Table of Contents

1. Executive Summary ・・・・・・・・・・ ・・・・・・・・・

2

2. Asset Replacements and Public Offering ・・・・・・・・・・

5

3. External Growth Strategies ・・・・・・・・・・・・・・・・

17

4. Internal Growth Strategies・・・・・・・・・・・・・・・・・

26

5. Financial Strategies ・・・・・・・・・・・・・・・・・・・

35

6. Overview of Financial Results for the 16th Fiscal Period ・・・・

39

7. APPENDIX・・・・・・・・・・・・・・・・・・・・・・・・ 46

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. Summary of 16th Fiscal Period Results
Growth Strategies and Management Policies

Results for 16th Fiscal Period

Portfolio growth and improvement
by utilizing the strengths of the
Hankyu Hanshin Group・Improved the portfolio’s health through thereplacement of assets (improved NOI yields)
・Returned to a growth path by conducting a public
offering (acquired 2 community-based retail facilities)(June 2013)

Internal
GrowthDeepening operational management

・Implemented large-scale tenant replacement andrenewal at HEP Five (total of 26 shops)
・Total portfolio occupancy rate up 0.5 points fromprevious period end to 99.5% (as of end of 16th fiscal
period)Financial
Strategies

Implementation of stable financial
operations and LTV controls・LTV improved due to a public offering (June 2013)
・Realized a reduction of borrowing costs anddiversification of debt repayment dates

External
GrowthResults for 16th Fiscal Period
Distribution per unit JPY 11,806 (up 2.7% from the initial forecast)
Portfolio NOI yield* 4.7% (After adjustment for public charges and taxes: 4.6%)*NOI yield = (Lease operation income + Depreciation) × 2 ÷ Total acquisition price (period average)

End of 16th Fiscal Period
Investment unit price (closing price):
Net assets per unit:
Net assets per unit after reflecting unrealized income/loss:

JPY 539,000
JPY 659,872
JPY 591,770

3

1-2. Distribution Forecast for 17th Fiscal Period
Forecast for the 17th fiscal period

Distribution per unit forecast JPY 12,700[Main factors of increase/decrease from the 16th fiscal period]・Lease operation income contribution of acquired assets, etc.
・Decrease of lease operation income of transferred properties
・Decrease of lease operation income of existing properties
・Income/loss on sale+757 (NISHINOMIYA GARDENS +363, Hankyu Head Office Building+179, Kitahanada +187, Honancho +27)
–214 (HEP Five –152, NU chayamachi –62)
–183 (Tennoz revenue decrease –102, Ueroku -36, and others)–21 (16th fiscal period: Income on sale of HEP Five 3,492,
Loss on sale of NU chayamachi 3,470)（ U nit : JPY m n ）ItemO perat ion per iod(day s )Re sults fo r 1 6th Fiscal Pe riod ①( D ec. 1 , 20 12 to May 31 , 20 13)

F or ecast f or 17th F isc al P eriod ②( Ju n. 1 , 201 3 to No v. 3 0, 2 013 )C han ge
② -①

R esults f or 15t h F iscal Per iod ③(Ju n. 1 , 20 12 to No v. 3 0, 2 012 )C han ge
②- ③

182

18 3

1

18 3

―

O perat ing revenues

8,0 8 8

4 ,52 9-3,5 59

4 ,73 6-2 06

O perat ing i ncom e

1,4 6 6

1 ,79 33 26

1 ,47 1

3 21

O rd inary inc om e

1,0 0 9

1 ,33 73 27

1 ,04 52 91

Net incom e

1,0 0 8

1 ,33 6

3 27

1 ,04 42 91

Num ber of out st anding
inves tm ent u nits at end of
period (unit s )8 5,4 0 0

10 5 ,20 0

1 9,8 00

85 ,40 0

1 9,8 00

D is tri bution per unit (J P Y )1 1,8 0 6

12 ,700

8 94

12 ,22 8

4 72

F FO per unit (J P Y )2 3,4 4 4

2 1 ,68 7-1,7 56

23 ,78 6-2,0 99[Main preconditions]•There will be no transfer of portfolio properties from the presently held 18 properties•There will be no additional issuance of investment units to the present 105,200 units until the end of the period42. Asset Replacements andPublic Offering52-1 Management Strategies and Goals (announced January 22, 2013)
Future Growth Strategies and Management Policies (reproduction of financial results briefing materials for the 15th fiscal period)
Distribution
Policies

External Growth
Strategies

Implement management that emphasizes stability of dividends in medium- to longterm
Collaborate with sponsor group and aim to realize measures to improve portfolio
earning power.
Portfolio growth and improvement by utilizing the strengths of the Hankyu Hanshin
Group
Improve existing portfolio by considering measures such as replacing properties withdeclining earning power, and aim to recover to a growth path.

Internal Growth
Strategies

Deepening operational management
Aiming to bottom out and turn around revenues by supporting each facility in details
such as proactively replacing retail tenants with stagnant sales while maintaining highoccupancy by establishing good relationships with the tenants.

Financial
Strategies

Implementation of Stable Financial Operations and LTV Controls
Realize steady refinancing, diversification of debt repayment dates and reduction ofdebt financing costs by reinforcing cooperation with financial institutions, and aim tostabilize the financial foundation.

Strategy Goals■ Distributions will be set at JPY 12,000 or more on an on-going basis, and aim for further build up.
■ Realize return to growth path through portfolio improvement, and aim for growth and expansion ofassets under management.
6

2-2. Policies for Portfolio Improvement and Replacement Assets
Aim to secure distributions of JPY 12,000 or more on an ongoing basis and return to a growth path at an early stage
Sponsor Group

Hankyu REIT, Inc.
In light of such factors as intensifying competition withsurrounding facilities, retail facilities in the Umeda area
(HEP Five and NU chayamachi) will be sold to thesponsor group.

WIN
||
WIN

A community-based retail facility (HANKYU NISHINOMIYAGARDENS) and a sponsor group head office building will
be acquired in an aim to enhance the NOI yield while
maintaining the quality of the portfolio.

■HANKYU NISHINOMIYA GARDENS (28% quasi co-ownership oftrust beneficiary interests)

HEP Five and NU chayamachi will be acquired to lead thevalue enhancement of both facilities and thereby promotefurther revitalization of the Umeda area.

In collaboration with Hankyu REIT, Inc., further growthof the real estate business of the sponsor group on thewhole will be targeted.

■HEP Five (partial transfer; 31% quasi co-ownership of trust
beneficiary interests)

Property overview

Property overview● Acquisition price: JPY 18,300 mn●Transfer price: JPY 16,523 mn● Appraisal value: JPY 20,300 mn (Note 1)● NOI yield: 5.9% (Note 2)● Yield after depreciation: 4.4% (Note 2)● Book value: JPY 13,002 mn● NOI yield: 4.4% (Note 3)● Yield after depreciation: 3.0% (Note 3)■Hankyu Corporation Head Office Building

Property overview●Acquisition price: JPY 10,200 mn● Appraisal value: JPY 10,200 mn (Note 1)● NOI yield: 5.8% (Note 2)● Yield after depreciation: 3.7% (Note 2)

Total acquisition price: JPY 28,500 mn■NU chayamachi

Property overview●Transfer price: JPY 14,100 mn● Book value: JPY 17,542 mn● NOI yield: 3.8% (Note 3)● Yield after depreciation: 1.4% (Note 3)

Total transfer price: JPY 30,623 mn(Note 1) The appraisal value for HANKYU NISHINOMIYA GARDENS is as of March 2013 and the appraisal value for Hankyu Corporation Head Office Building is
as of February 2013.
(Note 2) Calculated by dividing the net operating income (NOI) for the first fiscal year in the discounted cash flow (DCF) method recorded in the appraisal report
as well as the income after depreciation, calculated based on Hankyu REIT's accounting policies, by the acquisition price.
(Note 3) Calculated by dividing the annualized total of 15th and 16th fiscal period results by the sale price.

7

Overview of Acquired Assets ① HANKYU NISHINOMIYA GARDENS
2-3. (28%of the quasi co-ownership of the trust beneficiary interests)

Property features
 Largest-scale shopping center in western Japan
 Directly connected to Hankyu Nishinomiya-Kitaguchi
Station via deck
 Rooftop sky garden with a permanent stage
 Sales increased for 4 consecutive years since opening Received the Fifth Japan SC Gold Award (March2013)
 Stable management in the long term due to fixed typemaster lease agreement with Hankyu Corporation

Property Overview
Location
Number of stores
Main tenants
Overall sales(Note)

Takamatsu-cho, Nishinomiya-shi,
Hyogo
268 stores(as of end of May 2013)
Hankyu Department Store,
Izumiya and Toho Cinemas
JPY 73.6 bn

Total floor area(fiscal 2012 results)
Approx. 247,000㎡

Opening
Parking capacity

November 2008
Approx. 3,000 vehicles(Note) The amount including consumption tax, etc.

82-3. Overview of Acquired Assets ② Hankyu Corporation Head Office Building
Property features
 Core base of the Hankyu Hanshin Holdings Group Occupied byHankyu Corporation, Hankyu Hanshin Holdings, Inc., etc.
 Property was sold in November 2009 when real estate prices werefalling post-Lehman Shock in order to lower the LTV(Priority negotiation rights granted to Hankyu REIT upon the transfer) Stable management in the long term due to fixed type master leaseagreement with Hankyu Corporation

Property Overview
Location

Shibata, Kita-ku, Osaka-shi

Lot area

3,396.82㎡(Note)

Total floor area

27,369.37㎡(Note)

Number of floors

19 floors, 2 underground (Note)

Complition date

September 1992

(Note) As specified in the registry92-4. Overview of Public Offering and Newly Acquired Assets
Overview of Public Offering
Number of
total
investment
units issued

85,400 units

Number of
19,800 units
newly issued
investment (Of this, third-party
allotment: 1,800 units)
units
Issue priceTotal issue
price
Paid-inamountJPY 469,462
JPY 8,450 mn(Public offering portion)
JPY 453,091

Total paid-in
amountJPY 8,971 mn(Including third-party
allotment)

Date ofresolution ofissuance

May 30, 2013

Property nameAEON MALL SAKAI KITAHANADA(Site)

June 18, 2013
July 10, 2013

(tentative name)
MANDAI Toyonaka Honancho (Site)

Community-based retail facility

Community-based retail facility

Kita-ku, Sakai-shi

Honan-cho Higashi,
Toyonaka-shi, Osaka

Acquisition price(JPY mn)

8,100

1,870

Appraisal value(JPY mn)

8,490

2,060

5.2

5.7 (Note 1)

5.2

5.7(Note 1)

Acquisition method

SPC bridge

On-balance bridge

Acquisition dateJune 27, 2013

June 27, 2013

Property type
Location

NOI yield (%)(Note 2)

（注2）

Yield after depreciation (%)(Note 2)
（注2）

Acquisition price(JPY mn)

Appraisal value(JPY mn)

Total acquisition assets

Pricedetermination June 11, 2013
date
Payment date

List of Newly Acquired Assets

Average NOI yield(%) (Note 2)

Average yield after
depreciation (%)

（注2）

9,970

10,5505.3 (Note 1)(Note 2) （注2）

5.3 (Note 1)(Note 1) Assumes the rent from the day after the building completion date (scheduled to be completed in fall2013) of (tentative name) MANDAI Toyonaka Honancho (Site) and therefore differs from the figure thatassumes the rent up to the building completion date (30% of rent after completion).
(Note 2) Calculated by dividing the net operating income (NOI) for the first fiscal year in the discounted cash flow(DCF) method recorded in the appraisal report at the time of acquisition by the acquisition price.

