Table of Contents

1. Executive Summary ・・・・・・・・・・・・・・・・・・・ 2
2. Summary of Kansai Area・・・・・・・・・・・・・・・・・ 15
3. External Growth Strategies・・・・・・・・・・・・・・・・ 21
4. Internal Growth Strategies・・・・・・・・・・・・・・・・ 28
5. Financial Strategies・・・・・・・・・・・・・・・・・・・ 38
6. Overview of Financial Results for 23rd Fiscal Period・・・・・ 41
7. APPENDIX・・・・・・・・・・・・・・・・・・・・・・・ 47
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.
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. Whenundertaking 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 thatis 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.

11. Executive Summary2

1-1. Results for 23rd Fiscal Period(Objectives indicated in the Financial Results Briefing Materials for the 22nd Fiscal Period)

Objectives

Results for 23rd Fiscal Period

External
Growth・Acquired two properties, expanding asset scale to JPY 141.6 billion
・Expand opportunities
to acquire properties
through joint efforts
with the sponsor group,and strengthen
portfolio management

ü Acquired a community-based retail facility (site) through negotiated transaction
utilizing the asset management company’s own sourcing channels
ü Acquired a community-based retail facility developed by sponsor group company
Hanshin Electric Railway Co., Ltd.

・Promoted expansion of property acquisition methods andproperty information sourcing channels

Internal
Growth・Maintained high level of portfolio occupancy rate
・Maintain and improvehigh level of portfolio
occupancy rate

(end of 23rd fiscal period: 99.1%)(end of December 2016: 99.7% (24th fiscal period))・For Sphere Tower Tennozu,
achieved substantial increase in occupancy rate

Financial
Strategies(40.9% (end of May 2016) ⇒ 88.1% (December 1, 2016 (24th fiscal period))

・LTV maintained on an ongoing basis
・Continue stablefinancial operations andimprove distributions(41.9% ⇒ 43.0% (end of 23rd fiscal period))・Refinanced investment corporation bonds,
thereby striking a balance between reduction of funding costs, andextension of periods and diversification of debt repayment dates(7 years: 0.29% per annum; 15 years: 0.90% per annum)31-2. Financial Highlights for 23rd Fiscal Period(Unit: JPY mn)
Item

Forecast for 23rd Fiscal Period (A) Results for 23rd Fiscal Period (B)(as of July 15, 2016)(June 1, 2016 to Nov. 30, 2016)

Change(B)-(A)

Operation period (days)

183

183

—

Operating revenues

4,715

4,721

6

Operating income

1,954

1,976

22

(Main factors for increase/decrease)

(1)
(2)

(1)
Increase in income from HEP Ferris Wheel
JPY +5 mn(2)(3) Decrease in repair expense
Ordinary income

1,567

1,570

3

Net income

1,565

1,569

3

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

597,500—

Distribution per unit (JPY)

2,620

2,626

6

FFO per unit (JPY)

4,043

4,047

4

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

JPY +26 mn
Increase in Tennozu brokerage related expenses
JPY -11 mn(3)
Increase in other non-operating expenses(non-deductible consumption taxes
JPY -20 mn
on Itami site acquisition expenses)

JPY 122,558
JPY 147,098

Results for 23rd fiscal period (ended November 2016)
Distribution per unit

JPY 2,6264

1-3. Distribution Forecast for 24th Fiscal Period and 25th Fiscal Period(Unit: JPY mn)
Results for 23rd Fiscal Period (1)(June 1, 2016 to Nov. 30, 2016)

Forecast for 24th Fiscal Period (2)(Dec. 1, 2016 to May 31, 2017)

Operation period (days)

183

182

-1

183

1

Operating revenues

4,721

4,731

9

4,849

117

Operating income

1,976

1,945

-30

2,075

129

Ordinary income

1,570

1,573

2

1,674

101

Net income

1,569

1,571

2

1,673

101

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

597,500—

597,500—

Distribution per unit (JPY)

2,626

2,630

4

2,800

170

FFO per unit (JPY)

4,047

4,053

6

4,219

165

Item

[Forecast for 24th fiscal period]
Main factors for increase/decrease from 23rd fiscal period

Change(2)-(1)

Forecast for 25th Fiscal Period (3)(June 1, 2017 to Nov. 30, 2017)

Change(3)-(2)[Forecast for 25th fiscal period]
Main factors for increase/decrease from 24th fiscal period●Increase/Decrease in operating revenues/expenses
・Increase in lease operating revenues of Itami+39 (*based on assumption of 25% rent collection)
・Increase in repair expense-61 (Tennozu -31, LAXA -23, etc.)●Increase/Decrease in non-operating revenues/expenses
・Decrease in interest expenses, etc. (refinancing of investment
corporation bonds, and increase in interest-bearing debt)+19
・Decrease on the rebound of payment of
non-deductible consumption taxes in 23rd fiscal period+20●Increase/Decrease in operating revenues/expenses
・Increase in lease operating revenues of Itami+60 (*based on assumption of 25% rent collection until September 2, 2017 andForecast for 24th fiscal period (ending May 2017)
Distribution per unit

Forecast for 25th fiscal period (ending November 2017)
Distribution per unit

JPY 2,630

100% rent collection from the day after)

・Increase in income from lease of Tennozu+17・Decrease in repair expense+43 (LAXA +18, Tennozu +16, etc.)●Increase/Decrease in non-operating revenues/expenses
・Increase in interest expenses, etc. due to conversion of short-termloans payable to long term and fixed rate (assumed for May 31, 2017)-27

JPY 2,800[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 25th fiscal period51-4. 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

23 properties 23 properties
JPY 139.3 bn JPY 139.3 bn

16 properties
JPY 116.1 bn
Acquired assets

Transferred assets

JPY 13.0bn

21 properties
JPY 132.8 bn

23 properties
JPY 141.6 bn

19 properties 19 properties
JPY 127.8 bn JPY 127.8 bn

15 properties
JPY 121.3 bn

JPY 30.9bn

Sustainable growththroughacquiring properties atappropriate prices

JPY 41.2
bn

JPY 17.3
bn

JPY 44.6
bn

JPY 13.0bn

JPY 13.0bn

JPY 18.8
bn

JPY 20.7
bn

JPY 54.6
bn

JPY 39.7
bn

JPY 39.3
bn

JPY 41.1
bn

JPY 13.0bn
JPY 50.9
bn

JPY 39.3
bn

JPY 54.6
bn

JPY 36.9
bn

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 63.3
bn

JPY 37.6
bn

Aim to achieve
asset scale of
JPY 200 billion
during 2020

JPY 10.9bn
JPY 20.9
bn

JPY 72.0bn

JPY 26.3
bn

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

End of 16th FP(End of May 2013)

End of 17th FP
End of 18th FP(End of Nov. 2013) (End of May 2014)

Community-based retail facilities

End of 19th FP
End of 21st FP(End of Nov. 2014)(End of Nov. 2015)

Urban retail facilities

HotelsEnd of 22nd FP
End of 23rd FP(End of May 2016) (End of Nov. 2016)

Office-use zones / Other

During 20206

1-5. Promote Scale Expansion and Quality Enhancement of Portfolio

Transferred assets

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

Namba-Hanshin
Building andRichmond Hotel
Hamamatsu

Acquired assets

End of 22nd FP(End of May 2016)

KOHYO
Onohara Store(Tentative name)OASIS Town
Itami Konoike(site)End of 23rd FP(End of Nov. 2016)−

April 8, 2016−

July 1, 2016

November 25, 2016−23 properties-2 properties

21 properties+1 property+1 property

23 properties−

JPY 5,430 mn−

JPY 1,631 mn

JPY 7,100 mn−

JPY 139,307 mn−

JPY 132,897 mn−−

JPY 141,628 mn

4.8%

3.8%

4.8%

5.3%

4.3%

4.8%

3.4%

0.6%

3.5%

4.4%

4.3%

3.7%

JPY 8,479 mn−

JPY 12,633 mn−−

JPY 14,662 mn

LTV(Note)

43.2%

−

41.9%

−

−

43.0%

Interest-bearing debt ratio

43.0%

−

43.0%

−

−

44.5%

Transfer/Acquisition date

Number of properties

Transfer/Acquisition priceAsset scale
Average NOI yield(Note)
Average NOI yield
after depreciation(Note)
Unrealized income/lossof portfolio(Note)(Note) Details of the calculation method for “Average NOI yield,” “Average NOI yield after depreciation,” “Unrealized income/loss of portfolio” and “LTV”
are presented on page 65.
71-6. Overview of Asset Acquired in 23rd Fiscal Period((Tentative name) OASIS Town Itami Konoike (site))

Property Overview
Property name(Tentative name) OASIS Town Itami Konoike (site)

Location

Konoike, Itami City, Hyogo Prefecture

Site area

17,997.10m2

Acquisition price

JPY 7,100 mn

NOI yield
after depreciation

4.3% (Note)

Acquisition dateNovember 25, 2016

Form of facility

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

External appearance image(Note) The figure is calculated based on the operating revenues and operating costs in the second yearwith an assumption of 100% rent collection, using the DCF method described in the appraisal report.
As of January 2017, the building is under construction and the rent collectable is 25% (the rent through tothe date preceding the opening date of the store of the lessee or September 2, 2017, whichever earlier,
will be 25% of the rent on and after the date following the date indicated above.).

* Hankyu REIT acquired only the land. Also, since the images above are renderings of the building
scheduled to be completed, these image views may differ from the actual conditions after completion.

