Table of Contents

1. Executive Summary • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • 2
2. Summary of Kansai Area • • • • • • • • • • • • • • • • • • • • • • • • • • 13
3. External Growth Strategies • • • • • • • • • • • • • • • • • • • • • • • • • 19
4. Internal Growth Strategies • • • • • • • • • • • • • • • • • • • • • • • • • 26
5. Financial Strategies • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • 36
6. Overview of Financial Results for 22nd Fiscal Period • • • • • • • 39
7. APPENDIX • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • 45
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 asolicitation to sign contracts relating to transactions of other financial instruments. When undertaking any investment,
please do so based on your own judgment and responsibility as an investor.
Before purchasing investment securities of Hankyu REIT, please consult with a securities company that is a “Type I
Financial Instruments Business Operator.”
This material is an English translation of the original, which was issued in the Japanese language.
There are sections that display property names in abbreviated form.

11. Executive Summary2

1-1. Results for 22nd Fiscal Period(Issues indicated in the Financial Results Briefing Materials for 21st Fiscal Period)

External Growth

Issues・Expand Opportunities to Acquire
Properties through Joint Efforts with theSponsor Group, and Enhance Portfolio
Quality

Results for 22nd Fiscal Period• Achieved enhancement of portfolio quality and profitability through asset
replacement
ü Transferred two properties with low level of contribution to distributions(Namba at 22nd and Hamamatsu at 21st among 23 properties)
ü Acquired a community-based retail facility developed by its sponsor groupcompany, Hanshin Electric Railway Co., Ltd.
(July 2016, 23rd fiscal period)• Promoted expansion of property acquisition methods and property information
sourcing channels

Internal Growth• Reorganized Investment Planning Office as the Investment Planning Department inan aim to further enforce portfolio management• Maintained high level of portfolio occupancy rate
(end of 22nd fiscal period: 98.8%)• Made progress in leasing activities for Sphere Tower Tennozu
・Maintain and Improve High Level ofPortfolio Occupancy Rate

occupancy rate: 39.0% ⇒ 46.9%(including tenants scheduled to occupy in August 2016,
23rd fiscal period)• Brought in a new tenant which led to revitalization of the facility at first and second
floors of kotocross Hankyu Kawaramachi

Financial
Strategies• Achieved upward rent revisions with some tenants at Shiodome East Side Building

・Lowered LTV through appraisal value rise, etc.
(43.2% ⇒ 41.9% (end of 22nd fiscal period))・Continue Stable Financial Operations andImprove Distributions

・Continued stable financial operations by striking a balance between reduction ofdebt financing costs, and extension of borrowing periods and diversification of debt
repayment dates• Distribution for 22nd fiscal period significantly increased from the initial forecast due
to asset transfer, etc.

3

1-2. Financial Highlights for 22nd Fiscal Period(Main factors for increase/decrease)（Unit:JPY mn)
Initial Forecast for
Revised Forecast for22nd Fiscal Period (A) 22nd Fiscal Period (B)(as of Jan. 22, 2016) (as of Apr. 13, 2016)

Item

Results for 22nd Fiscal
Period (C)(Dec. 1, 2015 toMay. 31, 2016)

Change(C)-(A)

Operation period(days)

183

183

183

—

Operatingrevenues

4,843

5,527

5,527

683

Operatingincome

1,948

2,038

2,053

104

(1) Income on sale of Hamamatsu JPY +731 mn

Change(C)-(B)

Decrease in rent income, etc.
(Namba and Hamamatsu)—

Decrease in utilities expense income
JPY -13 mn(1)0Increase in income from HEP Ferris wheel
JPY +4 mn

(2)

14

(3)

(2) Loss on sale of Namba
Ordinary income

1,555

1,644

1,659

104

14

Net income

1,553

1,642

1,657

104

14

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

Distribution perunit (JPY)

2,600

2,750

2,775

175

25

FFO per unit
(JPY)

4,188

4,138

4,161

-27

22

597,500

Net assets per unit

JPY 122,706

Net assets per unit
after reflecting unrealized income/loss

JPY 143,850

597,500—

JPY -57 mn—

JPY -633 mn

Decrease in depreciation(Namba and Hamamatsu)

JPY +17 mn

Decrease in tax and public dues
(Namba and Hamamatsu)

JPY +7 mn

Decrease in utilities expense

JPY +21 mn

Increase in repair expense

JPY -13 mn(3) Decrease in PM/BM costs

JPY +3 mn

Decrease in depreciation

JPY +5 mn

Results for 22nd fiscal period (ended May 2016)
Distribution per unit

JPY 2,775█ Increased by 6.7% from the initial forecast due to net gain on transfer of Nambaand Hamamatsu, etc.

4

1-3. Distribution Forecast for 23rd Fiscal Period（Unit:JPY mn)
Results for 22nd Fiscal Period (1)(Dec. 1, 2015 to May 31, 2016)

Forcast for 23rd Fiscal Period (2)(Jun. 1, 2016 to Nov. 30, 2016)

Operation period (days)

183

183

—

183

—

Operating revenues

5,527

4,715

-811

4,875

-160

Operating income

2,053

1,954

-99

1,961

-7

Ordinary income

1,659

1,567

-92

1,566

0

Net income

1,657

1,565

-92

1,565

0

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

597,500—

597,500—

Distribution per unit (JPY)

2,775

2,620

-155

2,620

—

FFO per unit (JPY)

4,161

4,043

-118

4,242

-198

Item

Change(2)-(1)Results for 21st Fiscal Period(Jun. 1, 2015 to Nov. 30, 2015)

Change(2)-(3)[Main factors for increase/decrease from 22nd fiscal period]
lTransferred Namba and Hamamatsu• Decrease in net gain on transfer• Decrease in lease operating income-98 (Namba +633, Hamamatsu -731)-12 (Namba -8, Hamamatsu -3)

lAcquired Onohara• Increase in lease operating income+33

lExisting properties• Increase in rent income of Tennozu• Increase in repair expense+11-14 (Yamada -36, LAXA -32, Tennozu -10, Takatsuki +37, etc.)

Forecast for 23rd fiscal period (ending November 2016)
Distribution per unit

JPY 2,620█ Aim to be poised for stable distributions of JPY 2,600 level[Main preconditions]•There will be no transfer of portfolio properties from the presently held 22 properties•There will be no additional issuance of investment units to the present 597,500 units until the end of the period51-4. Overview of Asset Replacement
Enhanced portfolio quality and profitability through asset replacement and secured growth
capacity through utilizing transfer proceeds
Transferred 2 properties with lowlevel of contribution to
distributions and NOI yield after
depreciation

Transfer

Assetreplacement

Acquisition(Namba at 22nd and Hamamatsu at 21st among 23
properties)

Acquired a community-based retailfacility developed by its sponsor
group company, Hanshin Electric
Railway

Newly acquired asset

Transferred assets
Points of the measure●Enhance profitability• Average portfolio yield will improve by
replacing low-yield property with high-yieldproperty●Disposal of the property with unrealized loss
• Achieve exiting property with unrealized loss
without damaging distributions by utilizing
property-acquiring market environment
Namba-Hanshin Building

KOHYO Onohara Store
Acquisition price

JPY 1,631 mn

Appraisal value

JPY 1,640 mn

Richmond Hotel Hamamatsu

Transfer price

JPY 5,430 mn

Book value

JPY 5,287 mn

Appraisal value

JPY 4,760 mn

Unrealized income/loss

JPY -527 mn

NOI yield

3.8%

NOI yield after depreciation

0.6%

Acquisition price(at the time of acquisition)

JPY 6,410 mn*Total figures of the two properties are indicated●Joint efforts with the sponsor• Acquisition of properties developed by thesponsor group

NOI yield

5.3%

NOI yield after depreciation

4.4%• First direct acquisition from Hanshin Electric
Railway●Cover decrease in profit due to transfer• Decrease in distributions due to transferredassets and increase in distributions due to
newly acquired asset are at the same level+
Utilize remaining transfer proceeds
for acquisition of new properties in
the future(Note) Details of the calculation method for “NOI yield,” “NOI yield after depreciation” and “Unrealized income/loss” are presented on page 62.