102-5. Overview of Newly Acquired Assets ① AEON MALL SAKAIKITAHANADA (site)
Property features
 The property is a site of a retail facility adjacent to the
Osaka Municipal Subway Kitahanada Station. Highly
convenient transport strengthens customer attraction
as major roads run on the east and south sides of thesite and multiple methods of access such as buses
are available.
 There is a population of approx. 325,000 within a 3km
radius, approx. 857,000 within a 5km radius andapprox. 2,618,000 within a 10km distance and theplentiful trade area population speaks for the fortunate
market potential.
 AEON MALL SAKAIKITAHANADA, which stands atop
the property, is a regional shopping center. With
AEON and Hankyu Department Store as the coretenants, the shopping center is formed as a specialty
shop of about 160 shops.

Property Overview
Location
Site area
Leased area
Complition date
Number of stores

Kita-ku, Sakai-shi
64,232.77㎡,
64,104.27㎡,
October 2004
Approx. 160 stores112-5. Overview of Newly Acquired Assets ② (tentative name) MANDAI Toyonaka Honancho Store (site)
Property features(Note) Rendering of the building scheduled to be completed.

 Toyonaka City, where the property is located, sits in thenorthwest part of Osaka Prefecture. The land is blessedwith a vicinity population with a trade area population of
about 38,000 within 1km and possesses a volume in which
there are 3 grocery supermarkets within just 1km.
 In addition to MANDAI, a grocery supermarket with 146
shops (as of February 2012) primarily in the Osaka area
and which excels at targeting local populations, aneighborhood shopping center comprising of several
shops is scheduled to open and the construction of a
facility that is appropriate to the environment is underway.
 MANDAI, the main tenant, possesses the developmental
power and price of fresh foods and many of its stores havehigh space efficiency. It is highly popular with customers.

Property Overview
Location
Site area
Leased area
Complition dateHonan-cho Higashi,
Toyonaka-shi, Osaka
8,159.41㎡
8,159.41㎡
Fall 201312

2-6. Return to Growth Path
Significance of the Public Offering
126.1bn

Asset size (total acquisition price)121.3bn
Urban retailproperties
42.0％

50.9bn116.1bn
Transfer
Acquired
assetsasset

17.3bnUrban retailproperties
13.7％

17.3bn41.1bnOffice zone,
etc.
32.6％

13.0bn

Hotel
10.3％

41.1bnOffice zone,
etc.
25.5％

30.9bn

Hotel
10.7％

13.0bnCommunitybased retailfacility

Portfolio’s
health improved

13.0bnReturned to growth
path throughresumption of
external growth54.6bn44.6bnCommunitybased retailfacility

43.3％

26.3bn21.7％
End of 15th period(November 2012)

End of 16th period(May 2013)

After acquisition of
newly acquired assets

Number ofproperties

15 properties

16 properties

18 properties

Total
Acquisition
price121.3bn

116.1bn

126.1bn13

2-7. Profitability and Financial Status after Public Offering ①
End of 15th period(November 2012)

End of 16th period(May 2013)

Newly acquired assets

After acquisition of
newly acquired assets-8.3bn-5.8bn0.4bn-5.3bnEnd of 11th period(November 2010)

End of 15th period(November 2012)

End of 16th period(May 2013)

After acquisition of
newly acquired assets

Average NOI yield(Note 1)
Average NOI yield
after depreciation(Note 1)
Unrealized income/Loss (Note 1)

LTV(Note 2)
Interest-bearing
debt ratio (Note 3)
End of 11th period(November 2010)

End of 15th period(November 2012)

End of 16th period(May 2013)

1.5 years

2.4 years

2.0 years

Average borrowing
cost
Average remaining
period of long-term
funds

11th period(November 2010)
Distribution per unit

JPY

12,41515th period(November 2012)

JPY

12,22816th period(May 2013)

JPY

11,80617th period forecast(November 2013)

JPY

12,70014

2-7. Profitability and Financial Status after Public Offering ②(Note 1) Concerning owned real estate or newly acquired assets as of each period: Average NOI yield = [Total real estate lease operation
income* – Real estate lease operation expenses* + Total depreciation*] ÷ Total acquisition priceConcerning owned real estate or newly acquired assets as of each period: Average yield after depreciation = [Total real estate lease
operation income* – Real estate lease operation expenses*] ÷ Total acquisition priceUnrealized income/loss = Total appraisal value** of owned real estate or newly acquired assets as of each period – Total book value***Figures based on 15th and 16th fiscal period results. Figures for properties acquired or transferred during the periods are annualized.
However, the net operating income and operating expenses for the first fiscal year (for MANDAI Toyonaka Honancho Store, second
year of rent after the building completion) in the discounted cash flow (DCF) method recorded in the appraisal report is used for figuresother than depreciation of properties acquired in the 16th fiscal period as well as for newly acquired assets.
**Following the acquisition of newly acquired assets, book values and appraisal values of assets owned as of the end of the 16th fiscal
period are figures as of the end of the 16th fiscal period. Book values of newly acquired assets are expected amounts where acquisition
expenses that according to the Hankyu REIT’s.

(Note 2) LTV =Amount of outstanding debts + Security deposits or guarantees – Matched money
Total amount of assets – Matched money

When corporate bonds have been issued, the amount of outstanding debts shall include the amount of outstanding bonds. Matchedmoney refers to cash or deposits reserved in the trust account to guarantee the deposit or security money for the assets owned byHankyu REIT as the object of the trust beneficiary interests. The total amount of assets refers to the amount in the assets section of themost recent balance sheet for each period. However, with respect to tangible fixed assets, the difference between appraisal value andbook 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.
LTV after the acquisition of newly acquired assets are calculated under the following assumptions:・Assumes that there will be no change in the amount of outstanding debts from the 16th fiscal period figure.
・Security deposits and guarantees of newly acquired assets are added to the 16th fiscal period figure of security deposits andguarantees.
・Assumes that there will be no change in the matched money from the 16th fiscal period figure.
・The proceeds from the public offering and third-party allotment, security deposits or guarantees of newly acquired assets and theamount of difference between the appraisal values of newly acquired assets and the expected amount of assets to be recorded are
added to the 16th fiscal period figure of total amount of assets.
(Note 3) The interest-bearing debt ratio after the acquisition of newly acquired assets is calculated under the following assumptions: It is
assumed that there will be no change in the amount of interest-bearing debt from the 16th fiscal period figure.
Proceeds from the public offering and third-party allotment and security deposits and guarantees of newly acquired assets are added to
the 16th fiscal period figure of total amount of assets15

2-8. Portfolio Status (Comparison of End of 15th Fiscal Period with After the Public Offering)
End of 15th
fiscal period
Total acquisition price ：Total number ofproperties:

End of 16th
fiscal period
121.3bn

15 properties

PML：

3.3％

Zones for other use
0.4％

Total number ofproperties:

116.18bn

16 properties

PML：

3.5％

Investment
Investment ratio
ratio
by(Note 1)
1)
by zoningzoning (Note

Other
30.4％
Kansai region
69.6％

Total number ofproperties:

126.15bn

18 properties

PML：

3.5％

Office zone
32.2％

Office zone
34.9％
Retail zone
64.6％

Retail zone
67.3％

(Of this, hotel zone portion 11.2％）(Of this, hotel zone portion 10.3％）

Other
31.7％

Other
29.2％

Retail zone
74.4％

(Of this, hotel zone portion 10.7%)

Total acquisition price ：Zones for other use
0.4％

Zones for other use
0.5％

Office zone
25.1％

Investment
Investment ratio
ratio
by(Note 2)
2)
by areaarea (NoteTotal acquisition price ：After the public
offering

Kansai region
68.3％

Kansai region
70.8％(Note 1) Ratios are calculated based on the acquisition price. (For mixed-use zone properties, the amount is
proportionate to the rent income and common service fees for each zone)(Note 2) Ratios are calculated based on the acquisition price.

16

3. External Growth Strategies173-1. Acquisition Strategy and Investment Targets
Acquisition Strategy
 Securing opportunities for asset acquisitions and acquisition of assets at appropriate prices
 Investment decisions that even considers operational management after acquisitions
 Establishment of a balanced portfolio

Investment Targets

Investment Target Areas

Target real estate with retail and office zoning
Especially focus investment on retail zoning

Retailproperties

Officeproperties

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

Mixed-use
properties
Utilize information sourcing capabilities
and network of the Hankyu Hanshin
Holdings Group that has deeply rooted
connections in the community
Officezone

Retail zone
50% ormore

Retailzone

Zones forother uses

Officezone

Zones forother uses

Retailzone
Zones forother uses

Kansai region
50% or moreKansai region: Osaka, Kyoto, Hyogo, Nara,
Shiga and Wakayama* In principle, the maximum investment ratio for hotel portion (part of retail zone) is
10% of all assets under management.