Property Featuresl Itami City is located in the area dominated by the Hankyu Hanshin
Holdings Group, bounded by Hankyu Kobe Line, Takarazuka Lineand Imazu Line. Since it is close to the centers of Osaka City andKobe City with excellent 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 whenusing cars (Note) is approximately 58,000 within 5 minutes,
approximately 254,000 within 10 minutes and approximately
599,000 within 15 minutes, enjoying abundant population.
l HANKYU OASIS, the main tenant, has 83 stores (as of July 2016)
in the Kansai region with its original style of “high quality store
specializing in food.” They work to differentiate themselves fromother supermarket chains in the Kansai region by making the stores
attractive with creative ideas such as setting up a face-to-face fresh
fish section and selling vegetables by weight.
(Note) Figures based on the Basic Resident Registers in 20158

1-7. (Tentative name) OASIS Town Itami Konoike (site) and Properties in Vicinity

ChugokuExpressway

Prefectural Road
335 NakanoNakasuji Route

Municipal Road
Konoike-Ogino
Route

Itami Sports Center
Field(Tentative name) OASIS Town Itami Konoike (site)

Super Viva Home
Itami Store

Prefectural Road
331 UbagajayaItami Route

Aerial photograph taken from southwest side facing northeast

91-8. Overview of Asset Acquired in 23rd Fiscal Period(KOHYO Onohara Store)

Property Overview
Property name

KOHYO Onohara Store

Location

Onohara-higashi, Minoh City, Osaka Prefecture

Site area

4,479.14m2

Leased area

3,310.31m2

Acquisition price

JPY 1,631 mn

NOI yield

5.3%

NOI yield
after depreciation

4.4%

Acquisition dateJuly 1, 2016

Form of facility

Community-based retail facility that housesa grocery store, 100 yen shop and ATM

Property Featuresl Municipal road Onohara-Toyonaka Road on which the property stands
along is a community road that allows east-west mobility across the
new town and provides good access.
l According to the national census in 2010, population by trade area isapproximately 18,000 within 1km and approximately 57,000 within 2km.
More detached home sales are observed in the Onohara-nishi district
to the west of the property and the population is on an increasing trend.
l Large-scale residential districts developed by the sponsor group overmany years spread over the surrounding area of the property,
structuring an area where many rich people reside.
Taxable income per person (Note) of Minoh City is ranked at the top in
Osaka Prefecture (ranked 3rd in Kansai region, following Ashiya andNishinomiya cities).
l The tenant KOHYO is a main brand of the food supermarkets operated
by KOHYO Co., Ltd., a consolidated subsidiary of AEON Co., Ltd. It
has a reputation for its quality-oriented items and four fresh products(meat, fish, vegetables and ready-to-eat food).
(Note) Taxable income per person concerning municipal tax for fiscal 2015
Source: “Survey on taxation status, etc. concerning municipal tax for fiscal 2015” by Ministry of Internal Affairs and Communications101-9. Leasing at Sphere Tower Tennozu
Occupancy Rate Increased to 88.1% (24th Fiscal Period)
Trends of Occupancy Rate

88.1%

Occupancy rate dropped to 39.0% (end of June 2014) from 89.6%
due to factors such as departure of large tenants in August and 100%
September 2013
・Continued leasing activities without lowering target rent from a
medium to long term perspective, even after occupancy rate
decreased
・ Implemented renovation of entrance, elevator hall, etc., andvalue-enhancement work to improve flow of people and signboards
in December 2014
・Backed by the rents being on an upward trend due to decreased
vacancy rate in the Tokyo metropolitan area, the rent level and theappealing point of the property of being able to provide large space
all at once matched the needs of tenants

2 tenants
moved in(office floor)

80%

60%

1 tenant
moved out(retail floor)

2 tenants,incl. a large tenant,
moved in(office floor andretail floor)

40%
End of Sept.
9月末
2016

End of Oct.
10月末
2016

End of Nov.
11月末
2016

End of Dec.
12月末
2016

・Building location and features, such as being directly connected toa station, access to Haneda Airport and open ceiling (maisonette)of exclusive-use portion, also gained reputation

・Realized leasing to three tenants at anticipated rent level
during the period from January to September 2016, andoccupancy rate improved to 46.9% (end of September 2016)
・In addition, realized leasing to four tenants,
including a large tenant, since October 2016, andoccupancy rate increased to 88.1% in December 2016

Will focus on further improvement in occupancy rateby utilizing building location and features
Vacancies: Office floor Approx. 1,300m2 (equivalent to 1.5 floors)
Retail floor Approx. 1,700m2

Access from the nearest station11

1-10. Refinancing of Investment Corporation Bonds
Implemented refinancing by taking full advantage of the historic low interest rate environment,
thereby striking a balance between reduction of funding costs, andextension of periods and diversification of debt repayment dates
Overview of Already-Issued Bonds

Overview of Newly-Issued Bonds(1) First Series(2) Second Series(3) Third Series

Issue amountJPY 6.0 bn

Issue amountJPY 2.0 bn

JPY 2.0 bn

Period5 years

Period7 years

15 yearsInterest rate

1.27% per annum

Interest rate

0.29% per annum

0.90% per annum

Issue dateNovember 11, 2011

Issue date

Redemption dateNovember 11, 2016

Redemption date

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

A+

November 10, 2016
November 10, 2023

November 10, 2031
AA-

RatingJCR (Japan Credit Rating Agency, Ltd.)

Diversification of Debt Repayment Dates（JPY bn）
10.0

Of the already-issued bonds of JPY 6.0 bn,
refinanced JPY 4.0 bn
Short-term loans payable of JPY 6.0 bn

(3)

8.0

(2)
6.0

(1) 2.0
4.0

2.0 6.0

7.0

6.0 5.5

2.0

2.0
0.0

2.0

1.0

7.0
5.0

5.2

5.0

4.0
2.0

2.0

5.0
1.2

2.0

23rd 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 period121-11. Initiatives toward Strengthening Financial Foundation
Continued stable financial operations
by striking a balance between reduction of debt financing costs, andextension of borrowing periods and diversification of debt repayment dates
Trends of Debt Financing Costs and Average Remaining Years
1.50%

6.0 years

5.1 years
1.40%
1.33%

4.8 years
4.4 years

1.34%

5.0 years

4.4 years

1.30%
4.0 years

1.23%

1.20%

3.4 years
1.08%

1.10%

3.0 years
1.07%

2.7 years
1.00%
0.90%

1.9 years
As of end of
16th period

1.06%
1.04%

2.0 years

2.1 years

As of end of
17th period

0.92%
As of end of
18th period

As of end of
19th period

As of end of
20th period

As of end of
21st period

As of end of
22nd period

As of end of
23rd period

1.0 years

Ave. debt financing cost (including investment corporation bonds)
Ave. remaining years on loans payable and investment corporation bonds (Note)(Note) Materials up to the previous period (22nd fiscal period): Presented data on only long-term loans payable and investment corporation bonds
Materials from the period under review (23rd fiscal period): Presenting the data with the addition of short-term loans payable (16th fiscal period to 23rd fiscal period)

Overview of New Debt Financing

Status of Ratings

Drawdown dateAmount ofdebt financing

Interest
rate

Repayment
date

Rating agency

Rating

JCR
Nov. 24, 2016

JPY 6.0 bn

Variable

May 31, 2017

(Japan Credit Rating Agency, Ltd.)

AA(Stable)

Long-Term Debt Ratio and Fixed Debt Ratio
Long-term debt ratio

Fixed debt ratio

90.9%

81.5%

R&I
(Rating and Investment Information, Inc.)A+(Stable)13

1-12. Future Objectives

Aim for sustainable growth and enhancement 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 distributions of JPY 2,900 level on ongoing basis
in 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)

14

2. Summary of Kansai Area15

2-1. Status of Offices in Osaka
Decreasing Trend of Office Vacancy Rate Continuing in Osaka
・Metabolism of Osaka office market and concentration of city functions are advancing
・Outlook is that the decreasing trend of vacancy rate will continue(Vacancy rate of Umeda area is recently the same level as that of Tokyo’s business areas in May 2016 (4.05%))

・Relocation of offices from Yodoyabashi and Hommachi area, etc., into Umeda area, especially into high-spec buildings, is advancing
・New office supply in the future is limited
14.0%

Change in Vacancy Rate of Osaka’s Major Business Areas

Vacancy Rate As of November 2016

Vacancy rate increased dueto the impact from opening of
GRAND FRONT OSAKA

12.0%

Yodoyabashi and Shinsaibashi and
Shin-Osaka area
Hommachi area
Namba area

Umeda area

4.05%

5.63%

6.61%

10.0%

5.13%

Umeda area

8.0%
Yodoyabashi and
Hommachi area

6.0%
4.0%

Jan.
2012

May
2012

Sep.
2012

Jan.
2013

May
2013

Sep.
2013

Jan.
2014

May
2014

Sep.
2014

Jan.
2015

May
2015

Sep.
2015

Jan.
2016

May
2016

Shinsaibashi andNamba area

Sep.
2016

Shin-Osaka area

(Source) Miki Shoji Co., Ltd. “Office Data”

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

あ

(thousand m2)

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

New supply in the future are limited
Nakanoshima
Festival Tower West
Approx. 70,000m²

15
150
10
100

Umeda 1-Chome
1-Banchi Project
Approx. 140,000m²
Shin Nankai Kaikan
Building(tentative name)Approx. 37,000m²

5
50
0
2010
H22

2011
H23

2012
H24

2013
H25

2014
H26

2015
H27

2016
H28

2017
H29

2018
H30

2019
H31

2020
H32

2021
H33

2022
H34

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

16

2-2. Status of Retail Facilities in Osaka
Department Store Sales on Decreasing Trend But Recent Signs of Pickup, and Supermarket Sales
Going Strong• Sales of department stores in 2016 continued to be on a decreasing trend due to the appreciation of the yen and low stock prices from the beginningof the year lowering consumer sentiment, etc., but are showing signs of picking up due to the depreciation of the yen and high stock prices toward
the end of the year increasing purchases among Japan’s high-net-worth individuals and foreign tourists visiting Japan• Sales of supermarkets in central areas are on an increasing trend due to return of the population to central city, and the outlook is that this trend willcontinue 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 (2016) decreased by 4.0% over the previous year, but decrease in sales due to renovation of two stores (Note 1)
was a main factor, suggesting that large stores in Umeda and Namba maintained previous year levels (estimated by Hankyu REIT AssetManagement, Inc.)• Duty-free sales of department stores in the Kansai region (2016) decreased due to decrease in purchase of expensive goods, etc., but are recently
in a state of picking up to previous year levels (backed by the ongoing increase in foreign tourists visiting Japan, the number of people visiting
department stores for duty-free shopping increased throughout the year) (Note 2)• Sales of supermarkets in Osaka City (2016) continued to maintain strong sales (Note 3)⇒ Due to supermarkets yet being opened one after another in central areas
Sales of Department Stores by District(change over the previous year*)