61-5. 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)

After acquiring
the new asset(As of Jul. 1, 2016 )Average NOI yield(Note)

4.8%

4.8%

4.8%

4.8%

4.9%

Average NOI yield
after depreciation(Note)

3.4%

3.4%

3.4%

3.5%

3.6%

Unrealized income/loss(Note)

JPY 1.6 bn

JPY 4.7 bn

JPY 8.4 bn

JPY 12.6 bn

JPY 12.5 bn● Stability of Financial Foundation
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)

LTV(Note)

45.4%

44.4%

43.2%

41.9%

Interest-bearing
debt ratio

42.9%

42.9%

43.0%

43.0%

Averagedebt financing costs

1.08%

1.07%

1.06%

1.04%

3.6 years

5.1 years

4.8 years

4.4 years(including investment corporation bonds)

Averageremaining years on
long-term loans payable andinvestment corporation bonds(Note) Details of the calculation method for “Average NOI yield,” “Average NOI yield after depreciation,” “Unrealized income/loss” and “LTV”
are presented on page 62.

71-6. Overview of the Newly Acquired Asset (KOHYO Onohara Store)
Property Overview
Property name

KOHYO Onohara Store

Location

Onoharahigashi, Minoh City, Osaka Prefecture

Site area

4,479.14 m²

Leased area

3,310.31 m²

Month/Year opened

May 2016

Property Featuresl Onohara-Toyonaka Road on which the property stands along is acommunity road that allows east-west mobility through the new town andprovides 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 tothe 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 areputation 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 Communications81-7. 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

Minoh Onohara
ResidenceGein-Minami residential district
Osaka Monorail's
Saito Line

Onohara residential district

Nitori Ibaraki-Kita Store (site)

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 group91-8. Internal Growth Initiatives (Sphere Tower Tennozu)
Achieved Conclusion of Three Lease
Agreements for Office Floors• Tenant leasing progressed from the end of previous period,
which improved occupancy rate (39.0%→46.9%)(including tenants scheduled to occupy in August 2016, 23rd
fiscal period)• As rents are on an upward trend due to decreased vacancy
rate in the Tokyo metropolitan area, areas that can provide
large space all at once at undervalued rent are limited to prettymuch just the bay area
• In line with decreasing vacancy rate in the Tokyo metropolitanarea, property viewings are increasing and maintained highlevel during the 22nd fiscal period as wellTrends of Vacancy Rate in the Tokyo Metropolitan Area
and Property Viewings(relative value)
(%)
200

6.0

Property viewings(relative value)(left)

150

5.0

100

4.0
Vacancy ratein the Tokyo metropolitan area(right)50

19th FP

第19期
Nov.
2014
H26.11(Graph)20th FP

第20期
May
2015
H27.5

21st FP

第21期
Nov.
2015
H27.11

22nd FP

3.0

第22期
May
2016
H28.5

Vacancy rate in the Tokyo metropolitan area:
vacancy rate of Tokyo business districts in Miki Shoji Co., Ltd. “Office Data”
Property viewings:
relative value per fiscal period based on property viewings in the 19th fiscal
period (100)Gained Reputation for Building Features andLocation• Access to Haneda Airport and open ceiling (maisonette) of
exclusive-use portion gained reputation from many tenantcandidates• Held open property viewings in March 2016 jointly with otheroffice buildings in the Tennozu area and showcased strengthsof the area
• Aim for further improvement in occupancy rate anddistributions by continuously utilizing the environment where
vacancy rate in the Tokyo metropolitan area is decreasing andpromoting finely-tuned leasing activities, such as showcasingbuilding features, location, etc.

Example of maisonette floor utilization of exclusive-use portion(illustrative purposes only)
510

1-9. Initiatives toward Strengthening Financial Foundation
Continued stable financial operations by striking a balance between reduction of debt financing costs,
and extension of borrowing periods and diversification of debt repayment dates
Overview of Refinancing

Diversification of Debt Repayment Dates
10.0

Date ofrefinance

Amount of debt
financing

Borrowing
periodVariable/Fixed

January 21,
2016

JPY 1.0 bn

9 years

Variable

8.0

6.0

Long-Term Debt Ratio and Fixed Debt Ratio（JPY bn）

1.0

4.0
7.0

7.0

6.0

6.0

5.5

5.0

2.0

5.0

5.2

4.0

Long-term debt ratio

Fixed debt ratio

100%

90.0%

4.0

2.0

Overview of Issued Corporate Bonds

2.0

1.2

1.0

0.0
23rd 24th 25th 26th 27th 28th 29th 30th 31st 32nd 33rd 34th 35th 36th 37th 38th 39th 40th
period period period period period period period period period period period period period period period period period period

Trends of Debt Financing Costs and Average Remaining Years
1.50%

6.0 years
5.1 years
4.8 years

1.40%

1.33%

4.4 years

1.34%

1.30%

5.0 years
4.0 years

Issue amountJPY 6.0 bn

Period5 years

Interest rate

1.27% per annum

Issue dateNovember 11, 2011

Redemption dateNovember 11, 2016
A+

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

1.23%
3.6 years

1.20%
2.0 years

3.0 years

2.2 years
2.7 years

1.10%

1.08%

1.07%

1.06%

1.04%

1.00%

2.0 years
1.0 year

As of end of
16th period

As of end of
17th period

As of end of
18th period

As of end of
19th period

As of end of
20th period

As of end of
21st period

Issuer rating

As of end of
22nd period

Avg. debt financing cost (including investment corporation bonds)
Avg. remaining years on long-term loans payable and investment corporation bonds

Rating agency

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

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

A+ (Stable)111-10. Objectives for 23rd and Subsequent Fiscal Periods
Expand Opportunities to Acquire Properties through Joint Efforts with the Sponsor
Group, and Enforce Portfolio Management

External
Growth• Utilize real estate networks and warehousing functions of the sponsor group• Consider acquisition of properties utilizing the real estate development capabilities
coming from the sponsor group in an aim to acquire properties at appropriate prices• Progress further enforcement of portfolio management with the Investment Planning Department at the core

Maintain and Improve High Level of Portfolio Occupancy Rate

Internal
Growth• For Sphere Tower Tennozu, promote leasing activities based on location and building features backed by anenvironment where vacancy rate in the Tokyo metropolitan area is decreasing, and lead to further improvement in
occupancy rate and distributions• Aim to maintain and improve rent through measures based on the conditions and competitiveness of each property
while establishing favorable relationship with tenantsContinue Stable Financial Operations and Improve Distributions

Financial
Strategies• Realize equity financing that enables both distributions to be improved and LTV to be maintained• In refinancing investment corporation bonds which will be due for redemption in November 2016, aim to further
reduce fund procurement costs, extend periods and diversify maturity dates• Make progress in considering diversifying fund procurement methods
while continuing stable financial operations through cooperation with financial institutions12

2. Summary of Kansai Area13

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 in May 2016 is the same level as that of Tokyo’s business areas in March 2015 (5.30%))• 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
Change in Vacancy Rate of Osaka’s Major Business Areas

Vacancy Rate As of May 2016

14.0%
Umeda area

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

5.27%

6.86%

7.94%

10.0%

Umeda area
梅田地区

8.0%

淀屋橋・本町地区
Hommachi area

6.0%

Shinsaibashi and心斎橋・難波地区

5.00%

Yodoyabashi andNamba area

4.0%
Jan.
Apr.
July
Oct.
Jan.
Apr.
July
Oct.
Jan.
Apr.
July
Oct.
Jan.
Apr.
July
Oct.
Jan.
Apr.
H24.1
H24.4
H24.7
H24.10
H25.1
H25.4
H25.7
H25.10
H26.1
H26.4
H26.7
H26.10
H27.1
H27.4
H27.7
H27.10H.28.1
H.28.4
2012
2012
2012
2012
2013
2013
2013
2013
2014
2014
2014
2014
2015
2015
2015
2015
2016 2016

新大阪地区
Shin-Osaka area

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

Change in Floor Area of Major New Rental Office Supply in Osaka(thousands(万㎡)m²)

Approx. 600,000m² newly supplied (2010 — 2015)

New supply in the future are limited

20
200

Nakanoshima
Festival Tower West
Approx. 70,000m²

15
150
10
100

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

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

5
50
00

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) (June 2016)14

2-2. Status of Retail Facilities in Osaka
Sales of Department Stores, Supermarkets, Etc. Going Strong• 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• Although increase in inbound tourists is continuing, average purchase unit price is decreasing due to increase in repeating tourists, Chinese tariff
hike and other factors, and the decreasing trend in duty-free sales of department stores is currently being visible• Sales of department stores in Osaka (2015) increased by 1.6% over the previous year
• Duty-free sales of department stores in the Kansai region (fiscal 2015) increased, approximately 2.2 times over the previous fiscal year (Note 1)(On the other hand, April and May 2016 marked year-on-year reduction for the first time since the survey started in April 2013)• Sales of supermarkets in Osaka City (fiscal 2015) surpassed nationwide and Tokyo’s increase and maintain strong sales
Same-store sales are also strong while supermarkets are yet being opened one after another at the central Osaka⇒ Same-store sales: 4.1% increase (Tokyo: 3.3% increase) (compared to previous fiscal year) (Note 2)