18

3-2. Securing Opportunities to Acquire Properties
Trend of Information Leads（ le a d s ）10 00

In f o r m at io n l e ad s c h e c k e d
In f o r m at io n l e ad s c o n s i d e r e d

9 00
8 00
7 00
6 00
5 00
4 00
3 00
2 00
1 00
0
1 st
2 nd
3r d
4t h
5t h
6t h
7th
8th
9th
1 0 t h 11 th 1 2 t h 13 th 14 th 15 th 16 th
p er io d p er io d p er io d p er io d p er io d p er io d p er io d p er io d p er io d p er io d p er io d p er io d p erio d p er io d p erio d p erio dDiverse Property Acquisition Methods
Acquisition method
Sponsor group’s property

Route of obtaining information

HEP Five
Kitano Hankyu Building
Dew Hankyu Yamada
Nitori Ibaraki-Kita Store (site)
Lalaport KOSHIEN (site)
From thesponsor group LAXA Osaka
Namba-Hanshin Building

Property developed bysponsor group

On-balance bridge

SPC bridge

Shiodome East Side Building
Hotel Gracery Tamachi－－

Ueroku F building(tentative name) MANDAI Richmond Hotel Hamamatsu
Toyonaka Honancho (site)

Direct acquisition from outside－

Hankyu Corporation Head
Office Building

HANKYU NISHINOMIYAGARDENS
From Hankyu
REIT AssetManagement,
Inc.’s own
route

－

Acquired assets in the 16th fiscal period and newly acquired assets

AEON MALL SAKAIKITAHANADA (site)

Takatsuki-Josai Shopping
CenterKohnan Hiroshima NakanoHigashi Store (site)
Sphere Tower Tennoz

193-3. Information Leads and Leads Considered (16th fiscal period)
Area

1

Office

3

6

45

1

2

13

2

4

Multi-used

3

4

23

7

Retail

1 4

1

2 17

4

4

2

3

1

1

7

1

Hotel

Others2

225

SuburbanUrban vicinity

City center

Use

2

Kansai region (Osaka, Kyoto, Hyogo,
Nara, Shiga, Wakayama)

12

8

17

1

1

0

1

0

0

0

0

5

0

0

0

2

3

9

4

23

1

8

0

0

44

0

60

1

3

8

*Outer circle: Information leads Inner circle: Leads actually consideredTokyo metropolitan area
Community-based
Other areas(Tokyo, Kanagawa, Saitama,
Chiba)
retail facility

Leads-based retail
Leads considered
considered were
were primarily
primarily community
community-based
retail facilities
facilities inin thetheKansaiKansai region
region andand Tokyo
Tokyo metropolitan
metropolitan area
area

20

3-4. Asset Acquisition Policy for Future
Focus-based retail
Focus onon community
community-based
retail properties
properties
Area
Urban vicinity

RetailNambaHanshin

Ueroku F

Tennoz

Shiodome

Department
storesLarge
specialty
shops

HankyuCorporation
Head OfficeSpecialty shopbuildings(city center SC)
HEP
KitanoHankyuCommunity-based retailproperties

RSC (regional shopping centers)
AEON MALL
Lalaport
NISHINOMIYASAKAIKOSHIENGARDENSKITAHANADA

HankyuYamadaNSC (neighborhood shopping centers)
MANDAI
Takatsuki- Kohnan Toyonaka
Josai
Hiroshima Honancho

GMS (general-merchandise stores)/SM (supermarkets)
Specialty shops

Outlet centers

Street-level shops

City hotels

SuburbanUrban retail properties

Nitori
Ibaraki

Hotel

Use

OfficeCity center

LAXA Osaka

High-grade
hotels for Hamamatsu Tamachi
businesstravelers

Resort hotels

Budget hotels for business travelers
Primary investment
target zone

Focal investment zone of retailproperties

Acquired assets in the 16th fiscal period
and newly acquired assets

21

3-5. Strengths of Community-Based Retail Properties
Features and Superiority ofCommunity-Based Retail Properties
Excellent trade areas withstrong consumer demand

Composition of tenants
according to the featuresand needs of the trade areaand provision of products
and services that match thedemandOperational management by
the Hankyu Hanshin
Holdings Group

Secure stable income in the
mid to long term at
community-based retailproperties that meet theabove requirements

Excellent trade areas such asalong Hankyu and Hanshin lines
where the population isincreasing and where strong
consumer demand can be
expected in the mid to long term.

Composition of tenants according
to population dynamics, family
composition, household income
and other features/needs of the
trade area .
Provision of daily necessities, fresh
foods and other products/services
necessary for daily living.
Implementation of reviews of
products, services and tenantcompositions as well as renewals
and such in order to adapt to thechange of trade area needs.
Utilization of the real estate knowhow and experience fostered by the
Hankyu Hanshin Holdings Groupover many years.
Optimize products, services andtenant compositions with theoperational management of the
Hankyu Hanshin Holdings Groupat trade areas believed to be
excellent in the mid to long term
and aim to secure ongoing stability.

Investment
decision

Search for excellent community-based retail properties
and make investment decisions using the discernmentof the Hankyu Hanshin Holdings GroupManagement

Carry out stable management in the mid to long termusing the operational management know-how andexperience of the Hankyu Hanshin Holdings Group

Comparison of Community-Based Retail
Properties and Urban Retail Properties
Community-based
retail properties

Urban retail properties

Excellent trade areas
such as along the Hankyu
and Hanshin lines

Umeda, etc.

Provide for needs ofliving centering on daily
necessities and such

Extraordinary urban
entertainment space

As community-based retail properties serve toprovide for needs of living centering on daily
necessities such as foods and convenience goods,
sales of tenants are strong and profits are noteasily susceptible to economic circumstances

Stable profits are expected for the long term22

3-6. Population Dynamics of Kansai Region ①
・ Concentration of population will heighten due to return of population to central cityand urban vicinity
・ Retail properties of Hankyu REIT are located in most populous municipal regions

Nitori Ibaraki-Kita(site)
Dew
Hankyu Yamada

Takatsuki-Josai(tentative name)
MANDAI Toyonaka
Honacho StoreHEP
Kitano-Hankyu
LAXA Osaka
Hankyu Head
Office Bldg.

HANKYU NISHINOMIYAGARDENS

LaLaport KOSHIEN (site)
Ueroku F Building
Namba-Hanshin

AEON MALL
SAKAIKITAHANADA(site)<Populations as of March 31, 2012 of municipal regionswith populations of 100,000 or more>

Population
Population ofof Kansai
Kansai is
is 20.61
20.61 million
million
Osaka
Osaka Prefecture:
Prefecture: approx.
approx. 8.68
8.68 million
millionOf
Of which,which, 62%
62% residereside inin thethe toptop
77 municipal
municipal regions
regions(population(population ofof 300,000
300,000 oror more)more)
including
Osaka
City
including Osaka City
Hyogo
Hyogo Prefecture:
Prefecture: approx.
approx. 5.57
5.57 million
millionOf
Of which,which, 68%
68% residereside inin thethe toptop
77 municipal
municipal regions
regions(population(population ofof 200,000
200,000 oror more)more)
including
KobeCity
including Kobe City

Source: Japan Geographic Data Center “Population
Summary of the Basic Resident Registers”(2012)

23

3-6. Population Dynamics of Kansai Region ②
・Population is clearly resurging in central city and urban vicinity
・Populations of Umeda and municipal regions along Hankyu/Hanshin Lines are rising

Dew
Hankyu Yamada(tentative name)
MANDAI Toyonaka
Honacho Store

Takatsuki-Josai
HEP
Kitano-Hankyu
LAXA Osaka
Hankyu Head
Office Bldg.

HANKYU NISHINOMIYAGARDENS
LaLaport KOSHIEN (site)

Namba-Hanshin

Nitori Ibaraki-Kita(site)

Ueroku F Building

ThoughThough Kansai
Kansai population
population fell
fellslightlyslightly -0.1%-0.1% (10-year(10-year period),
period), thethepopulation
population ofof citycity centers
centers such
such as
as in
in
Osaka
Osaka City
City isis +2.4%
+2.4%
Areas
Areas along
along Hankyu
Hankyu andand Hanshin
Hanshinlines
lines increased
increased (+4.2%)(+4.2%)
ReasonReason forfor differentiation:differentiation:
High
High transportationtransportation convenience
convenienceandhighconcentrationand high concentration ofof citycity
facilities
facilities
Positive
Positive factors
factors toto profitability
profitability andandstability
stability ofof Hankyu
Hankyu REITREITAEON MALL
SAKAIKITAHANADA (site)

Source: Japan Geographic Data Center “Population
Summary of the Basic Resident Registers” (2002,
2012)<10-year population rise/fall in municipal regions withpopulations of 100,000 or more>24

3-7. Change in Population in Areas along Hankyu and Hanshin Lines
The population in the Kansai region is either remaining flat or is trending downwards
due to the decreasing birthrate and aging population but areas along Hankyu andHanshin lines are relatively popular and the population in these areas have been
increasing consistently since 1996

105
104
103
102

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

101
100
99
98

Population along Hankyu andHanshin lines has been increasing
consistently since the earthquake

97
96
95

*Change in population with 1991 as 100 are indicated.

01991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 201225

4. Internal Growth Strategies264-1. Operational Management
Achieving a WIN-WIN-WIN-WIN relationship in operations
Consumers

Investors
Boost stakeholder satisfaction
Maintain
Maintain andand improve
improve rent
rent income
incomeImprove
Improve attractivenessattractiveness toto consumers
consumers
andand sojournsojourn time
time
InviteInvite competitivecompetitive “in“in vogue”
vogue” tenants
tenants

Tenants

Hankyu REIT<<Results for the 16th Fiscal Period>>
HEP Five: 20 shops were newly brought in through tenant replacement, the largest number since the property’s opening. In
addition, with renewal of 6 existing shops and such, the property is being refurbished in preparation for its 15th anniversary.
Dew Hankyu Yamada: Maintained full occupancy throughout the period. Implemented efforts to draw visitors and increase
sales such as participatory events together with tenants.
Shiodome East Side Building: Concluded contract renewals with existing tenants under same conditions and maintained
full occupancy.
Ueroku F Building: Brought in a new tenant to fill up a single floor and the period-end occupancy rate was 97.2% (up 7.3
points compared to the previous period).

27

4-2. Occupancy Rate for Individual Properties (occupancy by end-tenants)
end of
Total
Total portfolio
portfolio occupancy
occupancy rate
rate ofof 99.5%
99.5% ((endof 16th
16th fiscal
fiscal period
period ))The graph excludes the nine properties (Takatsuki-Josai, Nitori Ibaraki, Kohnan Hiroshima, Tamachi, LaLaport
KOSHIEN, LAXA Osaka, Hamamatsu, NISHINOMIYA GARDENS and Head Office) leased to single tenants(occupancy rates of 100%).
(％)

100

Total portfolio
HEP

95

Kitano Hankyu

90

Hankyu Yamada

85

NU

Ueroku F Bldg.

Tennoz80

Shiod ome
Namba-Hanshin

75
70
2012/122013/01

2013/022013/032013/04

2013/05(Note) Figures express the value at the end of each month.

