KOSHIEN (site) is calculated for the parking
garage space administration building (394.88m2).

67

7-14. Investment Unit Price
Relative Price

Relative value based on 100 of the closing price basis on
July 1, 2016 / closing price basis

Per Unit Trading Trends(Oct. 26, 2005 — June 30, 2017)

140.00130.00120.00High (closing price basis)

JPY 276,000(Jun. 2007)

Low (closing price basis)

JPY 65,000(Dec. 2011)110.00July 1, 2016 — June 30, 2017100.00High (closing price basis)

JPY 156,500(Feb. 24, 2017)

Low (closing price basis)

JPY 130,600(Jul. 4, 2016)

90.00
80.00
'16/7

'16/9

Source: QUICK'16/11

Hankyu REIT

'17/1

TSE REIT Index

'17/3

'17/5

Nikkei Stock Average

Price on June 30, 2017 (closing price basis)
JPY 138,800

Unit Price (closing price basis)（Unit: JPY thousand）（Units）

280

7,000

240

6,000

200

5,000

160

4,000

120

3,000

80

2,000

40

1,000

'05/10/26

00'05/5 '05/11 '06/5 '06/11 '07/5 '07/11 '08/5 '08/11 '09/5 '09/11 '10/5 '10/11 '11/5 '11/11 '12/5 '12/11 '13/5 '13/11 '14/5 '14/11 '15/5 '15/11 '16/5 '16/11 '17/5

Source: QUICK

VolumeUnit Price687-15. Analysis of Unitholder Attributes at End of 24th Fiscal Period
Unitholder Composition
Ownership by category

Number ofunitholders (persons)

Top 10 Unitholders

Ratio to ownership

Number ofinvestment units held
( units)

Unitholder name

Ratio to numberof investment units

Number ofunits held

Ownership

157,540

26.37%

47,382

7.93%

32,185

5.39%

Japan Trustee Services Bank, Ltd.
(Trust account)
The Master Trust Bank of Japan, Ltd.
(Trust account)
Trust & Custody Services Bank, Ltd.
(Securities investment trust account)

Financial institutions(excluding trust banks)

90

0.76%

104,224

17.44%

Trust banks

10

0.08%

262,087

43.86%

11,45096.53%

129,851

21.73%

Other organizations

199

1.68%

54,706

9.16%

Hankyu Corporation

21,0003.51%

Foreign organizations, etc.

113

0.95%

46,632

7.80%

18,825

3.15%

11,862100.00%597,500

100.00%

The Nomura Trust and Banking Co., Ltd.
(Investment accounts)
THE CHUKYO BANK, Ltd.

11,385

1.91%

The Hachijuni Bank, Ltd.

9,420

1.58%

ＳＴＡＴＥ ＳＴＲＥＥＴ ＢANK ＡＮＤ ＴＲＵＳＴ ＣＯＭＰＡＮＹ 505012

9,047

1.51%

The Senshu Ikeda Bank, Ltd.

7,710

1.29%

Shikoku Railway Company

5,884

0.98%

Total investment

320,378

53.62%

Number of outstanding units

597,500

100.00%Individuals, etc.

Total

Ratio of Units by Unitholder Category
19.83%

17.77%

17.44%

37.76%

42.29%

43.86%

26.23%

22.93%

21.73%

9.03%

9.42%
6.76%

9.16%
7.86%

9.16%
7.80%

End of15th period

End of22nd period

End of23rd period

End of24th period

19.02%
33.83%

34.34%

47.27%
23.91%

13.39%

33.96%

26.31%
34.41%

22.27%

13.46%

9.29%
7.78%

10.14%

11.31%
4.83%

End of
1st period

End of
5th period

End of10th period

8.62%■ Foreign organizations, etc.

23.20%■ Other organizations

13.63%■ Individuals, etc.