Sales of Department Stores by District (change over the previous year)
6.0%
大阪
Osaka
4.0%

Sales of Supermarkets by District(change over the same month of the previous year)
25.0%
20.0%

東京
Tokyo

3.4%

Last minute demand due tothe consumption tax rate hike

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

15.0%

Nationwide
全国

2.0%

1.6%

0.0%

10.0%
5.0%

4.0%

0.0%

-0.0%

-0.2%

-0.1%

-2.0%
-5.0%

-4.0%
2011
H23

2012
H24

2013
H25

2014
H26

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

Source: Japan Department Stores Association(Note 1) Source: Bank of Japan Osaka Branch “Department Store Duty-Free Sales (Kansai Region)”(Note 2) Source: Ministry of Economy, Trade and Industry “Current Survey of Commerce”

Source: Ministry of Economy, Trade and Industry “Current Survey of Commerce”

15

2-3. Status of Inbound Tourists in the Kansai region
Foreign tourists to Japan who visit Kansai is continuously increasing
Status of International Flight Passengers
at Kansai International Airportu At Kansai International Airport, number of foreigners using international
flights reached 11 million in fiscal 2015, marking the new record high(million people)u Number of foreigners from nearby Asian countries (China, South Korea,
1,200
12.0
Taiwan and Hong Kong) using LCC is strong(Approximately 30% of the international flights are LCCs which increased by 1,000
10.0
approximately 80% over the previous fiscal year) (Note 1)
800
8.0
u Visit rate of foreigners visiting Japan (for tourism/leisure) to Osaka
Prefecture is significantly increasing, reaching a level close to Tokyo
600
6.0
Prefecture (Note 2)400
4.0
Visit rate of foreigners visiting Japan by prefecture (for tourism/leisure)
2013

2014

2015

Osaka Prefecture

30.2%

34.1%

41.9%

Tokyo Prefecture

43.2%

48.5%

48.2%

11.0 million
peopleNumber of Japanese passengers

6.1 million
peopleNumber of foreign passengers

200
2.0
0.0
0
1994 1996
1998 H12
2000 H14
2002 H16
2004 H18
2006 H20
2008 H22
2010 H24
2012 H26
2014 2015
H6
H8 H10(Fiscal year)

Source: New Kansai International Airport Company, Ltd.

(Note 1) Source: New Kansai International Airport Company, Ltd.
(Note 2) Source: “Consumption Trend Survey for Foreigners Visiting Japan” (Japan Tourism Agency)

Consumption target shifted from “things” to “experience”
u Main target of consumption shifted to daily necessities fromexpensive goods due to increase in repeating tourists,
Chinese tariff hike, increase in tourists other than wealthyclass and other factors

Change in average expenditure per purchaser by product(Relative value based on January to March 2014 survey (100))160

u Consumption targets have diversified and amount paid toentertainment services is on an increasing trend

140

u Business hotels in Kansai remain high occupancy rate anddemand for accommodation facilities continues

120

飲食
Food and drink

1Osaka Prefecture (87.8%)

娯楽
Entertainment
service
サー
ビス
買物
Shopping

2

Tokyo Prefecture (85.6%)

3

Kyoto Prefecture (84.5%)

4

Hyogo Prefecture (82.5%)

5

Kanagawa Prefecture (81.1%)

100• Increase in repeating tourists• Shift from group tour toindividual travel• Consumption targets havediversified

Aim to improve shopping
convenience in owned properties
by promoting environmental
development such as introducing
Wi-Fi and making UnionPay
cards available

80
2014
Ｈ26

Ranking of Guest Room Occupancy
Rate in Business Hotels(fiscal 2015)

2015
Ｈ27

2016
Ｈ28
(year)

Source: “Consumption Trend Survey for Foreigners Visiting
Japan” (Japan Tourism Agency)

Source:Calculated by Hankyu REIT AssetManagement, Inc. based on“Accommodation Survey”(Japan Tourism Agency)16

2-4. Changes and Current Status of Central Osaka
Metabolism 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.

2

Nishi-Umeda Sta.
Fukushima Sta.

Higobashi Sta.

For leased office area, Umeda area
surpassed Yodoyabashi and Hommachi area
Kitahama Sta.

1

3

Hommachi Sta.
Chuo-Odori
Boulevard

140(ten thousand m²)
260
260

130

121

110

Shinsaibashi Sta.

100

— Umeda area
— Yodoyabashi and Hommachi area180
180
2003 H172005 H19
2007 H21
2009 H23
2011 H25
2013 H272015
H15(year)

梅田地区
Source: Miki Shoji
Co., Ltd. “Office淀屋橋・本町地区
Data”
Uehommachi Sta.

135

240
240

200
200

Nankai Namba Sta.

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

120

220
220

Namba Sta.
(Hanshin, Kintetsu and subway)

Change in population of Osaka City
(relative value based on 2005 (100))

Change in leased office area of Umeda area andYodoyabashi and Hommachi area
Umeda area surpassed with the
opening of GRAND FRONT OSAKAJR Namba Sta.

3

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

Population of central Osaka has increased

Yodoyabashi Sta.

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

90
2005
H17

2007
H19

2009
H21

2011
H23

2013
H25

2015
H27

(year)

Source: Japan Geographic Data Center “Population Summaryof the Basic Resident Registers”

Openings of supermarkets in central Osaka
has accelerated

17

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

Aerial photograph takenfrom southeast side facing northwest(shot in December 2015)

ＮＵ chayamachi
ＮＵ chayamachi Plus

Hotel New
Hankyu Osaka

LAXA OSAKAHERBISOSAKAGRAND FRONTOSAKA

Kita-Hankyu
Bldg.

HERBIS ENT

Kitano Hankyu
Bldg.

HANKYUTERMINAL Bldg.

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

Chayamachi
Applause

HankyuCorporation
Head Office
Bldg.

Hankyu GrandBldg.

ＪＲ Osaka Sta.

Hankyu Umeda Sta.
Hankyu-Sanbangai
Umeda Center Bldg.

OS Bldg.
Shin Hankyu Bldg.
(under construction)

HEP Five

Umeda Hankyu Bldg.
(Hankyu Department Store)

Higashi Hankyu Bldg.
HEP Navio■Property owned by Hankyu REIT

■Major property owned and developed by Hankyu Hanshin Holdings Group18

3. External Growth Strategies19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 22nd fiscal period)

Other 1.3%

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

Urbanretail facilities
16.3%

Office26.5%

Total acquisition price:

Other region
1.6%
Tokyo
25.8%

Retail-use
zone

JPY 132.89 bn

72.3%
Total number of properties：
21 properties

Hotel
8.3%

Community-based
retail facilities
47.7%

Umeda area
18.4%

Other
Kansai region
8.4%

KansairegionAreas along
Hankyu andHanshin lines
45.8%

72.6%

20

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 the heatedcompetition for property acquisition. Will keep obtaining quality property information utilizing the comprehensive strengths of the sponsor
group through joint efforts, such as setting up a weekly forum for property information sharing and consideration with the sponsor group.
In addition, will keep aiming for further expansion of also the asset management company’s own property information sourcing channels.