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

6.0%

25.0%

4.0%

20.0%

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

15.0%

2.0%

10.0%

0.0%
-1.9%

-2.0%
Renovation of two stores (Note 1) beinga main factor

-4.0%
-6.0%

Last minute demand due to theconsumption tax rate hike

2011
H23

2012
2013
H24
H25
Osaka
大阪

2014
H26
Tokyo
東京

2015
H27

-3.3%
-4.0%

2016* (year)
H28
Nationwide
全国

5.0%
0.0%

4.5%
1.9%
1.4%

-5.0%
-10.0%
Apr. 2013 Oct. 2013 Apr. 2014 Oct. 2014 Apr. 2015 Oct. 2015 Apr. 2016 Oct. 2016
H25.4 H25.10 H26.4 H26.10 H27.4 H27.10 H28.4 H28.10
Tokyo (special wards)
Osaka City
Nationwide
大阪市
東京（特別区）
全国

Source: Japan Department Stores Association*Comparison based on January to November cumulative total in the case of 2016
Source: Ministry of Economy, Trade and Industry “Current Survey of Commerce”(Note 1) Hanshin Department Store Umeda Main Building (from February 2015) and Daimaru Shinsaibashi Store (from January 2016)(Note 2) Source: Bank of Japan Osaka Branch “Department Store Duty-Free Sales (Kansai Region)”(Note 3) Source: Ministry of Economy, Trade and Industry “Current Survey of Commerce”

172-3. Status of Inbound Tourists in the Kansai region
Foreign Tourists Visiting Osaka Continue to Increase in 2016
u Number of foreign tourists visiting Osaka:
January to September cumulative total comparable to theprevious year’s annual total and set to reach the record-highannual total (Note 1)
u Visit rate by prefecture of foreign tourists visiting Japan:
January to September visit rate for Osaka Prefecturecomparable to Tokyo (Note 2)
u International flight passengers at Kansai International Airport:
January to November cumulative total broke the record-highannual total (Note 3)

In 2016, January to September
cumulative total comparable tothe previous year’s annual total

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

8

7.16
Annual*7.11 *

January to September

6
5.26
3.76

4

2

1.7

2.35

2.03

1.58

2.63

2.68
1.87

Visit Rate by Prefecture of Foreign Tourists Visiting Japan
Osaka Prefecture
Tokyo

0

2013

2014

2015

2016 (Note 4)

30.2%

34.1%

41.9%

45.3%

2009

45.1%

Source: Osaka Convention & Tourism Bureau*January to September cumulative total in the case of 2016

43.2%

48.5%

48.2%

(Note 1) Source: Osaka Convention & Tourism Bureau(Note 2) Source: “Consumption Trend Survey for Foreigners Visiting Japan” (Japan Tourism Agency)(Note 3) Source: Kansai Airports(Note 4) Average values of January to September 2016 survey results

Consumption Targets Shift from “Things” to “Experience”

2010

2011

2012

2013

2014

Change in Purchase Rate (by Product)
and Ratio of Independent Travelers ofForeign Tourists Visiting Japan2015

2016 (year)“Entertainment services”
and “ratio ofindependent travelers”
on increasing trend(relative value based on January to March 2014 survey (100))160

u Chinese tariff hike, increase in tourists other than those of
wealthy class and other factors led to consumption shifting fromwatches, electrical appliances and other expensive goods tocosmetics, pharmaceuticals, etc.
u Increase in independent travelers and repeat visitors led toconsumption targets diversifying⇒ “Entertainment services” purchase rate on increasing trend

145
140
120

117

100

101

105

80

Independent travel
Shopping

Entertainment services
Food and drink

2014 2014 2014 2014 2015 2015 2015 2015 2016 2016 2016
1-3 4-6 7-9 10-12 1-3 4-6 7-9 10-12 1-3 4-6 7-9
Source: “Consumption Trend Survey for Foreigners Visiting Japan”(Japan Tourism Agency)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

Population Trend

Office Trend

Nakatsu Sta.

Hankyu Umeda Sta.
Umeda subway Sta.

JR Osaka Sta.

2

Higashi-Umeda Sta.

Hanshin Umeda Sta.

3

Old buildings away from center of office districts
and that fell into secondary vacancies areconverted 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

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

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 surpassedwith 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.

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 city90

— Umeda area
— Yodoyabashi and Hommachi area

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 owned and developed 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 the Tokyo metropolitanarea, government-ordinance-designated cities
nationwide and other comparable major cities
Of these, investment is focused on the 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 23rd fiscal period)

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

Other
1.0%
Urban
retail facilities
14.8%

Total acquisition price:

Office25.5%

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
73.4%
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. Will continue to obtain quality property information utilizing the comprehensive strengths of the sponsor
group through joint efforts, such as setting up a weekly forum to share property information and consideration 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
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)
LAXA Osaka

MANDAI Gojo Nishikoji Store (site)

Kita-Aoyama San cho-me Building

LIFE Shimoyamate Store (site)(Tentative name)OASIS Town Itami Konoike (site)

HANKYU NISHINOMIYA GARDENS
kotocross Hankyu Kawaramachi

Assets acquired in 23rd fiscal period233-3. Information Leads and Leads Considered (23rd Fiscal Period)* Outer circle: Information leads

30

Retail

3

2

Hotel

1

1

1

14

2

28
1

28

1

0

0

4

52

6

2

4

3

2

6

68

3

21

4

1

1

5

6

2

0

1

6

85

5

14

15

7

4

7

4

3

1

96

14

8

1

30

38

20

124

11

9

27

Suburban111Urban vicinity

62

21

OfficeOther*

Area

City center

Use

Mixed
(Complex)

Inner circle: Leads actually considered

22* Properties anticipating property development of 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 the Kansai region, Tokyo metropolitan area andregional major cities, such as Nagoya, Fukuoka and Hiroshima, etc.

243-4. 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(Tentative name) OASIS Town Itami Konoike
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 StoreLAXA Osaka
Hotel Gracery Tamachi

Primary investment target zone

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

Assets acquired in
23rd fiscal period25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 the 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 the 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 areasin the Kansai region
Kita-Aoyama San
cho-me Building

Other bustling areas26

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

Oriented toward stable income

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

Utilizing real estate know-how
and experience nurtured by thesponsor group over the years

1

Analysis of tradearea and flow ofpeople＋2

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

Urban retail facilities
Competitive bustling areas

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 income through adequate
business category and tenant compositions(Note) This is not intended as a guarantee that all assets held 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.

27

4. Internal Growth Strategies28

4-1. Operational Management

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

Consumers

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

Tenants

Hankyu REIT29

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

90
85
80

1st
period'05/11

2nd
period'06/053rd
period'06/114th
period'07/055th
period'07/116th
period'08/057th
period'08/118th
period'09/059th
period'09/1110th
period'10/0511th
period'10/1112th
period'11/0513th
period'11/1114th
period'12/0515th
period'12/1116th
period'13/0517th
period'13/1118th
period'14/0519th
period'14/1120th
period'15/0521st
period'15/1122nd
period'16/0523rd
period'16/11

Total portfolio occupancy rate as of the end of November 2016 (end of 23rd fiscal period) was 99.1%(Total portfolio occupancy rate as of the end of December 2016 was 99.7%)(%)
100
Total portfolio

90

HEP

80

Tennozu
88.1%

70(December 2016)

Kitano Hankyu
Hankyu Yamada
Ueroku F Bldg.
Tennozu

60

Shiodome
Namba-Hanshin

50

Kita-Aoyama
40
30
End ofJan. 2016

End ofFeb. 2016

End ofMar. 2016

End ofApr. 2016

End of
May 2016

End ofJune 2016

End ofJuly 2016

End ofAug. 2016

End of
Sept. 2016

End ofOct. 2016

End ofNov. 2016

End ofDec. 2016

・ 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%).