StableStable occupancy
occupancy rates
rates maintained
maintained since
since 1st
1st fiscal
fiscal period
period（％）

100
9599.5 100.0

99.3

98.5

99.3

98.8

98.1

98.5

98.7

98.4

98.7

99.0

99.4

98.5

99.0

99.5

1st
period'05/11

3rd
period'06/114th
period'07/055th
period'07/116th
period'08/057th
period'08/118th
period'09/059t h
per iod'09/1110th
period'10/0511th
period'10/1112th
period'11/0513th
period'11/1114th
period'12/0515th
period'12/1116th
period'13/05

90
85
80
2nd
period'06/05(Note) Figures indicate the values at the end of each fiscal period.

28

4-3. Operational Management Initiatives ①＜HEP Five＞
Largest tenant replacement since opening
The appeal of the Umeda area has increased due to the
opening of Hankyu Umeda Flagship Store and Grand
Front Osaka, and visitors are increasing, but thecompetition between the retail properties is intensifying.
With 20 new shops of the total of 170 shops and therenewal of 6 shops, casual brands whose core targets
are women in their teens and 20s were enhanced.

■Event at HEP Five

＜Dew Hankyu Yamada ＞
Maintained full occupancy
Periodically holding participatory events as a communitybased retail property such as picture book making andflower arrangements together with tenants has
contributed to increasing the number of visitors and sales.

■HEP Five new shop

＜Kitano Hankyu Building ＞
Entertainment-centered retail building
Change of business types and renewals were carried out
at some shops and events with the local community suchas candle nights are held on an ongoing basis in an
attempt to draw more visitors.
■Event at Dew Hankyu Yamada29

4-3. Operational Management Initiatives ②＜Shiodome East Side Building＞＜Ueroku F Building＞

Maintained full occupancy

Occupancy rate increased with new contracts

Utilize the benefits of the PM company
occupying the property and periodically work on
tenant relations to increase tenant satisfaction.

The occupancy rate increased to 97.2% as a
new tenant moved in from March.

＜Sphere Tower Tennoz ＞
Challenge: Leasing after Cancellation of Major Tenant

Occupancy rate at end of 16th fiscal period: 89.6% (fell to 42.8% after departure of main tenant)
As a notice of cancellation has been received from major tenant Net One Systems for the end of
August 2013 (12 floors) and the end of September 2013 (1 floor), leasing activities will commence suchas viewings especially for large-scale leasing, while enhancing the PM structure.
Features of Sphere Tower Tennoz
・At most, five floors in a row can be secured (about 1,400 tsubos)
・Has maisonette offices where 2 floors can be used integrally due to internal stairs
・Access to Haneda Airport is good and transportation is convenient due to direct connection to train
stationLeasing policy
・Make use of the above features, reach out primarily to companies considering consolidation of officespace or expanded office space and negotiate preferentially with companies that are able to contract
multiple floors based on the market rent of the area30

Rent Systems and Present Conditions of 16 Portfolio Properties ①4-4. (endof 16th fiscal period)＜Properties mainly using the sales-based overage rent system＞
Name

HEP Five
Specialty shop buildings (Citycenter SC)

Main rent system
Overage(fixed + variable)

Present conditions
The occupancy at the end of the period was 99.1% (tenant replacement underway in one section) and fulloccupancy is expected to be reached during the 17th fiscal period. The largest tenant replacement, change ofbrand and shop renewals (26 of the 170 shops) since the property’s opening was implemented this spring andshops reopened starting in March.
Vitalization events in collaboration with tenants and the PM company such as FIVE ACADEMY are effectively
being incorporated and implemented in an aim to attract visitors and improve sales.

＜Properties that mainly use the fixed rent systems＞
Name

Main rent system

Present conditions

Kitano Hankyu Building

Long-term, fixed(partly overage)

The occupancy rate at the end of the fiscal period was 97.8%, down by 2.2 points from the end of the previous
period (15th fiscal period).
Leasing activities for empty spaces are being conducted for tenants that will have a synergetic effect withexisting tenants as well as tenants that will vitalize the facility. Facilities are being activated such as withrenewals of some shops, change of business, etc. and events in conjunction with local events and such arebeing held to increase visitors.
Occupancy rate was stable at 100% throughout the fiscal period.
In addition to visitor-attractive events such as Anniversary Fair, participatory events such as making of 3D picture
books and flower arrangements are periodically held together with tenants.
Overall sales and rent income are stable as the trade area population is large and the property attracts many
visitors. In the rent revisions in the 17th fiscal period, negotiations are scheduled to have increased rent in view.
Also, some restaurants are scheduled to be replaced in an effort to further increase sales.

Specialty shop buildings (Citycenter SC)

Dew Hankyu Yamada
NSC (Neighborhood shopping
centers)

Long-term, fixed(partly overage)＜Properties using the fixed rent system＞
Name

Shiodome East Side
Building

Main rent system

Present conditions

Fixed

Maintained occupancy rate of 100% throughout the fiscal period.
Continue to utilize the benefits of the PM company occupying the property, implement preventive maintenancefor the building and reduce costs while strengthening tenant relations and minimizing risks of relocation anddecrease of rent.

Fixed

The occupancy rate at the end of the fiscal period was 89.6%, down by 0.6 points from the end of the previous
period (15th fiscal period).
Anticipating the departure of a major tenant in the 17th fiscal period, leasing activities will be implemented
especially for large leasing such as office consolidation, space expansion, etc. in an aim to secure tenant leasing
as early as possible.
The occupancy rate at the end of the fiscal period was 92.6%, down by 2.3 points from the end of the previous
period (15th fiscal period).
Although a new tenant moved in in July, a total of 3 notices of cancellation have been received for the 17th and18th fiscal periods and the occupancy rate is expected to fall to the 70% level. Therefore, resilient management
in close collaboration with the PM company will be carried out in terms of business type (shops where customers
visit such as sales offices, schools and clinics) and such in an aim to secure tenant leasing as early as possible.
The occupancy rate at the end of the fiscal period was 97.2%, up by 7.3 points from the end of the previous
period (15th fiscal period).
Going forward, leasing activities centering on needs for increased floor space will be conducted. Tenant relations
will be continued to be strengthened and risks of relocation and decrease of rent will be minimized.

OfficeSphere Tower Tennoz
OfficeNamba-Hanshin
Building

Fixed

OfficeUeroku F Building
OfficeFixed

31

Rent Systems and Present Conditions of 16 Portfolio Properties ②4-4. (endof 16th fiscal period)＜Properties that mainly use the long-term, fixed rent systems＞
Name

HANKYU NISHINOMIYAGARDENS
RSC (Regional shopping centers)

Hankyu Corporation Head
Office Building

Main rent

Present conditions

systemLong-term, fixed Stable rent income based on the fixed-type master lease method (note) with Hankyu Corporation.
Tenants are performing well as sales in fiscal 2012 was JPY 73.6 bn and as sales have increased for four
consecutive years since the property’s opening in 2008.
Long-term, fixed Stable rent income based on the fixed-type master lease method (note) with Hankyu Corporation.
Main base of Hankyu Hanshin Holdings Group and Hankyu Corporation uses it as its head office building.

OfficeTakatsuki-Josai Shopping
Center
NSC (Neighborhood shopping centers)

LaLaport KOSHIEN (site)
RSC (Regional shopping centers)

Long-term, fixed Stable rent income based on the fixed-type master lease method (Note) with Kohnan Shoji Co., Ltd.
As a community-based shop, the tenant composition of home center, grocery supermarket, homeelectronics retailer, sporting goods store, etc. fulfills needs of residents in the surrounding area.
Long-term, fixed Stable rent income based on a contract for fixed-term land lease for business use with Mitsui FudosanCo., Ltd.
Property’s competitiveness further enhanced by conducting a major renewal in spring 2011 (bringing in
new stores of fast-fashion chains such as H&M, ZARA, UNIQLO and newly adding “LaLaKid’s Park”).

Long-term, fixed Stable rent income based on the fixed-type master lease method (Note) with Hanshin Electric Railway
Co., Ltd.
City hotels
The occupancy rate of Hotel Hanshin that is under a sub-leasing contract remained at a high level.
Long-term,
fixedStable rent income based on long-term lease with Fujita Kanko Inc.
Hotel Gracery Tamachi
Hotel occupancy rate has been a high level and the 16th fiscal period’s average was high at 98.3%. Listed
High-grade hotels for business travelers
in the hotel section of “MICHELIN Guide 2013” and this was utilized in sales promotion development andcommemoration plans.
Kohnan Hiroshima Nakano- Long-term, fixed Although this retail property offers high transportation convenience with a home center and a grocery store,
the tenant’s management balance is in a tough situation and negotiations with Kohnan are underway
Higashi Store (site)
concerning measures for improvement including easing of economic conditions.
NSC (Neighborhood shopping centers)

LAXA Osaka

Long-term, fixed Stable rent income based on the fixed-type master lease method (Note) with RNT HOTELS Co., Ltd.
(consolidated subsidiary of ROYAL HOLDINGS Co., Ltd.).
High-grade hotels for business travelers
By providing a wide range of accommodation plans among other incentives, the hotel continues to maintaina high-level occupancy rate in the Hamamatsu City area.

Richmond Hotel Hamamatsu

Nitori Ibaraki-Kita Store (site)
Specialty shops

Long-term, fixed Stable rent income based on a contract for fixed-term land lease for business use with Nitori Holdings Co.,Ltd.
The trade area population is increasing mainly due to local residential property development and tenants’businesses are performing well.

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

32

4-5. Appraisal Value
Improvement of appraisal value by 0.1% (compared to after asset replacement)
While the appraisal value of Tennoz dropped by JPY 950 mn (-12.3%), because the overall appraisal value of other properties
increased due to the decrease of cap rates and such, the overall appraisal value increased by JPY 100 mn (+0.1%) (Note).
While a decrease of the overall cap rate (about -0.1%) can be seen, as properties with low cap rates were sold and properties
with high cap rates acquired in asset replacements, the weighted average cap rate increased.
(Note) Values for HEP Five are calculated with the appraisal values at the equity ratio of 14% while for HANKYU NISHINOMIYA GARDENS and
Hankyu Corporation Head Office Building the amount of change of appraisal values from the time of acquisition are calculated.
（J PY m n）
2 5 ,0 0 0

6 .0 %
5 .0 %

2 0 ,0 0 0

4 .0 %
1 5 ,0 0 0

3 .0 %
1 0 ,0 0 0(Note 1)
2 .0 %

5 ,0 0 0

1 .0 %
0 .0 %

01s t
per iod'05/ 112n dp er iod' 06/0 5

3rd
p er iod' 06/1 1

4th
p er iod' 07/0 5

5 th
pe rio d'0 7/116 th
pe rio d'08 /05

7th
pe rio d'08 /118t h
per iod'09 /059th
period'09/ 1110 th
per iod'10/ 05

11 th
period'10/ 1112 th
p er iod' 11/0 513t hpe rio d'1 1/1114th
pe rio d'1 2/0515t h
pe rio d'1 2/1116t h
pe rio d'13 /05

H EP

K itan o Ha nk y u

H an k yu Y am ad a

U e r ok u F B l dg .