Trends of Information Leads(leads)Information
情報件数 leads checked

Information leads considered
検討件数

1000
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
第1期
第2期
第3期
第4期
第5期
第6期
第7期
第8期
第9期
第10期
第11期
第12期
第13期
第14期
第15期
第16期
第17期
第18期
第19期
第20期
第21期
第22期
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• HEP Five
• Kitano Hankyu Building• Dew Hankyu Yamada• Nitori Ibaraki-Kita Store (site)• LaLaport KOSHIEN (site)• LAXA Osaka• HANKYU NISHINOMIYAGARDENS• kotocross Hankyu
Kawaramachi

Property developedby sponsor group• Shiodome East Side Building• Hotel Gracery Tamachi• KOHYO Onohara StoreOn-balance bridge• MANDAI Toyonaka Honan
Store (site)• DAILY QANAT Izumiya
Horikawa Marutamachi Store(site)• MANDAI Gojo Nishikoji Store(site)• LIFE Shimoyamate Store (site)

SPC bridge• Hankyu Corporation Head
Office Building• Ueroku F Building• AEON MALL
SAKAIKITAHANADA (site)

Direct acquisition
from outside• Takatsuki-Josai Shopping
Center• Kohnan Hiroshima NakanoHigashi Store (site)• Sphere Tower Tennozu• Kita-Aoyama San cho-me
Building

21

3-3. Information Leads and Leads Considered (22nd Fiscal Period)* Outer circle: Information leads

Inner circle: Leads actually considered

City center

Use

Area
Urban vicinity

Suburban

1

OfficeMixed(Complex)

Retail

36

1

63

2

22
1

4

3

17

48

3

18

38

1

6

80
2

7

24
2

Hotel

1

7

12

1

Other*

11

3

1

44

0

1

1

5

0

0

0

18

15

8

0

3

0

5

7

10

0

1

4

46

11

0

2

6

1

2

10

8

36

* 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.

22

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

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

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

Primary investment target zone23

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 areas24

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.

25

4. Internal Growth Strategies26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 REIT

27

4-2. Occupancy Rate for Individual Properties (Occupancy by End-Tenants)
Stable Occupancy Rates Maintained Since 1st Fiscal Period
(%)
100
99.5

100.0

99.3

95

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

90
85
80

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

Total portfolio occupancy rate as of the end of May 2016 (end of 22nd fiscal period) was 98.8%(Total portfolio occupancy rate forecast for the end of August 2016 is 98.9%)(%)
100
Total portfolio
90

HEP

80

Kitano Hankyu
Hankyu Yamada

70

Tennozu
Projected to be 46.9%

60

Ueroku F Bldg.
Tennozu

50

Shiodome

40

Namba-Hanshin
Kita-Aoyama

30

End ofDec. 2015

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(Note) Figures express the value at the end of each month.

• The graph excludes the 15 properties (Takatsuki-Josai, Nitori Ibaraki, Kohnan Hiroshima, Tamachi, LaLaport KOSHIEN, LAXA Osaka,
NISHINOMIYA GARDENS, Hankyu Corporation Head Office, SAKAIKITAHANADA, MANDAI Toyonaka Honan, Izumiya Horikawa
Marutamachi, kotocross, LIFE Shimoyamate and MANDAI Gojo Nishikoji) leased to single tenants (occupancy rates of 100%).
28• Forecasted figures are indicated for the end of June 2016 and after.

4-3. Topics on Properties Held
Kita-Aoyama San cho-me Building
Realized attraction of succeeding tenant at an
early point• Tenant for the 3F departed on May 15, 2016, but
realized attraction of a tenant at an early point(Occupied on June 1, 2016, 23rd fiscal period)• Realized leasing at a rent level above the market
rent in surrounding areas (same level as theprior tenant) partly due to high evaluation on thefacility’s landscape which received an award for
Minato City local green city development in
October 2015

Shiodome East Side Building
Achieved upward rent revisions• Achieved upward rent revisions for some tenants
by utilizing the market environment in the Tokyo
metropolitan area where vacancy rate isdecreasing• Promoted improving satisfaction level bycontinuously conducting tenant relations withexisting tenants.

kotocross Hankyu Kawaramachi
Attracted a new tenant• Attracted new tenants for 1F and 2F that further
revitalize the facility by conducting leasing
activities focused on inbound tourist• The property’s appeal improved as thesurroundings’ navigability heightened by thecompletion of sidewalk width expansion work for
Shijo-dori street conducted by Kyoto City
kotocross Hankyu Kawaramachi

29

Systems and Present Conditions of 21 Portfolio Properties (1)4-4. Rent(End of 22nd 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.

Dew Hankyu Yamada
NSC (Note 1)

Long-term, fixed(partly overage)

Implemented tenant replacement for 2F and maintained 100% occupancy rate throughout theperiod. 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 andkid-friendly events.

Kitano Hankyu Building
Specialty shop building(urban SC)

Fixed(partly overage)

Period-end occupancy rate was 98.3%, improved by 0.3pt from the end of the previous period (21stfiscal period).

Tenants’ sales are going strong with sales in fiscal 2015 increased for the seventh consecutive year
since opening in 2008 at JPY 79.5 billion.

Along with continuously advancing leasing activities for tenants that will have synergistic effects
with existing tenants and for tenants that will serve to revitalize the facility, continuing to focus
efforts on improving attractiveness to customers, such as holding events in conjunction with local
events, etc.

Count down event at HEP FIVE

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.

30

Systems and Present Conditions of 21 Portfolio Properties
4-4. Rent(End of 22nd Fiscal Period)(2)

Properties Mainly Using the Sales-based Overage-rent System
Property nameMain rent system

HEP Five
Specialty shop building(urban SC)

Overage(fixed + variable)

Present conditions
From April 2016, started integration with common points (S points) that can be used at sponsor
group’s facilities. Continuously aim to increase sales and attract more people by retaining
customers through group facilities acting as one, such as jointly holding events.
Increase in inbound tourist users increased the number of Ferris wheel riders by 60% year-on-year
and continues to be strong.

Properties Using the Fixed-rent System
Property nameMain rent system

Present conditions

Kita-Aoyama San chome Building
Urban retail facility

Fixed

Realized attraction of a succeeding tenant for 3F, which was vacated on May 15, 2016, at an earlypoint and the occupancy rate will be 100% from June.

kotocross Hankyu
Kawaramachi
Specialty shop building(urban SC)

Long-term, fixed

Takatsuki-Josai
Shopping Center
NSC (Note 1)

Long-term, fixed

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.
Rent income is stable based on a fixed-type master lease method (Note 2) with Hankyu Corporation.
Attracted tenants for 1F and 2F that further revitalize the facility by conducting leasing activities
focused on inbound tourist.
The property’s appeal improved as the surroundings’ navigability heightened by the completion of
sidewalk width expansion work for Shijo-dori street conducted by Kyoto City.
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.

(Note 1) 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.

31

Systems and Present Conditions of 21 Portfolio Properties
4-4. Rent(End of 22nd Fiscal Period)(3)

Properties Mainly Using the Fixed-rent System
Property nameMain rent system

Ueroku F Building
OfficeFixedSphere Tower Tennozu
OfficeFixed

Present conditions
Period-end occupancy rate is being maintained at 100%.
Continue striving to strengthen tenant relations through cooperation with the property managementcompany.
Tenant leasing has advanced and occupancy rate of August 2016 is expected to be 46.9%(including tenants scheduled to occupy in August 2016, 23rd fiscal period).
Continuously promote leasing activities based on location and building features backed by anenvironment where vacancy rate in the Tokyo metropolitan area is decreasing, and lead to early
improvement in occupancy rate and distributions.

Shiodome East Side
Building
OfficeFixed

Achieved upward rent revisions for some tenants by utilizing the market environment of Tokyo
metropolitan area where vacancy rate is decreasing.

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.

Aim to improve satisfaction level by continuously conducting tenant relations with existing tenants.

Fujita Kanko Inc., the lessee, filed an action for reduction in the amount of rent against Hankyu
REIT in October 2014, but Hankyu REIT has filed a counterclaim in July 2015 for increase in theamount of rent.
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 of Hotel Hanshin, which is under a sublease contract, remains at a highlevel and guest room unit price is also increasing.

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.

(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.

32

Systems and Present Conditions of 21 Portfolio Properties (4)4-4. Rent(End of 22nd Fiscal Period)
Properties mainly using the fixed-rent system
Property nameMain rent system

Present conditions

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.

LaLaport KOSHIEN(site)RSC (Note)

Long-term, fixed

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.
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 renovate into barrier-freespace in March 2016, convenience improved for visitors who use the railways.

AEON MALL
SAKAIKITAHANADA(site)RSC (Note)

Long-term, fixed

Rent income is stable based on a contract for fixed-term land lease for the shopping center landwith land leasehold right, which occupies most of the site. Boasts favorable market potential, andhouses AEON and Hankyu Department Store as anchor tenants and about 160 shops forming amall of specialty shops.
Impact of “AEON MALL SAKAITEPPOCHO” opened in the surrounding area (in March 2016) isestimated to be limited, but will keep a watchful eye.

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.

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. It is becoming more well-known among the neighboring areas along with its efforts,
including personal delivery service, being highly evaluated.

Opened in December 2013. The store is becoming more well-known and sales are steadily
increasing. With the increase in inbound tourists, tax-free shopping has been made available.