30

4-3. Topics on Properties Held (In Relation to Inbound Tourists)
Three Hotels in Hankyu REIT’s Portfolio (Note 1)
Hotel Metrics Going Strong• Performance metric RevPAR(Note 2) recently showing aslightly decreasing trend after sharply rising up until the
21st fiscal period, but still maintaining a high level• Ratio of use by foreign tourists visiting Japan maintained
at a high level at the two Osaka hotels and on an
increasing trend at Tamachi, too• Systematically implementing measures to tap
Japanese and foreign tourists, etc., such as guest room
beautification work and renovation from single to twin
• Hotels highly recognized for their location and features

Status of Hotels in Hankyu REIT’s Portfolio
160

100%

140

95%

120

90%

100

85%
ADR

80

Ferris Wheel Sales Continue to Increase• Striking increase in foreign tourists visiting Japan who
used the Osaka Amazing Pass (Note)(58.8% used the Pass in the 23rd fiscal period)• Directly contributed to income increase because Ferris
Wheel operating costs are pretty much a fixed amount(Ferris Wheel sales in the 23rd fiscal period doubled thatin the 16th fiscal period)(Note)

Surutto KANSAI Osaka Amazing Pass: A travel pass that offers unlimited travel on Hankyu Railway, Hanshin
Electric Railway, Keihan Electric Railway, Nankai Electric Railway, Kintetsu Railway and Osaka Municipal
Subway and Bus within Osaka City limits, and even admission to HEP Five Ferris Wheel, Umeda Sky
Building Floating Garden Observatory and other fee-based facilities in Osaka City

RevPAR

客室稼働率
Guest room occupancy rate (right axis)
第16期
May
H25.5

16th FP

第17期
Nov.
H25.11

17th FP

2013

2013

18th FP

第18期
May
H26.5
2014

19th FP

第19期
Nov.
H26.112014

20th FP

第20期
May
H27.5
2015

21st FP

第21期
Nov.
H27.112015

22nd FP

第22期
May
H28.5
2016

23rd FP

80%

第23期
Nov.
H28.11
2016[Graph]Guest room occupancy rate: Average of three properties (Note 1) (right axis)
RevPAR and ADR (Note 2): Relative value based on 16th fiscal period’s average set as 100 (left axis)*Factored out Hotel Gracery Tamachi’s renovation period (Jan. 2016) in the case of 22nd fiscal period(Note 1) Kitano Hankyu Building (Hotel New Hankyu Annex) (fixed-type master lease contract), LAXA Osaka(Hotel Hanshin) (fixed-type master lease contract) and Hotel Gracery Tamachi (long-term fixed contract)(Note 2) RevPAR (Revenue Per Available Room): Guest room revenue divided by number of guest rooms available
ADR (Average Daily Rate): Guest room revenue divided by number of guest rooms sold

HEP Five

Guest room
occupancy rate

Status of HEP Five Ferris Wheel

Ratio using Osaka
Amazing Pass

60%

400
Sales
売上

Riders
搭乗者

58.8%

周遊パス率
Ratio using Osaka Amazing Pass

300

(right axis)
224
201

200

30%

100

0

0%
16th FP
第16期
H25.5
May

17th FP
第17期
H25.11
Nov.

18th FP
第18期
H26.5
May

19th FP
第19期
H26.11
Nov.

20th FP
第20期
H27.5
May

21st FP
第21期
H27.11
Nov.

22nd
FP
第22期

23rd
FP
第23期

H28.5
May

Nov.
H28.11

2013

2013

2014

2014

2015

2015

2016

2016

[Graph]Ratio using Osaka Amazing Pass: Each fiscal period’s average (right axis)
Sales and Riders: Relative value based on 16th fiscal period’s total set as 100 (left axis)

31

Systems and Present Conditions of 23 Portfolio Properties (1)4-4. Rent(End of 23rd 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 79.5 billion in fiscal 2015, sales increased for the seventh consecutive year since opening in
2008. Sales in fiscal 2016, too, are going strong. The 1F food court will be completely renovated,with reopening scheduled for late April 2017.

Dew Hankyu Yamada
NSC (Note 1)

Long-term, fixed(partly overage)

Implemented tenant replacement for two 1F spaces (implemented on December 1, 2016 (24th fiscal
period) for one of the spaces). Maintained 100% occupancy rate throughout the period. As
measures against LaLaport EXPOCITY, implementing 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)

Having attracted new tenants to two spaces, including a restaurant targeting the young that would
lead to revitalization of the facility, in the 23rd fiscal period, achieved 100% occupancy rate at theend of the 23rd fiscal period (up 1.7pt from the end of the previous period (22nd fiscal period)).
Continuing to focus efforts on improving attractiveness to customers by implementing valueenhancement work on common-use portions.

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 asa home center, grocery store, electronics store 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 rent income from the master lessee (sublessor).
The amount received is fixed irrespective of the rent received by sublessor from end-tenants.

32

Systems and Present Conditions of 23 Portfolio Properties (2)4-4. Rent(End of 23rd Fiscal Period)
Properties Mainly Using the Sales-based Overage-rent System
Property name
HEP Five
Specialty shop building(urban SC)

Main rent system

Present conditions

Overage(fixed + variable)

From April 2016, started integration with common points (S points) that can be used at sponsor
group’s facilities. Along with retaining customers through group facilities acting as one byimplementing joint events, HEP FIVE internal marketing, etc., will continue to aim to attract morecustomers and boost sales.
The number of Ferris wheel riders remained strong in the 23rd fiscal period with a 28% increaseover the same period of the previous year due to increase in use by foreign tourists visiting Japan.

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%. Scheduled to implement tenant replacement for one 2F
space at a higher level of rent than before (scheduled to move in in March 2017 (24th fiscal period)).
THREE AOYAMA, the flagship store of THREE, a natural cosmetics brand operated by an affiliate
of Pola Orbis Holdings Inc., is occupying as the core tenant.

kotocross Hankyu
Kawaramachi
Specialty shop building(urban SC)

Long-term, fixed

Rent income is stable based on a 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, it houses merchandise shops, restaurants and service shops. The 1F and 2F tenants thatwere attracted in the previous period (22nd fiscal period) 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 a 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.

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

Long-term, fixed

Rent income is stable based on a contract for fixed-term land lease for business purposes with
HANKYU OASIS Co., Ltd. It is scheduled to house shops closely related to daily life, such as agrocery store, apparel store and drugstore. As of January 2017, the building is under construction
and the rent collectable is 25% (the rent through to the date preceding the opening date of the storeof the lessee or September 2, 2017, whichever earlier, will be 25% of the rent on and after the datefollowing the date indicated above. ).

(Note 1) NSC: Neighborhood Shopping Center; SM: Supermarket(Note 2) Fixed-type master lease method: Hankyu REIT receives rent income from the master lessee (sublessor).
The amount received is fixed irrespective of the rent received by sublessor from end-tenants.

33

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

Present conditions

Ueroku F Building
OfficeFixed

One tenant moved out, resulting in the period-end occupancy rate decreasing by 6.2pt from the endof the previous period (22nd fiscal period) to 93.8%. Will tap needs for expansion of floor area within
the same property through strengthening of relations with existing tenants concurrently with leasing
activities for new tenants.

Sphere Tower Tennozu
OfficeFixed

Achieved four leasing contracts, including a large tenant, since October 2016, boosting occupancy
rate to 88.1% in December 2016 (24th fiscal period). Will continue to promote leasing activities
based on location and building features backed by an environment where vacancy rate in the Tokyo
metropolitan area is decreasing, and thereby lead to further improvement in occupancy rate.

Shiodome East Side
Building
OfficeFixed

Occupancy rate continues to be 100%. Will continue to strive to improve satisfaction level by
pursuing relations with existing tenants, while also working on preventive maintenance of thebuilding.

Hankyu Corporation
Head Office Building
OfficeLong-term, fixed

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

Hotel Gracery Tamachi
HotelLong-term, fixed

Based on a contract for long-term and fixed lease 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 amountof rent and it is currently pending.

LAXA Osaka
Hotel

Long-term, fixed

Rent income is stable based on a fixed-type master lease method (Note) 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 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
Nakano-Higashi Store(site)NSC (Note)

Long-term, fixed

Based on a contract for 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 tenants’ management balance sheet.

(Note) Fixed-type master lease method: Hankyu REIT receives rent income from the master lessee (sublessor).
The amount received is fixed irrespective of the rent received by sublessor from end-tenants.

34

Systems and Present Conditions of 23 Portfolio Properties (4)4-4. Rent(End of 23rd 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 fixed-term land lease for business purposes with
Mitsui Fudosan Co., Ltd.
Improvement work on Hanshin Railway Koshien Station, the nearest station, is underway.
With the completion of works to increase the number of elevators and other renovation into barrierfree space in March 2016, convenience improved for visitors who use the railways (improvement
work scheduled for completion in spring 2017).

AEON MALL
SAKAIKITAHANADA(site)RSC (Note)

Long-term, fixed

Hankyu REIT owns the site only, and there is a contract for long-term, fixed-term land lease with thebuilding 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), announced on July 27, 2016 that it will move out at the endof July 2017, but AEON MALL Co., Ltd. announced on the same date that it will renovate it to“evolve into a completely new urban mall.” Will keep a watchful eye on future developments.

MANDAI Toyonaka Honan
Store (site)
NSC (Note)

Long-term, fixed

Rent income is stable based on a contract for fixed-term land lease for business purposes with
MANDAI Co., Ltd. Sales have been strong since the property’s opening in October 2013. As acommunity-based store, it houses shops closely related to daily life, such as a grocery store,
drugstore and 100 yen shop.

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

Long-term, fixed

Rent income is stable based on a contract for fixed-term land lease for business purposes with
Izumiya Co., Ltd.
Opened in December 2013. The store is becoming more well-known and sales are steadily
increasing. With the increase in foreign tourists visiting Japan, tax-free shopping has been madeavailable.

MANDAI Gojo Nishikoji
Store (site)
NSC (Note)

Long-term, fixed

Rent income is stable based on a contract for fixed-term land lease for business purposes with
MANDAI Co., Ltd. As a community-based store, it houses shops closely related to daily life, such asa grocery store, clothing shop, drugstore and 100 yen shop.

LIFE Shimoyamate
Store (site)
SM (Note)

Long-term, fixed

Rent income is stable based on a contract for fixed-term land lease for business purposes with Life
Corporation. Personal delivery service and other efforts are being well received by the residents of
the neighboring areas.