T ak at s u k i- J os ai

N it o r i Ib ar ak i

K oh na n H i r os h im a

NU

T en no z

S hi od om e

T am ac hi

L A X A O s ak a

L aL a po r t KO S H IE N

N am ba- H an s hi n

H am a m at s u

H A N K YU N IS H IN O M IYA G A R D E NS

H an k yu C or po rat io n H ead
O ff ic e B uil di ng

W e ig h t ed ave r age C A P ra te(Note 2)

(Note 1) Concerning HEP Five, because 31% quasi co-ownership of the trust beneficiary interest was transferred in the 16th fiscal period (April
9, 2013) and differs from the 14% equity ratio ownership, values calculated with the equity ratio of 14% are shown from the 1st to 15th
fiscal periods.
(Note 2) Cap rates are the weighted average based on appraisal values.

33

4-6. List of Appraisal Values(Unit：JPY mn)
Acquisition priceEnd of previous period(15th fiscal period-end)

Cap
rate
(Note 1)

①After asset
replacement② End of current
period(16th fiscal period-end)

Cap
rate
(Note 1)

Change(②-①)

Change(②-①)/①③Value recorded on
the balance sheet at
end of current period

Unrealized
income/loss②-③

Value to book ratio②/③

HEP Five ( quasi coownership of the trust
beneficiary interests) (Note 2)

6,468

23,895

4.5%

7,434

7,462

4.5%

28

0.4%

5,864

1,597

127.2%

Kitano Hankyu Building

7,740

6,650

5.6%

6,650

6,650

5.5%

0

0.0%

7,750

-1,10085.8%

Dew Hankyu Yamada

6,930

7,000

5.5%

7,000

7,100

5.4%

100

1.4%

5,949

1,150

119.3%

Takatsuki-Josai
Shopping Center

8,600

7,371

5.8%

7,371

7,497

5.7%

126

1.7%

7,656

-159

97.9%

Ueroku F Building

2,980

2,470

6.0%

2,470

2,500

6.0%

30

1.2%

2,833

-333

88.2%

Nitori Ibaraki-Kita Store(Site)

1,318

1,414

6.5%

1,414

1,435

6.3%

21

1.5%

1,340

94

107.0%

Kohnan Hiroshima NakanoHigashi Store (Site)

2,175

1,910

6.7%

1,910

1,890

6.7%

-20

-1.0%

2,280

-390

82.9%

-

-

-

-

-

19,30014,200

4.8%-

Sphere Tower Tennoz (33%of the quasi co-ownership of
the trust beneficiary

9,405

7,788

4.6%

7,788

6,831

4.7%

-957

-12.3%

8,722-1,891

78.3%

Shiodome East Side Bldg.

19,025

12,6004.8%

12,60012,900

4.7%

300

2.4%

18,196-5,296

70.9%

Hotel Gracery Tamachi

4,160

3,860

5.4%

3,860

4,000

5.2%

140

3.6%

3,960

39

101.0%LAXA Osaka

5,122

5,110

5.9%

5,110

5,200

5.8%

90

1.8%

4,704

495

110.5%

LaLaport KOSHIEN(site)

7,350

6,710

5.0%

6,710

6,850

4.9%

140

2.1%

7,748

-898

88.4%

Namba-Hanshin Building

4,310

2,860

5.5%

2,860

2,860

5.5%

0

0.0%

4,050

-1,19070.6%

Richmond Hotel Hamamatsu

2,100

1,952

6.3%

1,952

1,982

6.2%

30

1.5%

1,740

241

113.9%

18,300--20,30020,272

5.2%

-28

-0.1%

18,4411,830

109.9%

10,200--

10,20010,300

4.9%

100

1.0%

10,303-3

100.0%

121,306

105,790

5.1%

105,629

105,729

5.2%

100

0.1%

111,544-5,815

94.8%

ＮＵ chayamachi

HANKYU NISHINOMIYAGARDENS (28% of the quasi
co-ownership of the trust
beneficiary interests)
Hankyu Corporation Head
Office Building
Total

-

-

(Note 1) Cap rates are cap rates based on the direct capitalization method used for appraisal value calculations (Nitori Ibaraki-Kita Store (site), Kohnan Hiroshima
Nakano-Higashi Store (site) and LaLaport KOSHIEN (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) 31% quasi co-ownership of the trust beneficiary interest was transferred on April 9, 2013 and the ratio of ownership as of the end of the period is 14%.
(Note 3) Concerning HEP Five, because 31% quasi co-ownership of the trust beneficiary interest was transferred in the 16th fiscal period (April 9, 2013) the ownershipis now of a 14% equity ratio.

34

5. Financial Strategies35

5-1. Basic Financial Policy / Outstanding Debt
As of May 31, 2013
Outstanding Debt by Lender (JPY mn)

Basic Financial Policy●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
Avg. funding cost（interest-bearing debt＋utilized
amount of security deposits andguarantees)
Avg. debt financing cost (including
investment corporation bonds)
Avg. remaining years
on long-term loans payable andinvestment corporation bonds
Long-term debt ratio
Fixed debt ratio
LTVInterest-bearing debt ratio
Investor rating（R&I)

As of end of
15th period

As of end of
16th period

JPY 56.9 bn

JPY 56.9 bn

1.25%

1.27%

1.36%

1.33%

2.4 years

2.0 years

89.5%
69.8%
55.8%
45.5%
A+
（stable）

93.0%
73.3%
53.5%
46.7%
A+
（stable）(Note) LTV = (Interest-bearing debt + Security deposits/guarantees –Cash deposits of security deposits/guarantees) / (Total amountof assets* – Cash deposits of security deposits/guarantees)* Adjusted appraised value basis

3 ,00 0
5.9 %5,7 00
11 .2%

11 ,20 0
22 .0 %

5,900
11 .6%

5 ,90 01 1.6 %

1 1,0 00
21 .6%
8,2 00
16 .1%

Mitsubishi UFJ Trust and Banking Corporation
Development Bank of Japan Inc.
Sumitomo Mitsui Banking Corporation
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Mizuho Corporate Bank, Ltd. (Note)
Sumitomo Mitsui Trust Bank, Limited
The Senshu Ikeda Bank, Ltd.

Total JPY 50.9bn(Note) Changed name to Mizuho Bank, Ltd. as of July 1, 2013.
Registration for Issuance of Investment Corporation Bonds

Planned value of issuance (upper limited):
JPY 100,000 mn
Planned issuance period: Dec. 19, 2011 to Dec. 18, 201336

5-2. Trends of Debt Financing Cost and Diversification of Repayments Dates
As of May 31, 2013

Diversification of Repayment Dates

Trend of Debt Financing Costs and Avg.
Remaining Years（JPY bn）
20

Realized reduced debt financing costs and extending
the average remaining years of loans payable18
2.5 years

1.65%
1.60%

2.4 years

1.59%
1.57%

1.55%

1.52%

1.51%

1.50%
1.45%

2.1 years 2.1 years

2.0 years
2.0 years

1.43%

1.5 years

1.5 years 1.5 years
1.36%

Investment
corporation bonds

12

JPY 6.0bn

10

1.33%
1.0 years

1.30%
As of e nd of
11th period

As of en d of
12t h period

As of end of
13t h p eri od

As of end of
14t h p eri od

As of end of
15th period

As of e nd of
16th period

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

12.5

6
4

1.35%

As of end of
10th period

148

1.6 years

1.40%

16

11.2

10
6

2

1.2

1

6

7

2

25th
period
'1 7/1126th
period'18/05

0
17th
18th
19th
20th
period period period period'13/11 '14/05 '14/11 '15/05

21st
period'15/11

22nd
23rd
24th
period period period'16/05 '16/11 '17/05

JPY 1 bn of short-term borrowings maturing July 23, 2013 arescheduled to be refinanced with long-term (5 year) borrowings37

5-3. Asset Scale and LTV (Loan to Value)
Total acqu isition 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

Capitalincrease by
1st public
offering(JPY bn)
270
240

57.9

150

39.1

（％）
55.9 55.8

60

53.5
49.5

50

49.4
31.0 30.0 30.7

55.2

55.6 56.1 55.9 56.0

45.6 46.0

46.1

210
180

Capital increaseby 2nd public
offering

28.8

40.8

46.9 46.2 45.4 45.5 45.2

45.5 45.5 46.7

40.3

43.3

30

120

20

90
60

40

21.3

18.0 18.2 18.9

10

30

0

0
1st
2nd
3rd
4th
5th
6th
7th
8th
9th
period period period period period period period period period'05/11 '06/05 '06/11 '07/05 '07/11 '08/05 '08/11 '09/05 '09/11

No. of物件数
properties 5

6

7

8

9

10th
11th
12th
13th
period period period period'10/05 '10/11 '11/05 '11/11

14th
15th
16th
After
period period period 2nd PO'12/5 '12/11 '13/05 '13/06

11 11 16 15 15 15 15 15 15 15 16 18

LTV improved significantly38

6. Overview of Financial Results
for the 16th Fiscal Period396-1. Financial Highlights（Unit:JPY mn）

Item

Forecast for 16th Fiscal Period①(as of Jan.22, 2013)

Results for 16th Fiscal Period ②(Dec.1, 2012 to May. 31, 2013)

Change②-①

Operation period (days)

182

182

―

Operating revenues

4,672

8,088

3,416

Operating income

1,402

1,466

64

Ordinary income

983

1,009

26

Net income

982

1,008

26

Number of outstanding
investment units at end of
fiscal period (units)

85,40085,400―Distribution per unit (JPY)

11,50011,806306

23,01623,444427

FFO per unit (JPY)(Main factors for increase/decrease in profit)①②① Income on sale of HEP+JPY 3,492 mn
Loss on sales of NU-JPY 3,470mn
Increase in rental businessprofit from asset replacement+JPY 51mn② Investment unit issue costs-JPY 28 mn

40

6-2. Income Statement / Cash Distribution Statement
Income Statement
15h Fiscal Period