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

33

4-5. Appraisal Value

Unrealized income became JPY 12.63 bn due to transferring properties withunrealized loss and decrease in cap rate (appraisal value increased by 2.2%)
Change in Unrealized Income/Loss（JPY mn）

・Asset replacement
Acquired 2 properties,
transferred 2 properties

JPY 12,633 mn
mn

・Asset acquisition
Acquired 3 properties

・Asset acquisition
Acquired 4 properties

・Asset transfer
Transferred 2 properties

16,000

5.2%

8,000

5.0%

0

4.8%

-8,000

4.6%-16,000

13th FP
第13期
Nov. 2011

H23.1114th FP
第14期
May 2012

H24.5

15th FP
第15期
Nov. 2012

H24.11

16th FP
第16期
May 2013

H25.5

新規取得物件
Newly acquired

既存物件
Existing

Properties(Note 1)properties

17th FP
第17期
Nov. 2013

H25.1118th FP
第18期
May 2014

H26.5

合計
Total

19th FP
第19期
Nov. 2014

H26.1120th FP
第20期
May 2015

H27.5

21st FP
第21期
Nov. 2015

H27.11

22nd FP
第22期
May 2016

4.4%

H28.5

CAPレート（加重平均）(右軸）
Weighted average cap rate (right axis)(Note 2)

(Note 1) Properties acquired in 16th fiscal period and after(Note 2) Cap rates are the weighted average based on appraisal values

34

4-6. List of Appraisal Values（Unit:JPY mn)
Acquisition
price(1) End of previous period(21st fiscal period-end)(2) End of current period(22nd fiscal period-end)

Change((2)-(1))(Note 2)

Change((2)-(1)/(1))(Note 2)

(3) Valuerecorded on thebalance sheet at
end of current
periodUnrealized
income/loss(2)-(3)

Value to bookRatio(2)/(3)

Appraisal value

Cap rate (Note 1)

Appraisal value

Cap rate (Note 1)

6,468

8,372

3.9%

8,638

3.8%

266

3.2%

5,627

3,010

153.5%

Nitori Ibaraki-Kita Store (Site)

7,740
6,930
8,600
1,318

6,630
8,160
7,990
1,620

4.9%
4.8%
5.3%
5.1%

6,760
8,520
8,150
1,640

4.8%
4.7%
5.2%
5.0%

130
360
160
20

2.0%
4.4%
2.0%
1.2%

7,663
5,646
7,207
1,340

-903
2,873
942
299

88.2%
150.9%
113.1%
122.3%

Kohnan Hiroshima Nakano-Higashi Store(Site)

2,175

1,890

5.9%

1,890

5.8%

0

0.0%

2,280

-390

82.9%

Hotel Gracery Tamachi

4,160
7,350
2,100

4,240
7,320
2,160

4.7%
4.6%
5.7%

4,340
7,500
—

4.6%
4.5%
—

100
180
—

2.4%
2.5%
—

3,746
7,748
—

593
-248
—

115.8%
96.8%—

18,30023,044

4.6%

23,576

4.5%

532

2.3%

17,7355,840

132.9%

MANDAI Toyonaka Honan store (site)

8,100
1,870

9,210
2,200

4.6%
4.7%

9,410
2,240

4.5%
4.6%

200
40

2.2%
1.8%

8,189
1,889

1,220
350

114.9%
118.6%DAILY QANAT Izumiya Horikawa
Marutamachi Store (site)

3,100

3,350

4.6%

3,410

4.5%

60

1.8%

3,127

282

109.0%

kotocross Hankyu Kawaramachi

2,770
1,421
4,182
19,025
10,200
2,980

3,150
1,540
4,470
13,60011,400
2,740

4.7%
4.6%
4.7%
4.3%
4.4%
5.5%

3,180
1,570
4,550
13,90011,600
2,790

4.6%
4.5%
4.6%
4.2%
4.3%
5.4%

30
30
80
300
200
50

1.0%
1.9%
1.8%
2.2%
1.8%
1.8%

2,728
1,434
4,213
17,498
9,813
2,653

451
135
336
-3,5981,786
136

116.5%
109.5%
108.0%
79.4%
118.2%
105.1%

9,405

6,732

4.7%

6,765

4.7%

33

0.5%

8,615

-1,850

78.5%

5,122
4,310
1,680
139,307

5,380
2,600
1,840
139,638

5.1%
5.0%
3.8%
4.7%

5,500
—
1,910
137,839

5.0%
—
3.7%
4.5%

120
—
70
2,961

2.2%
—
3.8%
2.2%

4,306
—
1,736
125,205

1,193
—
173
12,633127.7%—
110.0%
110.1%HEP Five ( 14% of the quasi co-ownershipof the trust beneficiary interests)
Kitano Hankyu Building
Dew Hankyu Yamada
Takatsuki-Josai Shopping Center

LaLaport KOSHIEN (site)
Richmond Hotel Hamamatsu
HANKYU NISHINOMIYA GARDENS(28% of the quasi co-ownership of the trust
beneficiary interests)
AEON MALL SAKAIKITAHANADA (site)

LIFE Shimoyamate Store (site)
MANDAI GOJO Nishikoji Store (site)
Shiodome East Side Bldg.
Hankyu Corporation Head Office Building
Ueroku F Building
Sphere Tower Tennozu (33% of the quasi
co-ownership of the trust beneficiaryinterests)
LAXA Osaka
Namba-Hanshin Building
Kita-Aoyama San cho-me Building
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) are allocated a discount rate using the DCF method.) and the total is the weighted average cap rate based on appraisal values.
(Note 2) For total, figures excluding those for Namba-Hanshin Building and Richmond Hotel Hamamatsu are indicated.

35

5. Financial Strategies36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)Interest-bearing debt

As of end of 21st period

As of end of 22nd period

JPY 61.9 bn

JPY 61.9 bn

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

1.04%

1.02%

Avg. debt financing cost (including
investment corporation bonds)

1.06%

1.04%

Avg. remaining years on long-termloans payable and investment
corporation bonds

4.8 years

4.4 years

Long-term debt ratio

100.0%

100.0%

Fixed debt ratio

91.6%

90.0%

LTV (Note)

43.2%

41.9%

Interest-bearing debt ratio

43.0%

43.0%

JPY 6 bn

JPY 6 bn

Investment corporation bonds
Investor rating(R&I)

A+(stable)A+(stable)Investor rating(JCR)

AA(stable)AA(stable)(Note) Details of the calculation method for “LTV” are presented on P62.

As of May 31, 2016

1,000
1.6%
3,200
5.2%

6,000
9.7%

11,700
18.9%

6,000
9.7%
11,500
18.6%

6,400
10.3%
6,400
10.3%

9,700
15.7%

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

Total JPY 61.9 bn
Registration for Issuance ofInvestment Corporation Bonds
Planned value of issuance (upper limit): JPY 100,000 mn
Planned issuance period: Dec. 19, 2015 to Dec. 18, 201737

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)
Interest-bearing debt ratio at the end of period

Capital increaseby 1st public offering(JPY bn)
270

55.2
46.1

150

28.8
39.1

120

40.8 40.3

(%)
60.0

53.5
48.6 47.3
45.4 44.4
43.2

49.4
31.0 30.0 30.7

55.6 56.1 55.9 56.0 55.9 55.8

45.6 46.0

210180Capital increaseby 2nd public offering

57.9

240

Capital increaseby 3rd public offering

46.9

46.2 45.4 45.5 45.2 45.5 45.5

46.7

43.0 50.0

43.2 43.4 42.9 42.9 43.0 41.9

40.0
30.0
20.0

90
21.3

60 18.0 18.2 18.9

10.0

30
0.0

0
22nd
21st
20th
19th
18th
17th
16th
15th
14th
13th
12th
11th
10th
9th
8th
7th
6th
5th
4th
3rd
2nd
1st
PeriodPeriodPeriodPeriodPeriodPeriodPeriodPeriodPeriodPeriodPeriodPeriodPeriodPeriodPeriodPeriodPeriodPeriodPeriodPeriodPeriodPeriodNov. 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

No. ofproperties

5

6

7

8

9

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

LTV remains on an ongoing basis
38

6. Overview of Financial Results for 22nd Fiscal Period396-1. Income Statement / Cash Distribution Statement
Income Statement

Cash Distribution Statement(Unit: JPY mn)(Unit: JPY thousand)21st Fiscal Period
22nd Fiscal Period(Operation period:183 days) (Operation period:183 days)
Item