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

35

4-5. Appraisal Value

Appraisal value increased by 1.2%, making unrealized income JPY 14,662 mn
Cap rate decreased for all properties (excluding Itami acquired on November 25, 2016)

JPY 14,662 mn

Change in Unrealized Income/Loss and Cap Rate

(JPY mn)・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

16,000

5.4%

8,000

5.1%

0

4.8%

-8,0004.5%-16,000

14th
FP
第14期
H24.5
May
2012

16th
FP
15th
FP
第15期
第16期
H24.11
H25.5
2013
Nov.
2012 May

20th FP 第21期
21st FP
17th
FP
18th FP
19th FP
第17期
第18期
第19期
第20期
H25.11
H26.5
H26.11
May 2015 H27.11
Nov. 2015
Nov.
2013 May
2014 Nov.
2014 H27.5
Unrealized
Weighted
average
cap
rate
含み損益
CAPレート（加重平均）(右軸） (Note)
income/loss

22nd FP
第22期
H28.5
May
2016

23rd FP
第23期
H28.11
Nov. 2016

4.2%(right axis)(Note) Cap rates are the weighted average based on appraisal values364-6. List of Appraisal Values(Unit：JPY mn)

Acquisition
price

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

6,468① End of previous period(22nd fiscal period-end)
Appraisalvalue② End of current period(23rd fiscal period-end)

Cap rate(Note1)

8,638

Appraisal value

3.8%

8,736

Cap rate(Note1)③ValueChangerecorded on the Unrealized(②-①)/① balance sheet at income/loss(Note2)②-③
end of current
periodChange(②-①)(Note2)

3.7%

98

1.1%

5,607

3,128

Value to book
ratio
②/③

155.8%

Kitano Hankyu Building

7,740

6,760

4.8%

6,970

4.7%

210

3.1%

7,663

-693

90.9%

Dew Hankyu Yamada

6,930

8,520

4.7%

8,530

4.6%

10

0.1%

5,585

2,944

152.7%

Takatsuki-Josai Shopping Center

8,600

8,150

5.2%

8,160

5.1%

10

0.1%

7,139

1,020

114.3%

Nitori Ibaraki-Kita Store (Site)

1,318

1,640

5.0%

1,690

4.9%

50

3.0%

1,340

349

126.1%

Kohnan Hiroshima Nakano-Higashi Store (Site)

2,175

1,890

5.8%

1,890

5.7%

0

0.0%

2,280

-390

82.9%

Hotel Gracery Tamachi

4,160

4,340

4.6%

4,390

4.5%

50

1.2%

3,717

672

118.1%

LaLaport KOSHIEN (site)

7,350

7,500

4.5%

7,650

4.4%

150

2.0%

7,748

-98

98.7%

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

18,30023,576

4.5%

23,996

4.4%

420

1.8%

17,6076,388

136.3%AEON MALL SAKAIKITAHANADA (site)

8,100

9,410

4.5%

9,540

4.4%

130

1.4%

8,189

1,350

116.5%

MANDAI Toyonaka Honan store (site)

1,870

2,240

4.6%

2,260

4.5%

20

0.9%

1,889

370

119.6%DAILY QANAT Izumiya Horikawa Marutamachi
Store (site)

3,100

3,410

4.5%

3,490

4.4%

80

2.3%

3,127

362

111.6%

kotocross Hankyu Kawaramachi

2,770

3,180

4.6%

3,230

4.5%

50

1.6%

2,708

521

119.3%

LIFE Shimoyamate Store (site)

1,421

1,570

4.5%

1,590

4.4%

20

1.3%

1,434

155

110.9%

MANDAI GOJO Nishikoji Store (site)

4,182

4,550

4.6%

4,600

4.5%

50

1.1%

4,213

386

109.2%KOHYO Onohara Store

1,631

-

-

1,670

5.1%

-

-

1,655

14

100.9%(Tentative name) OASIS Town Itami Konoike(site)

7,100

-

-

7,120

4.2%

-

-

7,382

-262

96.4%

Shiodome East Side Bldg.

19,025

13,9004.2%

14,100

4.1%

200

1.4%

17,385-3,285

81.1%

Hankyu Corporation Head Office Building

10,20011,6004.3%

11,700

4.2%

100

0.9%

9,704

1,995

120.6%

Ueroku F Building

2,980

2,790

5.4%

2,700

5.3%

-90

-3.2%

2,643

56

102.1%

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

9,405

6,765

4.7%

6,765

4.2%

0

0.0%

8,578

-1,81378.9%

LAXA Osaka

5,122

5,500

5.0%

5,600

4.9%

100

1.8%

4,317

1,282

129.7%

Kita-Aoyama San cho-me Buiding

1,680

1,910

3.7%

1,940

3.6%

30

1.6%

1,733

206

111.9%

141,628

137,839

4.5%

148,317

4.4%

1,688

1.2%

133,654

14,662111.0%

Total(Note 1) 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) areallocated a discount rate using the DCF method) and the total is the weighted average cap rate based on appraisal values.
(Note 2) Change are the figures excluding KOHYO Onohara Store and (Tentative name) OASIS Town Itami Konoike (site) that were acquired in the 23rd fiscal period.

37

5. Financial Strategies38

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 risks (focus on long-term, fixed-rate loans)

As of November 30, 2016

1,500
2.3%
3,400
5.2%

4,000
6.1%

12,200
18.5%

6,900
10.5%
11,500
17.5%

6,900
10.5%

As of end of
22nd fiscal period

As of end of
23rd fiscal period

JPY 61.9 bn

JPY 65.9 bn

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

1.02%

0.90%

Avg. debt financing cost(including investment corporation bonds)

1.04%

0.92%

4.4 years

4.4 years

Long-term debt ratio

100.0%

90.9%

Fixed debt ratio

90.0%

81.5%

LTV (Note 2)

41.9%

43.0%

Interest-bearing debt ratio

43.0%

44.5%

Investment corporation bonds

JPY 6.0 bn

JPY 4.0 bn

Investor rating (R&I)

A+(Stable)A+(Stable)Registration for Issuance ofInvestment Corporation Bonds

Investor rating (JCR)

AA(Stable)AA(Stable)

Planned value of issuance (upper limit): JPY 100,000 mn

Interest-bearing debt

Avg. remaining years on loans payable andinvestment corporation bonds (Note 1)

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

Planned issuance period: Dec. 19, 2015 to Dec. 18, 2017

(Note 1) Average remaining years
Materials up to the previous period (22nd fiscal period): Presented data on only long-term loans payable and investment corporation bonds
Materials from the period under review (23rd fiscal period): Presenting the data with the addition of short-term loans payable(both 22nd and 23rd fiscal periods)(Note 2) Details of the calculation method for “LTV” are presented on P65.

39

5-2. Asset Scale and LTV (Loan to Value)
Total acquisition priceTotal appraisal value at the end of period
LTV at end of period (based on management guidelines)

Capital increaseby 2nd public offering

Interest-bearing debt ratio at the end of period

Capital increaseby 3rd public offering

Capital increaseby 1st public offering(%)(JPY bn)
57.9
55.2

270
240

46.1

150

48.6 47.3
49.4

31.0 30.0 30.7

28.8

40.8 40.3

60.0

53.5

45.6 46.0

210
180

55.6 56.1 55.9 56.0 55.9 55.8

46.9 46.2 45.4 45.5 45.2 45.5 45.5 46.7

45.4 44.4

43.2 43.0 44.5

43.2 43.4 42.9 42.9 43.0 41.9 43.0

20.0

90
60

40.0
30.0

39.1

120

50.0

21.3

18.0 18.2 18.9

10.0

30
0.0

0
23rd
22nd
21st
20th
19th
18th
17th
16th
15th
14th
13th
12th
11th
10th
9th
8th
7th
6th
5th
4th
3rd
2nd
1st
PeriodPeriodPeriodPeriodPeriodPeriodPeriodPeriodPeriodPeriodPeriodPeriodPeriodPeriodPeriodPeriodPeriodPeriodPeriodPeriodPeriodPeriodPeriodNov. 2005 May 2006 Nov. 2006 May 2007 Nov. 2007 May 2008 Nov. 2008 May 2009 Nov. 2009 May 2010 Nov. 2010 May 2011 Nov. 2011 May 2012 Nov. 2012 May 2013 Nov. 2013 May 2014 Nov. 2014 May 2015 Nov. 2015 May 2016 Nov. 2016

No. ofproperties

5

6

7

8

9

11 11 16 15 15 15 15 15 15 15 16 19 19 23 23 23 21 23

LTV remains on an ongoing basis40

6. Overview of Financial Results for 23rd Fiscal Period416-1. Income Statement / Cash Distribution Statement
Income Statement

Cash Distribution Statement(Unit: JPY mn)(Unit: JPY thousand)22nd Fiscal Period
23rd Fiscal Period(Operation period:183 days) (Operation period:183 days)
Item

1. Operating revenues
Lease operating revenues
Income on sale of real estate, etc.
2. Operating expenses
Lease operating costs
Loss on sale of real estate, etc.
Asset management remuneration
Officer remuneration
Asset consignment remuneration
Administrative 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
Interest due on investment corporation bonds
Amortization of investment corporation bondissuance costs

Other expenses
Ordinary income
Pretax net income for current period
Corporate, local and enterprise tax
Adjustment for corporate tax, etc.
Net income for current period
Retained earnings carried forwardfrom the previous period
Unappropriated income for current period

Dec. 1, 2015 to May 31, 2016

June 1, 2016 to Nov. 30, 2016

AmountPercentage

AmountPercentage

5,527
4,795
731
3,474
2,387
633
339
3
18
36
10
44
2,053
2
1
0
395
288
54
38
3
11
1,659
1,659
1
0
1,657

100.0

4,721
4,721
―
2,745
2,284
―
334
3
18
37
11
56
1,976
1
0
1
406
285
54
35
2
29
1,570
1,570
1
-0
1,569

100.0

62.9

37.1
0.0

7.2

30.0

30.0

0

0

1,658

1,569

22nd Fiscal Period 23rd Fiscal Period

-805

(1)

AmountAmountUnappropriated income
for current period

1,658,233

1,569,370-88,863

Distributions

1,658,062

1,569,035-89,027(2,775)(2,626)(-149)

171

335

163

(Distribution per unit (JPY))

58.1

ChangeItem
Change-728(2)Retained earnings carried forward

Amount(Main factors for increase/decrease)(1) Increase in operating revenues
Decrease in income on sale of real estate (Hamamatsu)
JPY -731 mn
41.9
0.0