■ Trust banks■ Financial institutions(excluding trust banks)69

7-16. Organization of Hankyu REIT Asset Management, Inc.
(As of May 31, 2017)
Corporate Data

General Meeting of
Shareholders
Auditors
Board of Directors

Trade nameHankyu REIT Asset Management, Inc.

Headquarters

19-19, Chayamachi, Kita-ku, Osaka 530-0013,
Japan

EstablishedMarch 15, 2004

Paid-in capital

JPY 300 mn

Shareholder

Hankyu Corporation (100%)

Number of
officers and employees

President &Representative Director

Internal Audit Department
Compliance Committee

31
President &Representative
Director

Yoshiaki Shiraki

Managing Director

Toshinori Shoji

Director

Hideo Natsuaki

Director

Hiroshi Aoyama

Director (part-time)

Kenji Yamaguchi

Director (part-time)

Noriyuki Yagi

Corporate Auditor(part-time)

Ken Kitano

Corporate Auditor(part-time)

Koji Yoshida

Executive officers

Investment Management
Committee
Compliance Department

Financial instruments trading business(investment management business)

Investment
Planning
Department

Investment
Management
Department 1

Investment
Management
Department 2

IR and Public
Relations
Department

Corporate
Administrationand Supervision
Department

Principal businesses

lFinancial product trader:
Director-General of the Kinki Finance Bureau
Ministry of Finance (Kinsho) No. 44
lReal estate transaction license:
The Governor of Osaka Prefecture (3) No. 50641
lApproval of discretionary dealing trustee, etc.:
No. 23 by Minister of Land, Infrastructure,
Transport and Tourism

70

7-17. Compliance and Internal Audit Systems of Hankyu REIT Asset Management, Inc.
Build robust compliance and internal audit systems by systematically ensuring multiple check functions based on thebasic policy for building internal control systems.
Constituent member

Compliance System

Directors, Corporate Auditors

Implementation(Note)

Decision criteria
A majority of directors in attendance, and approvalof a majority of the attending directors are required.
Constituent member

Board of Directors

President & Representative Director

Chairman: Compliance officer
Committee members: President & Representative
Director, full-time Directors and outside experts
Observers: Corporate Auditors (do not participate inresolutions) and other persons recommended by
the Chairman and approved by the Committeel Achieve comprehensive compliance by
establishing a Compliance Officer and aCompliance Departmentl The Compliance Committee, including outside
experts, deliberates on Conflicts of Interests
Transaction (note)l The Compliance Officer attends the Investment
Committee meeting and checks for complianceissuesl Appointed a person to be in charge of efforts toprevent improper requests and exclude anti-social
forces

Decision criteria

Compliance Committee

Investment Management Committee

Proposals by Department/Office

Approval of all of the attending committee members
is required under the condition where 3/4 or more
have attended including a compliance officer andtwo outside experts.
Constituent member
Chairman: President & Representative Director
Vice chairman: full-time director designated bychairmanCommittee members: full-time director (excluding
compliance officer), respective department or officemanagers (other than full-time director orcompliance officer)
Decision criteria
Approval of all of the attending committee members
is required under the condition where 3/4 or more
including the chairman and vice chairman haveattended together with the compliance officer.

Internal Audit Systeml Establish PDCA cycle for improving operations ineach department/office by systematically
implementing the internal audit every fiscal year
based on the annual internal audit plan.
l Utilize external consulting entity to secure
independence of internal audit and obtain an
extremely effective internal audit.

(Note) Interested party transactions that meet a certain
criteria must gain approval of Hankyu REIT’s
Board of Directors’ Meeting.

70
71

7-18. Company Structure of Hankyu REIT
(As of May 31, 2017)(Note) In preparation for the event that the number of Executive and Supervisory Directors is less than that stipulated in laws and regulations,
Toshinori Shoji was elected as alternate Executive Director and Hiroumi Shioji was elected as alternate Supervisory Director at theGeneral Unitholders’ Meeting held on August 25, 2016.

72