1. Operating revenues
Lease revenues 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 forward from the previous
periodUnappropriated income for current period

June 1, 2015 to Nov. 30, 2015

Dec. 1, 2015 to May 31, 2016

AmountPercentage

AmountPercentage

4,875
4,875
—
2,913
2,471
—
334
3
18
36
9
40
1,961
1
0
0
397
293
54
37
3
7
1,566
1,566
1
0
1,565

100.0

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

0
1,565

59.8

40.2
0.0

8.1

32.1

32.1

0
1,658

21st Fiscal Period

22nd Fiscal Period

ChangeAmountItem
Change651(1)

AmountAmountUnappropriated income forcurrent period

1,565,759

1,658,233

92,474

Distributions

1,565,450

1,658,062

92,612(2,620)(2,775)

(155)

309

171

-138

(Distribution per unit (JPY))

62.9

560

(2)

Retained earnings carried forward(Main factors for increase/decrease)(1) Increase in operating revenues

37.1
0.0

91
0

7.2

-1

Income on sale of Hamamatsu

JPY +731 mn

Decrease in rent income, etc.
(Namba and Hamamatsu)

JPY -54 mn

Decrease in utilities expense income

JPY -42 mn(2) Increase in operating expenses
Loss on sale of Namba

30.0

30.0

92

JPY +633 mn

Decrease in utilities expense

JPY -57 mn

Increase in repair expense

JPY +17 mn

Decrease in depreciation

JPY -41 mn

92

Lease operating revenues/costs
Breakdown: See pages 42 and 4340

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

21st Fiscal Period(as of Nov. 30, 2015)

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

ChangeAmountAmountAmountRatio(%)

Ratio(%)

Item

AssetsI. Current assets total

12,401

8.6

18,275

4,013

10,465Currency and demand deposit in trust

8,103

7,481

3

4

Deposit paid

115

94

Prepaid expense

162

226

Deferred income tax assets
II. Fixed assets total

2
131,685

12.7

5,874

2
91.4

125,686

87.3-5,998

1. Tangible fixed assets
Buildings

1,985

1,919

Structures

215

203

0

0

Land

9,485

9,485

Buildings in trust

29,517

26,331

Structures in trust

573

551

Machinery and equipment in trust

171

160

Tools, furniture and fixtures in trust

62

59

88,11585,466918

Tools, furniture and fixtures

Land in trust
Trust construction accountTangible fixed assets total

130,137

90.3

124,195

Land leasehold

957

957

Others

74

71

1,031

0.7

1,028

I. Current liabilities total

ChangeAmountRatio(%)

AmountRatio(%)

Amount

8,716

6.0

7,846

5.5

-870

Operating accounts payable

484

439

Investment corporation bonds(due within 1 year)
Long term loans payable(due within 1 year)

6,000

6,000

1,000

—

Interest-bearing
liabilities
JPY 61,900 mn

Accrued dividend

10

10

Accrued expenses

174

171

1

1

Accrued consumption tax

77

348

Advance received

708

646

0

0

260

228

Income taxes payable

Current deposit received
Security deposits(return within 1 year)
II. Total noncurrent liabilities

62,150Long term loans payable

54,90055,900

Security deposits

1,279

1,251

Security deposits in trust

5,971

5,649

43.1

62,800Total security
deposits
JPY 7,128 mn
43.6

650
JPY 1,357 mn
was allocatedfor property

70,86749.2

70,64749.1

I. Unitholders capital

71,65949.7

71,65949.8

II. Total surplus

1,565

1.1

1,658

1.2

Liabilities total-220

acquisitions

Net assets

86.3-5,941

2. Intangible fixed assets

Intangible fixed assets total

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

Liabilities

Currency and demand deposit

Operational income receivable

21st Fiscal Period(as of Nov. 30, 2015)

Unappropriated income for current
period

0.7

-2

1,565

1,658

Net assets total

73,22450.8

73,31750.9

92Liabilities and net assets total

144,092

100.0

143,964

100.0

-127

3. Investments, other assets
Long-fiscal period prepaid expenses

506

Guarantee money deposit

10

452
10

516

0.4

462

0.3

-54

III. Total deferred assets

5

0.0

2

0.0

-3

Investment corporation bond issuance
costs

5

100.0

-127

Investment, other assets total

Assets total

144,0922
100.0

143,96441

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

Item(14% of thequasi coownership of
the trust
beneficiaryinterests)

Kitano Hankyu
Bldg.

Dew Hankyu
YamadaTakatsuki-Josai
SC

Number of operating daysof 22nd fiscal period

183

183

183

183

Lease operating
revenues total

314

544

382

Income from lease

245

375

Utilities expense income

14

Other incomes

Nitori IbarakiKita Store (site)(Note 1)183

KohnanHiroshima
Nakano-Higashi
Store (site)

Hotel Gracery
Tamachi

LaLaport
KOSHIEN (site)

Richmond Hotel
Hamamatsu(Note 1)
(Note 2)

129

NISHINOMIYAGARDENS(28% of thequasi coownership of
the trust
beneficiaryinterests)

183

183

183

183

284

68

121

257

618

267

283

68

116

257

617

110

47

—

—

—

—

—

54

58

67

0

0

4

0

0

Lease operating costs
total

178

401

233

173

6

50

112

212

Property/Facility
management fees

45

115

73

10

0

1

2

0

Utilities expense

22

135

50

0

—

—

—

—

Rent paid

3

0

1

22

—

—

0

6

Advertising andpromotion expenses

31

1

6

—

—

—

—

—

Repair expense

4

13

7

38

—

—

5

0

Nonlife insurance
premium

0

1

0

1

—

0

0

2

Tax and public dues

23

49

26

26

6

15

102

59

Other expenses

7

1

5

0

—

0

1

0

Depreciation

40

82

62

74

—

32

0

141

Lease operating income

136

143

148

110

62

70

144

406

NOI
(Lease operating income+ Depreciation)

176

226

210

185

60

62

103

144

44

Capital expenditure

16

95

18

—

—

—

—

0

—

AEON MALL
SAKAI
KITAHANADA(site)(Note 1)

MandaiToyonaka
Honan Store(site)(Note 1)

183

183

548

211

53

25

—

—

(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 the disclosure may affect competitiveness of Hankyu REIT and eventually damage the interests of unitholders.
(Note 2) Transferred on April 8, 2016.

42

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

Item

Number of operating daysof 22nd fiscal period

IzumiyaHorikawa
Marutamachi
store (site)(Note 1)

Kotocross
HankyuKawaramachi

LIFE
Shimoyamate
store (site)(Note 1)

183

183

183

MANDAI Gojo
Nishikoji store(site)(Note 1)183

Shiodome East
Side Bldg.

HankyuCorporation
Head Office
Bldg.

Ueroku F Bldg.

Sphere Tower
Tennoz(33% of thequasi coownership of
the trust
beneficiaryinterests)

LAXA Osaka

NambaHanshin
Building(Note 2)Kita-Aoyama
San cho-me
Bldg.
(Note 1)

183

183

183

183

183

183

129

Total
(23 properties)—

Lease operating
revenues total

102

403

359

138

121

254

100

4,795

Income from lease

102

379

359

120

78

254

81

4,331

Utilities expense income

—

19

—

10

11

—

8

223

Other incomes

—

3

—

8

31

0

10

240

Lease operating costs
total

47

185

160

87

170

143

91

2,387

Property/Facility
management fees

1

18

1

22

26

2

15

345

Utilities expense

—

24

—

10

40

—

16

301

Rent paid

12

0

—

—

—

17

—

65

Advertising andpromotion expenses

—

—

—

—

2

—

—

42

Repair expense

—

4

—

3

10

10

2

101

Nonlife insurance
premium

0

0

1

0

0

2

0

15

Tax and public dues

10

21

47

12

28

47

13

560

Other expenses

0

2

0

1

1

1

0

27

Depreciation

22

113

109

36

59

62

43

927

Lease operating income

54

217

199

51

-48

110

8

2,408

NOI
(Lease operating income+ Depreciation)

88

76

34

109

330

308

88

11

173

51

33

3,335

Capital expenditure

—

7

—

—

2

26

13

6

22

24

0

261

(Main capital expenditure)
Kitano Hankyu Building

Cooling tower modernization

JPY 42 mn

Elevator modernization

JPY 24 mn

Hankyu Corporation Head Office Building

Upgrading air conditioning equipment

JPY 26 mn

Namba-Hanshin Building

Store opening work in 1F

JPY 17 mn

LAXA Osaka

Upgrading security system

JPY 13 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 the disclosure may
affect competitiveness of Hankyu REIT and eventually
damage the interests of unitholders.
(Note 2) Transferred on April 8, 2016.