-76
-0

8.6

11

Decrease in income from lease, etc. (Namba and Hamamatsu)
JPY -152 mn
Increase in operating revenues due to contribution ofproperties acquired in 23rd fiscal period
JPY +43 mn(2) Increase in operating expenses
Decrease in loss on sale of real estate (Namba)
33.3

JPY -633 mn-88

Decrease in lease operating costs (Namba and Hamamatsu)
JPY -139 mn
33.2

-88

Lease operating revenues/costs
Breakdown: See pages 44 and 4542

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

22nd Fiscal Period(as of May 31, 2016)

23rd Fiscal Period(as of Nov. 30, 2016)

ChangeAmountAmountAmountRatio (%)

Ratio (%)

Item

23rd Fiscal Period(as of Nov. 30, 2016)

ChangeAmountRatio (%)

AmountRatio (%)

Amount7,846

5.5

14,744

10.0

6,897

Liabilities

AssetsI. Current assets total

22nd Fiscal Period(as of May 31, 2016)

18,275

12.7

13,822

9.3-4,452

I. Current liabilities total

Currency and demand deposit

10,465

5,604

Operating accounts payable

439

572

Currency and demand deposit in trust

7,481

7,722

Short-term loans payable

—

6,000

Operational income receivable

4

7

6,000

—

Deposit paid

94

80

Consumption taxes receivable—258

Long-term loans payable(due within 1 year)

—

7,000

226

144

Accrued dividend

10

10

Accrued expenses

171

167

1

1

Prepaid expense
OthersII. Fixed assets total

2
125,686

Investment corporation bonds(due within 1 year)3
87.3

134,111

90.6

8,424

1. Tangible fixed assets
Buildings

1,919

2,224

Structures

203

219

0

0

Land

9,485

18,130

Buildings in trust

26,331

25,846Structures in trust

551

541

Tools, furniture and fixtures

Machinery and equipment in trust
Tools, furniture and fixtures in trust
Land in trust
Trust construction accountTangible fixed assets total

160

56

85,46685,46618
124,195

132,678

OthersIntangible fixed assets total

957

1,028

1,024

0

1

228

218

8,482

-4

59,98540.5-2,814

JPY 7,304 mn

—

4,000
48,900

JPY 1,485 mn

Security deposits

1,251

1,391

was allocated forpropertyacquisitions

5,649

5,694

70,64749.1

74,73050.5

I. Unitholders capital

71,65949.8

71,659

48.4

II. Total surplus

1,658

1.2

1,569

1.1

4,082

Net assets

Unappropriated income
for current period

0.7

43.6

Total
security deposits

55,900Liabilities total

89.7

62,800JPY 65,900 mn

Long-term loans payable

Security deposits in trust

67
0.7

691

Investment corporation bonds

957

71

79

646

II. Total noncurrent liabilities

2. Intangible fixed assets
Land leasehold

348

Advance received

Security deposits(return within 1 year)

48
86.3

Accrued consumption tax

Current deposit received

143

59

Income taxes payable

Interest-bearing
debt

1,658

1,569

Net assets total

73,31750.9

73,22849.5-88Liabilities and net assets total

143,964100.0

147,958

100.0

3,993

3. Investments, other assets
Long-term prepaid expenses

452

398

Guarantee money deposit

10

10

Investment, other assets total
III. Total deferred assets
Investment corporation bondissuance costs
Assets total

462

0.3

408

0.3

-54

2

0.0

24

0.0

22

100.0

3,993

2
143,96424
100.0

147,95843

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

Item

HEP Five(14% of thequasi
co-ownershipof the trust
beneficiaryinterests)

Kitano Hankyu
Building

Dew Hankyu
YamadaTakatsuki-Josai
Shopping
CenterNitori
Ibaraki-Kita
Store(site)(Note 1)

Hotel Gracery
Tamachi

LaLaport
KOSHIEN(site)

HANKYUNISHINOMIYAGARDENS(28% of thequasi
co-ownershipof the trust
beneficiaryinterests)

AEON MALL
SAKAI
KITAHANADA(site)(Note 1)

MANDAI
Toyonaka
Honan Store(site)(Note 1)DAILY QANAT
IzumiyaHorikawa
MarutamachiStore(site)(Note 1)

183

183

183

183

183

183

183

KohnanHiroshima
Nakano-HigashiStore(site)

Number of operating daysof 23rd fiscal period

183

183

183

183

Lease operating revenues
total

308

578

379

284

68

121

257

618

Income from lease

242

378

258

283

68

116

257

617

Utilities expense income

14

137

53

—

—

—

—

—

Other incomes

183

51

62

66

0

0

4

0

0

Lease operating costs
total

181

411

252

129

6

51

106

212

Property/Facility
management fees

43

113

75

10

0

1

1

0

Utilities expense

23

149

53

0

—

—

—

—

3

0

1

22

—

—

0

6

Advertising andpromotion expenses

25

1

4

—

—

—

—

—

Repair expense

11

8

22

0

—

0

—

0

Nonlife insurance
premium

0

1

0

1

—

0

0

2

Tax and public dues

24

49

26

26

6

14

102

58

6

1

4

0

—

0

1

0

40

85

62

68

—

32

0

142

NOI
(Lease operating income+ Depreciation)

168

251

189

223

60

62

102

150

548

211

53

88

Lease operating income

127

166

127

155

60

62

69

150

406

211

53

88

Capital expenditure

20

85

1

—

—

—

3

0

14

—

—

—

Rent paid

Other expenses
Depreciation(Note 1) The Asset Management Company decided that rent information is not disclosed as the consent of the tenants was not obtained, andthere is a possibility that the disclosure may affect competitiveness of Hankyu REIT and eventually damage the interests of unitholders.

446-3. Income and Expenditure by Property (2)(Unit: JPY mn)

kotocross
HankyuKawaramachi

LIFE
Shimoyamate
Store(site)(Note 1)

MANDAI Gojo
Nishikoji Store(site)(Note 1)

KOHYO
Onohara Store(Note 1)
(Note 2)

Number of operating daysof 23rd fiscal period

183

183

183

153

Lease operating revenues
total
Income from lease(Tentative name)OASIS Town
Itami Konoike(site)(Note 1)
(Note 3)Sphere Tower
Tennozu(33% of thequasi
co-ownershipof the trust
beneficiaryinterests)

LAXA Osaka

Kita-Aoyama
San cho-me
Building(Note 1)Total
(23 properties)

183—

Shiodome
East Side
Building

HankyuCorporation
Head Office
Building

183

183

183

183

183

102

405

359

140

123

255

4,721

102

380

359

120

90

254

4,247

Utilities expense income

—

20

—

11

12

—

251

Other incomes

Item

6

Ueroku F
Building

0

3

—

7

20

0

223

Lease operating costs
total

46

182

160

89

194

168

2,284

Property/Facility
management fees

1

18

1

22

42

2

346

Utilities expense

—

25

—

11

42

—

306

Rent paid

12

0

—

—

—

17

65

Advertising andpromotion expenses

—

—

—

—

—

—

32

Repair expense

0

0

0

4

7

33

90

Nonlife insurance
premium

0

0

1

0

0

2

14

Tax and public dues

10

21

47

12

29

47

543

0

2

0

1

12

1

35

Depreciation

20

113

109

37

60

63

849

NOI
(Lease operating income+ Depreciation)

76

34

109

40

1

336

307

88

-10

150

39

3,286

Lease operating income

55

34

109

33

1

222

198

50

-71

87

35

2,437

Capital expenditure

0

—

—

—

—

0

—

27

24

74

0

254

Other expenses(Main capital expenditure)
Kitano Hankyu Building Elevator modernization
Common-use portion beautification
LAXA Osaka
Central monitoring equipment upgrading
Hot water boiler upgrading
Ueroku F Building
Elevator modernization
Sphere Tower Tennozu Preparation work for tenant moving in

JPY 30 mn
JPY 29 mn
JPY 59 mn
JPY 10 mn
JPY 19 mn
JPY 18 mn(Note 1) The Asset Management Company decided that rent
information is not disclosed as the consent of the tenants
was not obtained, and there is a possibility that thedisclosure may affect competitiveness of Hankyu REIT
and eventually damage the interests of unitholders.
(Note 2) Acquired on July 1, 2016.
45(Note 3) Acquired on November 25, 2016.

6-4. Financial Indicators

Item

22nd Fiscal Period

23rd Fiscal Period

183 days

183 days

1.2%

1.1%

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

2.3%

2.1%

Calculated from duration of operation

2.3%

2.1%

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

4.5%

4.3%

Calculated from days of operation

Ratio of net assets at end of period

50.9%

49.5%

Net assets / Total assets

Loan To Value ratio at end of period (LTV)

41.9%(45.8%)

43.0%(47.4%)

Ratio of interest-bearing debts to total assets
at end of period

43.0%

44.5%

Interest-bearing debt / Total assets

Debt Service Coverage Ratio (DSCR)

8.9 times

8.5 times

Pre-interest and pre-depreciation net income for current fiscal period /Interest expenses

Net Operating Income (NOI)

JPY 3,335 mn

JPY 3,286 mn

Net lease operating income + Depreciation

Funds From Operation (FFO)

JPY 2,486 mn

JPY 2,418 mn

Net income for current fiscal period + Depreciation - Income/loss on saleof real estate

Operation period

Return On Assets (ROA)(per annum)
Return On Equity (ROE)(per annum)

Remarks

22nd fiscal period: December 1, 2015 to May 31, 2016
23rd fiscal period: June 1, 2016 to November 30, 2016

(Amount of interest-bearing debt + Security deposits - Matched money tosecurity deposits) / (Total assets(*) - Matched money to security deposits)*Appraisal-value basis (Ratios in brackets are based on book value)46

7. APPENDIX

47

7-1. Profitability and Financial Status● Profitability of Portfolio
End of 19th FP(End of Nov. 2014)