Item(Operation period:183 days)(Operation period:183 days)

Dec. 1, 2012 to May.31.2013

Lease operating revenues
Income on sale of real estate, etc.
Distribution revenue of silent partnership

2. Operating expenses
Lease operating costs
Loss on sale of real estate
Asset management remuneration
Officer remuneration
Asset consignment remuneration
Adminstrative agency remuneration
Auditor remuneration
Other operating expenses
Operating income
3. Non-operating revenues
Interest earned
Other non-operating revenues
4. Non-operating expens esInterest expenses
Loan related expense
Interest due on investment corporation bonds
Amortization of investment corporation bondissuance costs

4,736
4,700
―
35
3,264
2,892
―
274
3
16
31
7
38
1,471
6
0
5
432
359
30
37
3

Pretax net income for current period

―
1
1,045
1,045

Corporate, local and enterprise tax

1

Investment unit issue costs
Other expenses
Ordinary income

Adjustment for corporate tax, etc.
Net income for current period
Retained earnings carried forwardfrom the previous period
Unappropriated income for current period

0
1,044
0
1,044

(Unit: JPY thousand)16th Fiscal Period

Jun. 1, 2012 to Nov. 30, 2012
Amount

1. Operating revenues

Cash Distribution Statement（Unit: JPY mn）

Percentage

100.0

68.9

31.1
0.1
9.1

22.1

22.0

Amount

8,088
4,556
3,492
40
6,621
2,787
3,470
272
3
16
30
7
32
1,466
1
0
0
458
345
30
38
3
28
13
1,009
1,009
1
-0
1,008
0
1,008

Item

AmountAmountAmount3,352

Unappropriated income for current
period

1,044,317

1,008,275-36,042

Distributions

1,044,271(12,228)46

1,008,232(11,806)
43-36,038(-422)-3①(Distribution per unit (JPY))
Retained earnings carried forward

81.9

ChangeChangePercentage

100.0

15th Fiscal Period 16th Fiscal Period

3,357

②
(Main factors for increase/decrease① Increase of operating revenues

18.1
0.0

-5
-4

5.7

25

12.5

-36

12.5

-36

Income on sale of HEP+JPY 3,492 mn
Decrease of lease operating revenues due toasset replacement–JPY 96 mn
Decrease of utilities expense income(excluding replacement properties)–JPY 42 mn② Increase of operating expenses
Loss on sale of NU+JPY 3,470 mn
Decrease of lease operating revenues due to asset
replacement–JPY 105 mn
Decrease of utilities expenses (excluding replacement
properties)–JPY 45 mn
Increase of maintenance and repair fees (excluding
replacement properties)+JPY 39 mn

Lease operating revenues / expenses
Breakdown: See pages 43 and 4441

6-3. Balance Sheet（U nit: JPY m n）

（Unit: JPY mn）

Item

15th Fiscal Period

16th Fiscal Period(as of Nov. 30, 2012)(as of May. 31, 2013)

AmountRatio (%)

AmountChangeItem

15th F iscal Period

16th F iscal Period(as of Nov. 30, 2012)(as of M ay. 31, 2013)

AmountRatio (%) Amount

Ratio (%)

AmountC han ge

Ratio (%)

Amount

14.6

6,267

Liabilities

AssetsI Current assets total

9,781

7.8

9,018

7

-762

I Current liabilities total

Currency and demand deposit

1,676

1,939

Operating accounts payable

Currency and demand depositin trust

7,672

6,467

Operational income receivable

44

316

Deposit paid

295

119

Prepaid expense
Deferred income tax assets

II Fixed assets total

90

142

3
115,306

32
92.2

112,736

93-2,569

1. Tangible fixed assets
Buildings
Structures
Tools, furniture and fixtures
Land
Buildings in trust

2,174

2,111

284
1
7,938

0
7,938

32,494

31,826

OthersIntangible fixed assets total

957

169

1

1

Accrued consum ption tax

42

21

Advance received

475

615

0

5

417

463

Income taxes payabl e

57,26945.8

47,70140,90034,900

Secur ity depo sits

1,504

1,457

Secur ity depo sits in trust

Liabilities total

110,49491-2,6591,051

Interest-bearing
liabilities
56,900mn

1

89

8,864

39.2

-9,567

5,343

68,72454.9

65,42353.7

I Unitholders capital

55,34444.2

55,344

45.4

II Total surplus

1,044

0.8

1,008

0.8

-3,300N et assets

U nappropriated i ncom e for current
period

94
0.8

166

II Total noncurrent li abilitei es

957

4
961

10

Accrued expenses(retur n w ithin 1 yea r)

2. Intangible fixed assets
Land leasehold

12,00010

Secur ity depo sits

0
90.4

4,000

Accrued dividendLong term loans p ayable

67,388113,154

4,000

236
61

69,613

Tangible fixed assets total

6,000Long term loans p ayable(return within 1 year)

659

181
67
―

Short term loans payable

6,000

398

Trust construction account

435

6,000

Machinery and equipment in trust

Land in trust

17,722

Inves tment corpora tion bonds

Structures in trust

Tools, furniture and fixtures in trust

9.2

340

C urrent deposi t received

269

11,454

1,044

Total
security
deposits
JPY 7,264
mn
JPY 2,652
mn wasallocated forpropertyacquisitions

1,008

N et assets total

56,38945.1

56,353

46.3-36

Liabilities and net assets total

125,113100.0

121,777

100.0-3,336

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

IIITotal deferred assets
Investment corporation bondissuance costs

Assets total

1,119

1,119

60

61

10
1,190

1.0

10
1,190

1

0

25

0.0

22

0

-3

100.0

121,777

100-3,33625
125,1132242

6-4. Income and Expenditure by Property ①（Un it： JP Y mn ）Item

HE P Fiv e( Not e 2)

K it ano H anky u
B ldg.

Dew H anky u
Y ama daT akat suk iJo sai S C

N itor i I barak iK ita S t ore( sit e)(N ote 1)

K ohnanHir oshim a
N akan oH igashi S t ore(s it e)NU
ch aya m a chi(N ote 3 )Hot el G r acery
T am achi

18 2

182

1 36

18 2

182

R ichm ond
H otelHam am at s u(N ot e 1)

LaLapor t
K O S H IE N
(s it e)N um be r o f op era tin g d ays
o f 16 th fi scal p er io d

18 2

1 82

18 2

182

L ea se o pe ra ti ng re ve nu es tota l

80 2

5 36

37 3

284

76

4 70

12 1

257

64 4

3 77

25 9

283

76

3 48

11 6

257

52

1 10

45

―

―

59

―

―

10 6

48

69

0

0

62

4

0

54 3

3 87

22 6

147

7

4 07

54

106

11 8

1 22

75

9

0

79

1

1

62

1 28

46

0

―

80

―

―

5

0

1

21

―

0

―

0

11 4

2

2

―

―

57

―

―

11

10

7

10

―

7

―

0

2

2

1

0

―

1

0

0

Ta x a nd pu bli c du es

56

50

26

26

6

38

14

102

O the r e xp en se s

25

1

3

0

―

1

0

1

In com e fr om le ase
Uti liti es ex pe nse i nco m e
O the r i nco m e s
L ea se o pe ra ti ng costs tota l
P ro pe rty/Fa cil ity m a na g em en t
fe es
Uti liti es ex pe nse
Re nt p ai d
A dv er tisin g a nd pr om oti one xpe n se s
Re pa ir exp en se
No nl ife in su ra nce pr em iu m

1 82

14 5

69

62

77

―

1 40

36

0

L ea se o pe ra ti ng in com e

25 9

1 49

14 7

137

69

62

67

150

N OI
( Le ase op era tin g i nco m e +D ep re ciati on )

40 5

2 18

20 9

214

60

69

2 03

10 3

150

65

5

46

1

―

―

―

1

―

0

―

De pr eci ati on

C ap ital ex pe nd itur e(Note 1) Rent Information is not disclosed as the consent of the tenant was not obtained.
(Note 2) Regarding HEP Five, figures until April 8, 2013 are calculated using the 45% quasi co-ownership whereas figures after April 9, 2013use the 14% quasi co-ownership.
(Note 3) NU chayamachi was sold on April 16, 2013.

43

6-4. Income and Expenditure by Property ②（U n it： JP Y m n ）Item

NI S HI NO MI YA
G A RDEN S(2 8% of thequas i coown ers hip oft he t rus t
benef ic iary
int erest s)

Han kyuC orp o rati on
Hea d O ffi ce
B ld g.

S hi od om e
Ea st
S i de Bl dg .

U eroku F
B ldg.

S ph ere Tow er
Tennoz(33% of thequas i coowners hip oft he t rus t
benef ic iary
int erest s)

LAX A O s aka

Nam baH anshi n
B uilding

Item

46

1 82

52

182

18 2

182

1 82

N um be r o f op era tin g d ays
o f 16 th fi scal p er io d

15 4

3 95

10 1

132

31 0

254

1 44

L ea se o pe ra ti ng re ve nu es tota l

15 4

3 72

10 1

114

24 3

254

1 20

Uti liti es ex pe nse i nco m e

―

21

―

8

22

―

9

O the r i nco me s

―

2

―

8

44

―

14

49

1 95

37

91

17 7

166

1 27

0

18

0

22

27

2

23

N um be r o f op era tin g d ays
o f 16 th fi scal p er io d
L ea se o pe ra ti ng re ve nu es tota l
In com e fr om le ase

L ea se o pe ra ti ng costs tota l
P ro pe rty/Fa cil ity ma na g em en t
fe es
Uti liti es ex pe nse

―

26

―

9

52

―

In com e fr om le ase

Tot al(16 propert ies)―
4 ,55 6
3 ,86 5

Uti liti es ex pe nse i nco m e

32 9

O the r i nco m e s

36 1

L ea se o pe ra ti ng costs tota l

2 ,78 7

P ro pe rty/Fa cil ity m a na g em en t
fe es

50 6

15

Uti liti es ex pe nse

42 1

Re nt p ai d

49

Re nt p ai d
A dv er tisin g a nd pr om oti one xpe n se s
Re pa ir exp en se

1
―
―

0
―
4

―
―
0

―
―
9

―
0
10

18
―
10

―
―
11

No nl ife in su ra nce pr em iu m

0

1

0

0

0

3

0

Ta x a nd pu bli c du es

―

21

―

12

28

49

18

O the r e xp en se s

0

2

0

1

2

1

0

46

1 21

35

34

55

81

57

10 4

1 99

64

40

13 3

88

16

L ea se o pe ra ti ng in com e

1 ,76 8
2 ,78 2

De pr eci ati on
L ea se o pe ra ti ng in com e
N OI( Le ase op era tin g i nco me +D ep re ciati on )C ap ital ex pe nd itur e