43

6-4. Financial Indicators

Item

21st Fiscal Period

22nd Fiscal Period

Operation period

183

183

21st fiscal period: June 1, 2015 to Nov. 30, 2015
22nd fiscal period: Dec. 1, 2015 to May 31, 2016

Return On Assets (ROA)

1.1%

1.2%

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

2.2%

2.3%

Calculated from duration of operation

2.1%

2.3%

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

4.3%

4.5%

Calculated from days of operation

Ratio of net assets at end of period

50.8%

50.9%

Net assets / Total assets

Loan To Value ratio at end of period (LTV)

43.2%(45.9%)

41.9%(45.8%)

43.0%

43.0%

8.7 times

8.9 times

Net Operating Income (NOI)

JPY 3,373 mn

JPY 3,335 mn

Net lease operating income + Depreciation

Funds From Operation (FFO)

JPY 2,534 mn

JPY 2,486 mn

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

Ratio of interest-bearing debts to total assets
at end of period
Debt Service Coverage Ratio (DSCR)

Remarks(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)Interest-bearing debt / Total assets
Pre-interest and pre-depreciation net income for current fiscal
period / Interest expenses

44

7. APPENDIX

45

7-1. Portfolio List (As of End of 22nd Fiscal Period) (1)Retail-use Facilities

Classification

As of May 31, 2016

Code

Name

(Note 1)

Location

Completion
date

Building
Age(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)(Note 5)

Cap rate(Note 5)(Note 6)R1(K)HEP Five(14% of the quasi co-ownership of thetrust beneficiary interests)

Kita-ku,
Osaka City

Nov. 1998

17.6

6,337.37(2,958.94)

100.0%(98.0%)

1
(125)

5.0%

Feb. 1, 2005

6,468

4.9%

8,638

3.8%

R2(K)

Kitano Hankyu Bldg.

Kita-ku,
Osaka City

June 1985

31.0

28,194.15(18,477.35)

100.0%(98.3%)

2
(23)

10.1%

Feb. 1, 2005

7,740

5.8%

6,760

4.8%

R3(K)

Dew Hankyu Yamada

Suita City,
Osaka Prefecture

Oct. 2003

12.7

13,027.28

100.0%

28

4.7%

Feb. 1, 2005

6,930

5.2%

8,520

4.7%

R4(K)

Takatsuki-Josai
Shopping Center

Takatsuki City,
Osaka Prefecture

Apr. 2003

13.2

31,451.81

100.0%

1

6.1%

Nov. 15, 2005

8,600

6.5%

8,150

5.2%

R5(K)

Nitori Ibaraki-Kita Store (site)

Ibaraki City,
Osaka Prefecture——

6,541.31

100.0%

1—

Mar. 29, 2006

1,318

1.0%

1,640

5.0%

Kohnan Hiroshima Nakano-Higashi
Store (site)

Aki-ku, Hiroshima
City

Oct. 2, 2006

2,170

R6

—

—

100.0%

1

—

1.6%

1,890

5.8%

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

7.7

4,943.66

100.0%

1

10.3%

Dec. 25, 2008

4,160

3.1%

4,340

4.6%

Nishinomiya City,
Hyogo Prefecture——

126,052.16

100.0%

1

6.4%

Jan. 22, 2009

7,350

5.5%

7,500

4.5%

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

Nishinomiya City,
Hyogo Prefecture

Oct. 2008

7.7

65,372.41

100.0%

1

9.2%

Apr.16, 2013

18,30013.8%

23,576

4.5%

R12(K)AEON MALL SAKAIKITAHANADA (site)

Kita-ku,
Sakai City——

64,104.27

100.0%

2—

June 27, 2013

8,100

6.1%

9,410

4.5%

R13(K)

MANDAI Toyonaka Honan Store (site)

Toyonaka city
Osaka Prefecture——

8,159.41

100.0%

1—June 27, 2013

1,870

1.4%

2,240

4.6%

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

Kamigyo-ku,
Kyoto City——3,776.15

100.0%

1—June 4, 2014

3,100

2.3%

3,410

4.5%

R15(K)

kotocross Hankyu Kawaramachi

Shimogyo-ku,
Kyoto City

Oct. 2007

8.7

4,400.13

100.0%

1

2.6%

June 4, 2014

2,770

2.1%

3,180

4.6%

R16(K)

LIFE Shimoyamate store (site)

Chuo-ku,
Kobe City

——

2,397.83

100.0%

1—June 4, 2014

1,421

1.1%

1,570

4.5%

R17(K)

MANDAI Gojo Nishikoji store (site)

Ukyo-ku,
Kyoto City——

9,182.80

100.0%

1—June 24, 2014

4,182

3.1%

4,550

4.6%

46

Mixed-use (complex) facilities

Office-use
facilities

Classification

7-1. Portfolio List (As of End of 22nd Fiscal Period) (2)

Code

Name

(Note 1)

Location

Completion
date

Building
Age(Note 2)

Occupancy
Rate(Note 3)

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

Acquisition
Price(JPY mn)

Investment
ratio

Appraisal
value(JPY mn)(Note 5)

Cap rate(Note 5)(Note 6)

O1

Shiodome East Side Bldg.

Chuo-ku,Tokyo

Aug. 2007

8.8

9,286.58

100.0%

6

4.6%

Feb. 29, 2008

19,025

14.3%

13,900

4.2%

O2(K)

Hankyu Corporation
Head Office Building

Kita-ku,
Osaka City

Sep. 1992

23.7

27,369.37

100.0%

1

3.7%

Apr. 10, 2013

10,2007.7%

11,600

4.3%

M1(K)

Ueroku F Bldg.

Chuo-ku,
Osaka City

Sep. 1993

22.7

4,611.82

100.0%

12

3.2%

Nov. 1, 2005

2,980

2.2%

2,790

5.4%

M2

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

Shinagawa-ku,
Tokyo

Apr. 1993(Note 7)23.2

8,807.71

40.9%

18

2.7%

Oct. 2, 2007

9,405

7.1%

6,765

4.7%

M3(K)

LAXA Osaka

Fukushima-ku,
Osaka City

Feb. 1999

17.3

30,339.91

100.0%

1

3.7%

Jan. 22, 2009

5,122

3.9%

5,500

5.0%

M5

Kita-Aoyama San cho-me Building

Minato-ku,
Tokyo

Sep. 2013

2.7

619.76

66.7%

2

7.4%

Nov. 12, 2013

1,680

1.3%

1,910

3.7%

14.9

480,505.64(467,410.41)

98.9%(98.8%)

84
(229)

3.6%

—

132,897

100.0%

137,8394.5%

0.1

3,310.31

100.0%

1

5.3%

July 1, 2016

1,631

—

1,640

5.2%

14.7

483,815.95(470,720.72)

98.9%(98.8%)

85
(230)

—

—

134,528—

139,479

4.6%

Total (at the end of 22nd Fiscal Period)
Retail-use
Facilities

Total leasable
Area (m²)(Note 3)

R18(K)KOHYO Onohara Store

Minoh City,
Osaka Prefecture

Total (including newly acquired property)

May 2016(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) For KOHYO Onohara Store, appraisal value and cap rate as of June 1, 2016 are indicated.
(Note 6) Cap rates or 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 7) The completion date for the office and store portions is indicated.

47

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

Community-based Retail Facilities (1)HEP Five

kotocross Hankyu Kawaramachi

HANKYU NISHINOMIYA GARDENS

Kita-Aoyama San cho-me Building

Kitano Hankyu Building

Dew Hankyu Yamada

48

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

KOHYO Onohara StoreMANDAI Gojo Nishikoji Store (site)

LIFE Shimoyamate Store (site)49

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

MANDAI Toyonaka Honan Store (site)

Takatsuki-Josai Shopping Center

Kohnan Hiroshima Nakano-Higashi Store (site)

Nitori Ibaraki-Kita Store (site)

AEON MALL SAKAIKITAHANADA (site)

Nitori Ibaraki-Kita Store (site)50

7-2. Portfolio View (4)Hotel

OfficeLAXA Osaka

Hankyu Corporation
Head Office Building

Ueroku F Building

Shiodome East Side Building

Sphere Tower Tennozu

Hotel Gracery Tamachi

51
51

7-3. Trends of Distribution per Unit

Distribution per unit forecast *Distribution per unit *JPY 2,775

(JPY)
4,000

3,792
3,473

3,500

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

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
periodNov.
2016

Irregular period (303 days)(Compared with 22nd FP initial forecast: JPY +175 per unit; Profit JPY +104 mn)
Increase in operating income JPY +104 mn
l Transfer of Namba and Hamamatsu
Net gain on transfer
Decrease in rent income, etc.
Decrease in depreciation
Decrease in tax and public duesl Others
Increase in repair expense
Increase in utilities expense income
Increase in income from HEP Ferris wheel

JPY +98 mn
JPY -57 mn
JPY +17 mn
JPY +7 mn
JPY -13 mn
JPY +8 mn
JPY +4 mn* 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.