End of 20th FP(End of May 2015)

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

End of 22nd FP(End of May 2016)

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

Average NOI yield(Note 1)

4.8%

4.8%

4.8%

4.8%

4.8%

Average NOI yield
after depreciation(Note 1)

3.4%

3.4%

3.4%

3.5%

3.7%

Unrealized income/loss(Note 1)

JPY 1.6 bn

JPY 4.7 bn

JPY 8.4 bn

JPY 12.6 bn

JPY 14.6 bn● Stability of Financial Foundation
End of 20th FP(End of May 2015)

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

End of 22nd FP(End of May 2016)

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

LTV(Note 1)

44.4%

43.2%

41.9%

43.0%

Interest-bearing
debt ratio

42.9%

43.0%

43.0%

44.5%

Averagedebt financing costs

1.07%

1.06%

1.04%

0.92%

5.1 years

4.8 years

4.4 years

4.4 years(including investment corporation bonds)

Averageremaining years onloans payable andinvestment corporation bonds(Note 2)

(Note 1) Details of the calculation method for “Average NOI yield,” “Average NOI yield after depreciation,” “Unrealized income/loss” and “LTV” are presented on page 65.
(Note 2) Materials up to the previous period (22nd fiscal period): Presented data on only long-term loans payable and investment corporation bonds
Materials from the period under review (23rd fiscal period): Presenting the data with the addition of short-term loans payable (20th fiscal period to 23rd fiscal period)48

7-2. Portfolio List (As of End of 23rd Fiscal Period) (1)Retail-use facilities

Classification

As of November 30, 2016

Code
(Note 1)Name

Location

Completion
date

Building
age(years)(Note 2)

Total leasable
area
(m²)
(Note 3)

Occupancy
rate(Note 3)

Total numberof tenants(Note 3)PML
(Note 4)Dateof acquisition

Acquisition
price(JPY mn)

Investment
ratio

Appraisal
value(JPY mn)

Cap rate(Note 5)R1(K)HEP Five(14% of the quasi co-ownership of thetrust beneficiary interests)

Kita-ku,
Osaka City

Nov. 1998

18.1

6,337.37(2,958.94)

100.0%(99.0%)

1
(128)

5.0%

Feb. 1, 2005

6,468

4.6%

8,736

3.7%

R2(K)

Kitano Hankyu Building

Kita-ku,
Osaka City

June 1985

31.5

28,194.15(18,477.35)

100.0%(100.0%)

2
(25)

10.1%

Feb. 1, 2005

7,740

5.5%

6,970

4.7%

R3(K)

Dew Hankyu Yamada

Suita City,
Osaka Prefecture

Oct. 2003

13.2

13,027.28

100.0%

28

4.7%

Feb. 1, 2005

6,930

4.9%

8,530

4.6%

R4(K)

Takatsuki-Josai Shopping Center

Takatsuki City,
Osaka Prefecture

Apr. 2003

13.7

31,451.81

100.0%

1

5.9%

Nov. 15, 2005

8,600

6.1%

8,160

5.1%

R5(K)

Nitori Ibaraki-Kita Store (site)

Ibaraki City,
Osaka Prefecture——

6,541.31

100.0%

1—

Mar. 29, 2006

1,318

0.9%

1,690

4.9%

Kohnan Hiroshima Nakano-Higashi
Store (site)

Aki-ku,Hiroshima City

Oct. 2, 2006

2,170

R6

—

—

100.0%

1

—

1.5%

1,890

5.7%

Apr. 9, 2007

5

R8

Hotel Gracery Tamachi

Minato-ku,
Tokyo

R9(K)

LaLaport KOSHIEN (site)

R11(K)

25,469.59
60.14
Sep. 2008

8.2

4,943.66

100.0%

1

10.3%

Dec. 25, 2008

4,160

2.9%

4,390

4.5%

Nishinomiya City,
Hyogo Prefecture——

126,052.16

100.0%

1

6.4%

Jan. 22, 2009

7,350

5.2%

7,650

4.4%

HANKYU NISHINOMIYA GARDENS(28% of the quasi co-ownership of thetrust beneficiary interests

Nishinomiya City,
Hyogo Prefecture

Oct. 2008

8.2

65,372.41

100.0%

1

9.2%

Apr.16, 2013

18,30012.9%

23,996

4.4%

R12(K)AEON MALL SAKAIKITAHANADA (site)

Kita-ku,
Sakai City——

64,104.27

100.0%

2—

June 27, 2013

8,100

5.7%

9,540

4.4%

R13(K)

MANDAI Toyonaka Honan Store (site)

Toyonaka City
Osaka Prefecture——

8,159.41

100.0%

1—June 27, 2013

1,870

1.3%

2,260

4.5%

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

Kamigyo-ku,
Kyoto City——3,776.15

100.0%

1—June 4, 2014

3,100

2.2%

3,490

4.4%

R15(K)

kotocross Hankyu Kawaramachi

Shimogyo-ku,
Kyoto City

Oct. 2007

9.2

4,400.13

100.0%

1

2.6%

June 4, 2014

2,770

2.0%

3,230

4.5%

R16(K)

LIFE Shimoyamate Store (site)

Chuo-ku,
Kobe City

——

2,397.83

100.0%

1—June 4, 2014

1,421

1.0%

1,590

4.4%

R17(K)

MANDAI Gojo Nishikoji Store (site)

Ukyo-ku,
Kyoto City——

9,182.80

100.0%

1—June 24, 2014

4,182

3.0%

4,600

4.5%

R18(K)KOHYO Onohara Store

Minoh City,
Osaka Prefecture

May 2016

0.6

3,310.31

100.0%

1

5.3%

July 1, 2016

1,631

1.2%

1,670

5.1%

R19(K)(Tentative name)OASIS Town Itami Konoike (site)

Itami City,
Hyogo Prefecture——

17,997.10

100.0%

1—

Nov. 25, 2016

7,100

5.0%

7,120

4.2%

49

Mixed-use (complex) facilities

Office-use
facilities

Classification

7-2. Portfolio List (As of End of 23rd Fiscal Period) (2)

Code

Name

(Note 1)

Location

Completion
date

Building
age(years)(Note 2)

Total leasable
area
(m²)
(Note 3)

Occupancy
rate(Note 3)

Total numberof tenants(Note 3)PML
(Note 4)Dateof acquisition

Acquisition
price(JPY mn)

Investment
ratio

Appraisal
value(JPY mn)

Cap rate(Note 5)

O1

Shiodome East Side Building

Chuo-ku,Tokyo

Aug. 2007

9.3

9,286.58

100.0%

6

4.6%

Feb. 29, 2008

19,025

13.4%

14,100

4.1%

O2(K)

Hankyu Corporation
Head Office Building

Kita-ku,
Osaka City

Sep. 1992

24.2

27,369.37

100.0%

1

3.7%

Apr. 10, 2013

10,2007.2%

11,700

4.2%

M1(K)

Ueroku F Building

Chuo-ku,
Osaka City

Sep. 1993

23.2

4,611.82

93.8%

11

3.2%

Nov. 1, 2005

2,980

2.1%

2,700

5.3%

M2

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

Shinagawa-ku,
Tokyo

Apr. 1993(Note 6)23.7

8,818.09

52.5%

21

2.7%

Oct. 2, 2007

9,405

6.6%

6,765

4.2%

M3(K)

LAXA Osaka

Fukushima-ku,
Osaka City

Feb. 1999

17.8

30,339.91

100.0%

1

3.7%

Jan. 22, 2009

5,122

3.6%

5,600

4.9%

M5

Kita-Aoyama San cho-me Building

Minato-ku,
Tokyo

Sep. 2013

3.2

619.76100.0%

3

7.4%

Nov. 12, 2013

1,680

1.2%

1,940

3.6%

15.2

501,823.43(488,728.20)

99.1%(99.1%)

89
(239)

3.5%

—

141,628100.0%

148,317

4.4%

Total (at end of 23rd fiscal period)(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 the 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 (394.88m2).
(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.

50

7-3. 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

51

7-3. Portfolio View (2)Community-based Retail Facilities (2)DAILY QANAT Izumiya Horikawa Marutamachi Store (site)(Tentative name) OASIS Town Itami Konoike (site)

External appearance image
MANDAI Gojo Nishikoji Store (site)

LIFE Shimoyamate Store (site)52

7-3. 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)53

7-3. Portfolio View (4)Hotel

OfficeLAXA Osaka

Hankyu Corporation
Head Office Building

Ueroku F Building

Shiodome East Side Building

Sphere Tower Tennozu

Hotel Gracery Tamachi

54

7-4. Trends of Distribution per Unit

JPY 2,626
(JPY)
4,000

Distribution per unit forecast *3,792

Distribution per unit *

3,473
3,500

2,998 3,068
2,991
2,862
3,300
2,775
2,715 2,744
2,714
2,626
2,597
2,538 2,537 2,464 2,445
2,537 2,567 2,620
3,000
2,492
2,483
2,860
2,361
2,820
2,820
2,800
2,600
2,600 2,620 2,630
2,560
2,550
2,540
2,530
2,500 2,560
2,460 2,480
2,420 2,400 2,460 2,400 2,400
2,322
2,300

3,000
2,500
2,000
1,500
1,000
500
0

1st
period
Nov.
2005

2nd
period
May
2006

3rd
period
Nov.
2006

4th
period
May
2007

5th
period
Nov.
2007

6th
period
May
2008

7th
period
Nov.
2008

8th
period
May
2009

9th
period
Nov.
2009

10th
period
May
2010

11th
period
Nov.
2010

12th
period
May
2011

13th
period
Nov.
2011

14th
period
May
2012

15th
period
Nov.
2012

16th
period
May
2013

17th
period
Nov.
2013

18th
period
May
2014

19th
period
Nov.
2014

20th
period
May
2015

21st
period
Nov.
2015

22nd
period
May
2016

23rd
period
Nov.
2016

24th
period
May
2017

25th
periodNov.
2017

Irregular period (303 days)* Hankyu REIT implemented a five-for-one split of its investment units with December 1, 2014 as the effective date.
The graph shows figures that retrospectively reflect the implementation of the five-for-one split.