A dv er tisin g a nd pr om oti one xpe n se s

17 6

Re pa ir exp en se

93

No nl ife in su ra nce pr em iu m

17

Ta x a nd pu bli c du es
O the r e xp en se s
De pr eci ati on

15 0

3 21

99

75

18 8

169

73

N OI
( Le ase op era tin g i nco m e +D ep re ciati on )

―

2

11

37

7

―

62

C ap ital ex pe nd itur e

46 3
44
1 ,01 417 5(Main capital expenditure)
Kitano Hankyu Building
Renewal work for anti-disaster facilities JPY 16 mn
Repair work for air conditioners JPY 16 mn

Ueroku F Building
Renewal work for air conditioners JPY 27 mn
Namba-Hanshin Building
Renewal work for central monitoring and control
device JPY 50 mn

44

6-５. Financial Indicators
Item

Operation period

15th Fiscal Period

16th Fiscal Period

183

182

Remarks
15th fiscal period: Jun. 1, 2012 to Nov. 30, 2012
16th fiscal period: Dec. 1, 2012 to May. 31, 2013

0.8%

0.8%

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

1.7%

1.6%

Calculated from duration of operation

1.9%

1.8%

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

3.7%

3.6%

Calculated from days of operation

45.1%

46.3%

Net assets / Total assets

55.8%

53.5%

(51.9%)(50.8%)

45.5%

46.7%

6.1times

6.3times

Net Operating Income (NOI)

JPY 2,794 mn

JPY 2,782 mn

Net lease operating income + Depreciation

Funds From Operation (FFO)

JPY 2,031 mn

JPY 2,002 mn

Net income for current fiscal period +Depreciation - Income/loss onsale of real estate

Return On Assets (ROA)(per annum)
Return On Equity (ROE)(per annum)
Ratio of net assets at end of period

Loan To Value ratio at end of period (LTV)
Ratio of interest-bearing debts to total assets
at end of period
Debt Service Coverage Ratio (DSCR)(Amount of interest-bearing debt + Security deposits - Matched money to security deposits)/(Total assets(*) - Matched money to security deposits)*Appraisal-value basis (Ratios in brackets are based on book value)Interest-bearing debt / Total assets
Pre-interest and pre-depreciation net income for current fiscal period /Interest expenses

45

7. APPENDIX

46

7-1. Portfolio List (end of 16th Fiscal Period) ①
As of May 31, 2013
Classifi
cationCode(Note 1)Name

Mixed-use Properties

Office Properties

Retail Properties

HEP Five

Location

Completion date

Building
age(Note 2)

Kita W ard,
Osaka City

Nov. 1998

14.6

R1(K)

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

R2(K)Kitano Hankyu Bldg.

Kita W ard,
Osaka City

Jun. 1985

28.0

R3(K)

Dew Hankyu Yamada

Suita City,
Osaka Prefecture

Oct. 2003

R4(K)

Takatsuki-Josai
Shopping Center

Takatsuki City,
Osaka Prefecture

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

R6

Occupancy rate
(Note 3)

Total numberof tenants(Note 3)

6,337.37

100.0%

1(2,958.94)(99.1%)(131)

PML
Date of acquisition(Note 4)

Acqusition price Investment(JPY mn )ratio

Appraisal value(JPY mn)(Note 7)

Cap rate(Note 5)

4.6%

Feb. 1, 2005

6,468

5.6%

7,462

4.5%

10.1%

Feb. 1, 2005

7,740

6.7%

6,650

5.5%

28,194.15

100.0%

2(18,477.35)(97.8%)(23)

9.7

12,982.19

100.0%

28

4.5%

Feb. 1, 2005

6,930

6.0%

7,100

5.4%

Apr. 2003

10.2

31,451.81

100.0%

1

6.1%

Nov. 15, 2005

8,600

7.4%

7,497

5.7%

Ibaraki City,
Osaka Prefecture――

6,541.31

100.0%

1―

Mar. 29, 2006

1,318

1.1%

1,435

6.3%

Kohnan Hiroshima NakanoHigashi Store (site)

Aki W ard,
Hiroshima City――

100.0%

1―

Oct. 2, 2006

2,170

Apr. 9, 2007

5

1.9%

1,890

6.7%

R8

Hotel Gracery Tamachi

Minato W ard,
Tokyo

Sep. 2008

4.7

4,943.66

100.0%

1

10.2%

Dec. 25, 2008

4,160

3.6%

4,000

5.2%

R9(K)

LaLaport KOSHIEN(site)

Nishinomiya City,
Hyogo Prefecture――

126,052.16

100.0%

1

6.0%

Jan. 22, 2009

7,350

6.3%

6,850

4.9%

R10

Richmond Hotel Hamamatsu

Naka W ard,
Hamamatsu City

Sep. 2002

10.7

6,995.33

100.0%

1

13.9%

Jan. 22, 2009

2,100

1.8%

1,982

6.2%

R11(K)

HANKYU NISHINOMIYAGARDERNS

Nishinomiya City,
Hyogo Prefecture

Oct. 2008

4.7

65,372.41

100.0%

1

9.2%

Apr.16, 2013

18,30015.8%

20,272

5.2%(28% of the quasi co-ownership of
the trust beneficiary interests)

25,469.59
60.14

O1

Shiodome East Side Bldg.

Chuo W ard,
Tokyo

Aug. 2007

5.8

9,286.58

100.0%

6

4.6%

Feb. 29, 2008

19,025

16.4%

12,900

4.7%

O2(K)

Hankyu Corporation Head
Office Building

Kita W ard,
Osaka City

Sep. 1992

20.7

27,369.37

100.0%

1

3.7%

Apr.10 2013

10,2008.8%

10,300

4.9%

M1(K)

Ueroku F Bldg.

Chuo W ard,
Osaka City

Sep. 1993

19.7

4,611.82

97.2%

12

3.2%

Nov. 1, 2005

2,980

2.6%

2,500

6.0%

M2

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

Shinagawa W ard,
Tokyo

Apr. 1993(Note 6)20.2

8,806.19

89.6%

22

2.7%

Oct. 2, 2007

9,405

8.1%

6,831

4.7%

M3(K)

LAXA Osaka

Fukushima W ard,
Osaka City

Feb. 1999

14.3

30,339.91

100.0%

1

3.4%

Jan. 22, 2009

5,122

4.4%

5,200

5.8%

M4(K)

Namba-Hanshin Building

Chuo W ard,
Osaka City

Mar. 1992

21.2

4.5%

Jan. 22, 2009

4,310

3.7%

2,860

5.5%

3.5%

―

116,184

100.0%

105,729

5.2%

Sphere Tower Tennoz

Total(at the end of 16th fiscal period)
Retail Properties

Total leasable area(m2)
(Note 3)R12(K)

R13(K)AEON MALL
SAKAIKITAHANADA(site)(tentative name)MANDAI
Toyonaka Honancho store(site)

11.8

9,959.01

100.0%

1(6,456.88)（92.6%)(17)404,773.01

99.7%

81

(388,175.66)(99.5%)(248)

Kita W ard,
Sakai City――

64,104.27

100.0%

2―

June. 27, 2013

8,100

―

8,490

5.0%

Toyonaka city
Osaka Prefecture――

8,159.41

100.0%

1―June. 27, 2013

1,870

―

2,060

5.2%

3.5%

―

126,154―

116,279

5.2%

Total (including public offering properties）

11.8

477,036.69

99.8%

84

(460,439.34)(99.6%)(251)47

7-1. Portfolio List (end of 16th Fiscal Period) ②(Note 1) These codes and numbers represent properties owned by Hankyu REIT classified into the following properties and regions.
Left-side letters represent properties: “R” is for retail property, “O” is for office property, and “M” is for mixed-use property.
The numbers are assigned to properties in order of date of acquisition, and the letter “K” in parenthesis means the property is locatedin 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 ofend-tenants, respectively.
For HEP Five, 14% quasi co-ownership of the trust beneficiary interests is indicated as the leasable area.
For Sphere Tower Tennoz, 33% quasi co-ownership of the trust beneficiary interests is indicated as the leasable area.
For HANKYU NISHINOMIYA GARDENS, 28% quasi co-ownership of the trust beneficiary interests is indicated as the leasable area.
(Note 4) PML of LaLaport KOSHIEN (site) is calculated for the parking garage space administration building (394.88m2).
(Note 5) Cap rates and discount rates are based on the direct capitalization method used for appraisal value calculations (Nitori Ibaraki-Kita Store(site), Kohnan Hiroshima Nakano-Higashi Store (site), LaLaport KOSHIEN (site) and AEON MALL SAKAIKITAHANADA (site) areallocated a discount rate using the DCF method.) and the portfolio total is the weighted average cap rate based on appraisal values.
(Note 6) The completion date for the office and store portions is indicated.
(Note 7) Appraisal values for AEON MALL SAKAIKITAHANADA (site) and (tentative name) MANDAI Toyonaka Honancho Store are as of May 1,
2013.

48

7-2. Portfolio View (end of 16th fiscal period) ①
Urban retail properties

Community-based retail properties
HANKYU NISHINOMIYA GARDENS

Dew Hankyu Yamada

HEP Five

LaLaport KOSHIEN (site)

LaLaport KOSHIEN (site)

Kohnan Hiroshima Nakano-Higashi Store (site)

Kitano Hankyu Building

Takatsuki-Josai SC

Nitori Ibaraki-Kita Store (site)49

7-2. Portfolio View (end of 16th fiscal period) ②
Hotel
LAXA Osaka

Richmond Hotel Hamamatsu

OfficeHotel Gracery Tamachi

Shiodome East Side Building

Hankyu Corporation
Head Office Building

Namba-Hanshin Building

Ueroku F Building

Sphere Tower Tennoz

50

7-3. Trends of Distribution per Unit
（JPY）

20,00018,962Distribution per unit forecast

18,00016,00014,00012,00010,0008,000

13,57913,723

14,955

14,99017,365
15,342Distribution per unit

14,310

JPY12,700

16,500 11,611
12,41512,694 12,68812,32412,228
15,00011,806
14,30014,10014,10013,00012,80012,70012,50012,800
12,10012,00012,300 12,00012,000
11,50013,572

6,000
4,000
2,000
0
1s t
2nd
3rd
4th
5th
6th
7th
8t h
9t h
10th 11th 12t h 13t h 14th 15th 16th 17th
period period period period period period period period period period period period period period period period period'05/11 '06/ 05 '06/11 '07/05 '07/11 '08/05 '08/11 '09/ 05 '09/ 11 '10/05 '10/11 '11/05 '11/11 '12/05 '12/ 11 '13/5 '13/11

Irregular period (303 days)(Comparison with 16th fiscal period forecast: +JPY 306 per unit, net income +JPY 26 mn)
Increase in operating income +JPY 64 mn(Increase of lease operation income from asset replacement + JPY 50 mn, Income/loss on transfer + JPY 21
mn, Increase of repair expenses -JPY 13 mn, etc.)