52

7-4. Income Ratio by Rent Category and Sales-Based Overage Rent System Mechanism
Income Ratio by Rent Category
and Variation Factors
22nd FP
Income Ratio
1.3%
Overage-rent
tenants

Fixed-rent
tenants

7.1%

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)53

7-5. 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, 2015 of municipal regions with populations of 100,000 or more>

Population of Kansai is 20.51 million
Osaka Prefecture: approx. 8.66 million
Of which, 62% reside in the top
7 municipal regions(population of 300,000 or more)
including Osaka City
Hyogo Prefecture: approx. 5.54 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 Summaryof the Basic Resident Registers” (2015)54

7-5. 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 arerising<10-year Population Rise/Fall in Municipal Regions with Populations of 100,000 or More and Hankyu/Hanshin Lines >Though Kansai population fellslightly -0.6% (10-year period), thepopulation of city centers increasesuch as in Osaka City +2.3%
Areas along Hankyu/Hanshin lines
increased (+3.9%)
Reason for differentiation:
High transportation convenienceand 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” (2005, 2015)(Note) With change of the research period for the Basic Resident Registers, comparison is of the population as at the end of March 2005 in the 2005
version and as at January 1, 2015 in the 2015 version.

55

7-6. Change in Population in Areas along Hankyu/Hanshin Lines

The population in the Kansai region is either remaining flat or is trending downwards due to theaging 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
Great Hanshin-Awaji Earthquake
Osaka
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(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.

56

7-7. Hankyu/Hanshin Lines and Properties Held57

7-8. 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 zone58

7-9. 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 north59

7-10. 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 north60

7-11. kotocross Hankyu Kawaramachi and Properties in Vicinity

KeihanMain line
Kawaramachi-dori St.

KAWARAMACHI
OPA

HankyuKyoto Line

Kyoto
Takashimaya

kotocross
Hankyu Kawarachi

Kyoto MARUI
Shijo-dori St.

Aerial photograph taken from south side facing north5861

7-12. Details of Value Calculation Methods

Average NOI yield = [Total real estate lease operation income* - Real estate lease operation expenses* + Total depreciation*]concerning owned real estate or newly acquired assets as of each period ÷Total acquisition price
Average yield after depreciation = [Total real estate lease operation income* - Real estate lease operation expenses*] concerning owned
real estate or newly acquired assets as of each period ÷Total acquisition priceUnrealized income/loss =Total appraisal value of owned real estate or newly acquired assets as of each period - Total book value** Figures are based on results. However, for newly acquired asset (KOHYO Onohara Store), the net operating revenues
and operating expenses for the first fiscal year in the discounted cash flow (DCF) method recorded in the appraisal
report is used except for depreciation of the property, and figure based on Hanky REIT’s accounting policy is used forthe figure of 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 for transferred assets indicated in page 6 (Namba-Hanshin
Building and Richmond Hotel Hamamatsu) are calculated based on results for 20th and 21st fiscal periods

Amount of outstanding debts + Security deposits or guarantees - Matched money

LTV ＝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.

627-13. Portfolio PML and Anti-Seismic Measures
As of May 31, 2016
Classification

Retail-use
facilities

Office-use
facilities

Mixed-use(complex)facilities

Retail-use
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

6.1%

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)―

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%

R18(K)

Total

3.6%

KOHYO Onohara Store

5.3%●What is PML?
PML (Probable Maximum Loss) refers to the estimatedamount of the maximum loss from earthquake damage
expressed as a percentage, and indicates the ratio of
projected maximum physical loss amount of a building
from a probable earthquake of maximum magnitude(assumed to happen once every 475 years, or a 10%
probability of occurring during any 50 year span) during
its use (a 90% non-exceedance probability) against theprice to reacquire it.
●Portfolio PML
The total PML value for multiple buildings scattering inwide areas is always smaller than the weighted average
PML value of each building. This is called the portfolio
effect. Hankyu REIT calculates the portfolio PML bytaking into account the geographical diversity ofbuildings over wide areas.
As shown in the table to the left, the portfolio PML ofHankyu REIT is 3.6%.
●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).

63

7-14. Investment Unit Price
Relative Price*

Per Unit Trading Trends*(Relative value based on 100 of the closing price basis on June 1, 2015 / closing price basis)(Oct. 26, 2005 — June 30, 2016)

120.00110.00100.00High (closing price basis)

JPY 276,000(June 2007)

Low (closing price basis)

JPY 65,000(Dec. 2011)

90.00

June 1, 2015 — June 30, 2016

80.00
70.00
60.00
'15/6

'15/8
Hankyu REIT

'15/10'15/12
TSE REIT Index

'16/2

'16/4

'16/6

Nikkei Stock Average

Source: QUICKHigh (closing price basis)

JPY 147,500(June. 2/3, 2015)

Low (closing price basis)

JPY 108,200(Sept. 8, 2015)

Price on June 30, 2016 (closing price basis)
JPY 130,900

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

7,000

280
240

6,000

200

5,000

160

4,000

120

3,000

'05/10/26

80

2,000

40

1,000

0
0
'05/5 '05/11 '06/5 '06/11 '07/5 '07/11 '08/5 '08/11 '09/5 '09/11 '10/5 '10/11 '11/5 '11/11 '12/5 '12/11 '13/5 '13/11 '14/5 '14/11 '15/5 '15/11 '16/5

Source: QUICK

VolumeUnit Price* 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.

647-15. Analysis of Unitholder Attributes at End of 22nd Fiscal Period
Unitholder Composition
Ownership by category

Financial institutions(excluding trust banks)
Trust banks
Individuals, etc.

Number ofunitholders(persons)

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)

135,52722.68%

Unitholder name

101

0.73%

118,480

19.83%The Master Trust Bank of Japan, Ltd. (Trust account)

44,416

7.43%

9

0.07%

225,59337.76%

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

22,570

3.78%

Hankyu Corporation

21,0003.51%

13,32096.70%

156,716

26.23%The Nomura Trust and Banking Co., Ltd.
(Investment accounts)

16,938

2.83%

The Senshu Ikeda Bank, Ltd.

12,500

2.09%

STATE STREET BANKAND TRUST COMPANY 505223

8,648

1.45%

The Hachijuni Bank, Ltd.

8,420

1.41%

THE CHUKYO BANK, Ltd.

7,905

1.32%

Shikoku Railway Company

5,884

0.98%

Total investment

283,80847.50%

Number of outstanding units

597,500

100.00%

Other organizations

237

1.72%

56,3109.42%

Foreign organizations,
etc.

108

0.78%

40,401

6.76%

Total

13,775100.00%597,500

100.00%

Ratio of Units by Unitholder Category
19.02%
33.83%

16.09%

17.56%

19.83%

43.42%

40.93%

37.76%

23.59%

26.27%

26.23%

9.24%

34.34%

47.27%
23.91%

13.39%

33.96%

26.31%
34.41%

22.27%

13.46%

23.20%
13.63%

9.29%

8.62%

7.78%

10.14%

4.83%

9.03%

7.65%

9.26%
5.98%

6.76%

As of end of
1st period

As of end of
5th period

As of end of
10th period

As of end of
15th period

As of end of
20th period

As of end of
21st period

As of end of
22nd period

Trust banks

Financial institutions(excluding trust banks)

11.31%

Foreign organizations, etc.

Other organizations

Individuals, etc.

9.42%

65

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

28
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,transportation and tourism

66and Internal Audit Systems
7-17. 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.

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7-18. Company Structure of Hankyu REIT
(As of May 31, 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 Motofumi Suzuki was elected as alternate Supervisory Director at theGeneral Unitholders’ Meeting held on August 27, 2014.

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