55

7-5. Income Ratio by Rent Category and Sales-Based Overage Rent System Mechanism
Income Ratio by Rent Category
and Variation Factors
23rd FP
Income Ratio
1.0%
Overage-rent
tenants

Fixed-rent
tenants

7.3%

91.6%

<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 overage rentis generated

Tenant sales

Total rent income(excluding warehouse income)56

7-6. Population Dynamics of Kansai Region (1)l Concentration of population will heighten due to return of population to city centerand urban vicinity
l Retail facilities of Hankyu REIT are located in most populous municipal regions<Populations as of January 1, 2016 of municipal regions with populations of 100,000 or more>

Population of Kansai is 20.46 million
Osaka Prefecture: approx. 8.65 million
Of which, 62% reside in the top
7 municipal regions(population of 300,000 or more)
including Osaka City
Hyogo Prefecture: approx. 5.52 million
Of which, 68% reside in the top
7 municipal regions(population of 200,000 or more)
including Kobe City

(Source) Japan Geographic Data Center “Population Summary of the Basic Resident Registers” (2016)57

7-6. Population Dynamics of Kansai Region (2)l Population is clearly resurging in city center and urban vicinity
l Populations of Umeda and municipal regions along Hankyu/Hanshin Lines are rising<10-year Population Rise/Fall in Municipal Regions with Populations of 100,000 or More and Hankyu/Hanshin Lines >Though Kansai population
fell slightly -1.0% (10-year period),the population of city centers
increase such as in Osaka City +2.2%
Areas along Hankyu/Hanshin lines
increased (+3.5%)
Reason for differentiation:
High transportation convenience
High concentration of city facilities
Positive factors to profitability andstability of Hankyu REIT

(Source) Japan Geographic Data Center “Population Summary of the Basic Resident Registers” (2006, 2016)(Note) With change of the research period for the Basic Resident Registers,comparison is of the population as at the end of March 2006 in the 2006 version and as at January 1, 2016 in the 2016 version.

1258

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

The population in the Kansai region is either remaining flat or is trending downwards due tothe aging population along with decreasing birthrate but areas along Hankyu/Hanshin lines
are relatively popular and the population in these areas have 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

7-8. Hankyu/Hanshin Lines and Properties Held

1260

7-9. Overview of the Hankyu Umeda Area and the “Umeda 1-Chome 1-Banchi Project”

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

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. 140,000m2
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

7-10. HANKYU NISHINOMIYA GARDENS and Properties in 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 north62

7-11. Dew Hankyu Yamada and Properties in 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 north63

7-12. KOHYO Onohara Store and Properties in 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 group64

7-13. 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 KOHYO Onohara Store and (Tentative name) OASIS Town Itami Konoike (site), thenet operating revenues and operating expenses in the first fiscal year (second year in the case of (Tentative name) OASIS Town
Itami Konoike (site)) based on the discounted cash flow (DCF) method recorded in the appraisal report are used except for
depreciation, and figures based on Hankyu REIT’s accounting policy are used for depreciation. For public charges and taxes,
they are posted in expense from the first fiscal year and yields on an on-going basis are calculated. Furthermore, figures fortransferred assets (Namba-Hanshin Building and Richmond Hotel Hamamatsu) are calculated based on results for 20th and 21stfiscal periods.

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.

65

7-14. Portfolio PML and Anti-Seismic Measures
As of November 30, 2016
Classification

Retail-use
facilities

Office-use
facilities

Mixed-use(complex)facilities

Code

Name

PML

R1(K)

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

5.0%

R2(K)

Kitano Hankyu Building

10.1%

R3(K)

Dew Hankyu Yamada

4.7%

R4(K)

Takatsuki-Josai Shopping Center

5.9%

R5(K)

Nitori Ibaraki-Kita Store (site)―

R6

Kohnan Hiroshima Nakano-Higashi Store (site)―

R8

Hotel Gracery Tamachi

10.3%

R9(K）

LaLaport KOSHIEN (site) (Note)

6.4%

R11(K)

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

9.2%

R12(K)AEON MALL SAKAIKITAHANADA (site)―

R13(K)

MANDAI Toyonaka Honan Store (site)―

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

R15(K)

kotocross Hankyu Kawaramachi

2.6%

R16(K)

LIFE Shimoyamate Store (site)―

R17(K)

MANDAI Gojo Nishikoji Store (site)―

R18(K)KOHYO Onohara Store

5.3%

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

O1

Shiodome East Side Building

4.6%

O2(K)

Hankyu Corporation Head Office Building

3.7%

M1(K)

Ueroku F Building

3.2%

M2

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

2.7%

M3(K)

LAXA Osaka

3.7%

M5

Kita-Aoyama San cho-me Building

7.4%

Total

3.5%

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

66

7-15. Investment Unit Price
Relative Price*

Per Unit Trading Trends*(Relative value based on 100 of the closing price basis on Jan. 4, 2016 / closing price basis)(Oct. 26, 2005 — Dec. 30, 2016)

130.00120.00110.00High (closing price basis)

JPY 276,000(June 2007)

Low (closing price basis)

JPY 65,000(Dec. 2011)

100.00Jan. 4, 2016 — Dec. 30, 2016

90.00
80.00
70.00
'16/1

'16/3

'16/5

Hankyu REIT

'16/7

'16/9

TSE REIT Index'16/11High (closing price basis)

JPY 151,000(Oct. 27, 2016)

Low (closing price basis)

JPY 119,200(Jan. 21, 2016)

Nikkei Stock Average

Price on Dec. 30, 2016 (closing price basis)

Source: QUICK

Unit Price (closing price basis)*

JPY 146,100(Unit: JPY thousand)(Units)

280

7,000

240

Unite Price

6,000

Volume

200

5,000

160

4,000

120

3,000

'05/10/26

80

2,000

40

1,000

0
0
H17.5H17.11
May Nov. H18.5H18.11
May Nov. H19.5H19.11
May Nov. H20.5H20.11
May Nov. H21.5H21.11
May Nov. H22.5H22.11
May Nov. H23.5H23.11
May Nov. H24.5H24.11
May Nov. H25.5H25.11
May Nov. H26.5H26.11
May Nov. H27.5H27.11
May Nov. H28.5H28.11
May
May
2005

2005

2006

2006

2007

2007

2008

2008

2009

2009

2010

2010

2011

2011

2012

2012

2013

2013

2014

2014

2015

2015

2016

2016

Source: QUICK* Hankyu REIT implemented a five-for-one split of its investment units with December 1, 2014 as the effective date, and investment units started
transacting at the split price from November 26, 2014. Investment unit prices in the graphs and table retrospectively reflect the implementation of
the five-for-one split.

67

7-16. Analysis of Unitholder Attributes at End of 23rd Fiscal Period
Unitholder Composition
Number ofunitholders(persons)

Ownership by category

Top 10 Unitholders
Ratio toownership

Number ofinvestment
units held
(units)Ratio tonumber ofinvestment
units

Number ofunits held

Ownership

Japan Trustee Services Bank, Ltd. (Trust account)

158,00926.45%

Unitholder nameFinancial institutions(excluding trust banks)

93

0.75%

106,150

17.77%The Master Trust Bank of Japan, Ltd. (Trust account)

39,132

6.55%

Trust banks

9

0.07%

252,70842.29%

Trust & Custody Services Bank, Ltd.
(Securities investment trust account)

30,527

5.11%

Hankyu Corporation

21,0003.51%

12,02396.50%

136,992

22.93%The Nomura Trust and Banking Co., Ltd.
(Investment accounts)

18,985

3.18%

The Senshu Ikeda Bank, Ltd.

12,5002.09%

THE CHUKYO BANK, Ltd.

11,385

1.91%

The Hachijuni Bank, Ltd.

8,420

1.41%

Shikoku Railway Company

5,884

0.98%

CBNY DFA International Real Estate Securities Portfolio

5,803

0.97%

Total investment

311,645

52.16%

Number of outstanding units

597,500

100.00%Individuals, etc.
Other organizations

218

1.75%

54,706

9.16%

Foreign organizations,
etc.

116

0.93%

46,944

7.86%

Total

12,459100.00%597,500

100.00%

Ratio of Units by Unitholder Category
17.56%

19.83%

17.77%

40.93%

37.76%

42.29%

26.27%

26.23%

22.93%

9.26%
5.98%

9.42%

9.16%

9.03%

6.76%

7.86%

As of end of
15th period

As of end of
21st period

As of end of
22nd period

As of end of
23rd period

19.02%
33.83%

34.34%

47.27%
23.91%

33.96%

13.39%

26.31%
34.41%

22.27%

13.46%

9.29%

8.62%

7.78%

10.14%

As of end of
1st period

As of end of
5th period

Foreign organizations, etc.

23.20%
13.63%
11.31%
4.83%
As of end of
10th period
Other organizations

Individuals, etc.

Trust banks

Financial institutions(excluding trust banks)687-17. Organization of Hankyu REIT Asset Management, Inc.
(As of November 30, 2016)
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)

Yasuki Fukui

Director (part-time)

Toyoyuki Komori

Corporate Auditor(part-time)

Ken Kitano

Corporate Auditor(part-time)

Koji Yoshida

Executive officers

Investment Management
Committee
Compliance Department

Financial instruments trading(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

69

and Internal Audit Systems
7-18. Complianceof 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 ofthem have attended including Compliance officer
and two 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 ofthem including the chairman and vice chairman
have attended 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

7-19. Company Structure of Hankyu REIT
(As of November 30, 2016)(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.

71