Increase in non-operating expenses –JPY 39 million(Investment unit issue costs JPY 28 mn, etc.)

Target a level of JPY 12,000 or more on an ongoing basis and aim for further increase51

7-4. Income Ratio by Rent Category and Sales-Based Overage Rent System Mechanism
Income Ratio by Rent Category and Variation Factors
3.6%

Variablerent
tenants

Fixedrent
tenants<Variable-rent portion>
Rent income varies inaccordance with the overallsales of primarily HEP Five
and NU chayamachi

32.2%<Fixed-rent portion>
Rent income varies inaccordance with theoccupancy rates and rent
levels of primarily HEP Five
and NU chayamachi

3.3%

3.0%

32.3%

25.1%

96.7%

96.4%
64.2%

Actualfixed-rent
portion

64.4.%

71.9%

97.0%

Rent income varies inaccordance with theoccupancy rates and rent
levels of remaining properties

Total rent income

JPY 4.05 bn(excluding warehouse income) 12th fiscal
第12期
periodJPY 3.96 bn
14th fiscal
第14期
periodJPY 3.84 bn
16th fiscal
第16期
periodConcept Diagram of General Sales-based Overage Rent System
Rent income
Variablerent
portionFixedrent
portionTenant sales
Point from where sales-based
rent is generated

52

7-5. Hankyu/Hanshin Lines and Properties Held
Properties held
outside the Kansai
regionDew Hankyu
Yamada(Tokyo)Tennoz
Shiodome
TamachiNitori Ibaraki-Kita

MANDAI Toyonaka
Honancho Store(Other areas)
Kohnan Hiroshima
Hamamatsu
HANKYU NISHINOMIYAGARDENS

Takatsuki-Josai

Hankyu Head
Office Bldg.
HEP
Kitano Hankyu
LAXA Osaka

LaLaport KOSHIEN
Ueroku F Building
AEON MALL
SAKAIKITAHANADA

Namba-Hanshin

53

7-6. HANKYU NISHINOMIYA GARDENS and Properties in Vicinity
Hankyu Imazu
Line
ACTA
NISHINOMIYAWest Bldg.

ACTA
NISHINOMIYA
East Bldg.

Nishinomiya
Kitaguchi Sta.
Hankyu Kobe
Line

Hyogo
Performing Arts
Center

HANKYUNISHINOMIYAGARDENS

Konan
University

南から北方向に向って撮影した航空写真(Aerial photograph taken from south side facing north)54

7-7. AEON MALL SAKAIKITAHANADA (site) and Properties in Vicinity
Osaka City
University

SubwayMidosuji Line

Osaka City
Yamato River

Nagai Park

Shinasakayama
Elementary School

Sakai City
Asakayama Municipal
Residential Buildings

Asakayama UR
Rental Apartment
Buildings

Route 28
(prefectural road)Route 187
(prefectural road)

AEON MALL
SAKAI
KITAHANADA(site)
Subway Midosuji Line
Kitahanada Sta.
(underground)(Aerial photograph taken from south side facing north)*The property was acquired on June 27, 2013.

55

7-8. Dew Hankyu Yamada and Properties in Vicinity
Osaka University
Osaka Monorail
Chugoku Expressway
Osaka Central
Circular Route

Osaka University HospitalBampaku-kinenkoen

Osaka Monorail
Yamada Sta.
Hankyu Yamada Sta.

Hankyu Senri
Line

Tsukumodai
housing estate

Dew Hankyu
Yamada(Aerial photograph taken from south side facing
north)
56

7-9. LaLaport KOSHIEN (site) and Properties in Vicinity
Hanshin Koshien
Stadium

Daiei Koshien

甲子園球場

Hanshin Koshien Sta.

Hanshin Expressway
No.3 Kobe Line
阪神高速3号神戸線

Route 43
(national road)

Kidzania Koshien(opened in March 2009)

Prefectural Highway 340

Mukogawa
Women’s
University(Department ofPharmacy)(Aerial photograph taken from south side facing north)57

7-10. Takatsuki-Josai Shopping Center and Properties in Vicinity

Takatsuki City Hall

Hankyu Kyoto
Line

JR Kyoto LineJR Takatsuki-shi Sta.
HankyuTakatsuki-shi Sta.

Route 171
(national road)Route 16
(prefectural road)

Takatsuki-Josai
Shopping Center(Aerial photograph taken from south side facing north)58

7-11. Portfolio PML and Anti-seismic Measures
As of May 31, 2013
C la s s if ic a t io n

C od e( N o te 1 )Nam eRetail Properties

H E P F iv e

Office Properties

C o m p l e ti o n d at e

PM L
(N o t e 4 )K it a W a rd ,O s a k a C it y

N o v. 1 9 9 84 .6 %

R 1 (K )(1 4 % o f t h e q u as i c o - ow n e rs h i p o f
t h e t ru s t be n e f i c i a ry i n t er e s t s )R 2 (K )K it a n o H a n k y u B ld g .

K it a W a rd ,O s a k a C it yJ un. 1985

10. 1%

R 3 (K )Dew H ankyu Y am ada

S u it a C i ty ,O s a k a P r ef e c t u reO c t. 2 0 0 3

4 .5 %

R 4 (K )T a k a ts u k i -J o s a i
S h o p p in g C e n t e r

T a k a ts u k i C i ty ,O s a k a P r ef e c t u re

A pr. 2 003

6 .1 %

R 5 (K )N i to r i Ib a r a k i -K it a S to r e(s i te )Ib a ra k i C i t y ,O s a k a P r ef e c t u re

―

―

R6

K o h n a n H ir o s h i m a N a ka n o H i g a s h i S to r e ( s i t e )A k i W a rd ,H i ro s h i m a C it y

―

―

R8

H o te l G r a c e ry T a m a c h i

M i n a t o W ar d ,T o kyoS ep . 20 08

10. 2%

R 9 (K )L a L a p o rt K O S H IE N
( s it e )N i s h i n om i y a C i t y ,H y o g o P re f e c tu r e―

6 .0 %

R 10

R i c h m o n d H o te l H a m a m a ts u

N a k a W a rd ,H a m a m at s u C it y

S ep . 20 02

13. 9%

N i s h i n om i y a C i t y ,H y o g o P re f e c tu r e

O c t. 2 0 0 8

9 .2 %

R 1 1(K )Mixed-use Properties

Lo c a t io n

H A N K Y U N IS H I N O M I Y A
G AR D ER N S(2 8 % o f t h e q u as i c o - ow n e rs h i p o f
t h e t ru s t be n e f i c i a ry i n t er e s t s )O1

S h i o d o m e E a s t S i d e B ld g .

C h uo W a r d,
T o kyoA ug . 20 07

4 .6 %O 2(K )

H a n k y u C o r p o r a ti o n H e a d
O f f i c e B u il d i n g

K it a W a rd ,O s a k a C it y

S ep . 19 92

3 .7 %

M 1(K )

U e r o k u F B ld g .

C h uo W a r d,
O s a k a C it y

S ep . 19 93

3 .2 %

M2(3 3 % o f t h e q u as i c o - ow n e rs h i p o f
t h e t ru s t be n e f i c i a ry i n t er e s t s )S h i n a ga w a W a r d,
T o kyoA pr. 1 993(N o te 6 )2 .7 %

M 3(K )L A X A O saka

F u k u s h im a W a r d,
O s a k a C it y

F eb. 199 9

3 .4 %

M 4(K )

N a m b a - H a n s h in B u i l d i n g

C h uo W a r d,
O s a k a C it y

M a r. 1 9 9 2

4 .5 %

S phere T ow er T enn oz

Retail Properties

T o t a l (a t t h e e n d o f 1 6 t h f i s c a l p e r io d )R 1 2(K )R 1 3(K )AE O N MAL L
S A K A I K IT A H A N A D A( s it e )(t e n ta t i v e n a m e ) M A N D A I
T o yo n a k a H o n a n c h o s to r e( s it e )3 .5 %

K it a W a rd ,S a k a i C it y――

T o yo n a ka ci ty
O s a k a P r ef e c t u re――

T o t a l (i n c lu d i n g p u b l ic o f f e ri n g p ro p e r t ie s ）3 .5 %

What is PML?
●What
PML (Probable Maximum Loss) refers to the estimatedamount of the maximum loss from earthquake damage,and indicates the ratio of projected maximum physicalloss amount of a building from a probable earthquake ofmaximum 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 the price to reacquire it.
Portfolio PML●Portfolio
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 of buildings
over wide areas.
As shown in the table to the left, the portfolio PML ofHankyu REIT is 3.5%.
Policy on earthquake insurance coverage●Policy
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%.”59

7-12. Investment Unit Price
Unit Price (closing price basis)

Per Unit trading trends（Un it: JPY th ou sand ）（Un its）

1 ,40 0

1 ,40 0

1 ,20 0

1 ,20 0

1 ,00 0

1 ,00 0

80 0

8 00

60 0

6 00

'05 /10/ 26

40 0

4 00

20 0

2 00

0
'05 /5'05 /1 1 '0 6/ 5 '0 6/ 11'0 7 /5'07 /1 1 '0 8/ 5 '0 8/ 11'09 /5'09 /1 1 '1 0/ 5 '1 0/ 11 '1 1/ 5

VolumeSource: QUICK'1 1 /1 1 '12 / 5 '1 2/ 11'1 3 /5

0'13 /1 1(Oct 26, 2005-July 8, 2013)
High (closing price basis) JPY 1,380,000(June 2007)
Low (closing price basis) JPY 325,000(December 2011)
During 16th fiscal period(December 1, 2012-May 31, 2013)
High (closing price basis)
JPY700,000(April 8, 2013)
Low (closing price basis) JPY 392,000(December 12,13, 2012)
Price of May 31, 2013 (closing price basis)
JPY539,000

Unit price

Relative Price (closing price basis)
（％）
240
220
200
180
160
140
120
100
80

'0 5 / 1 0 / 2 66040'0 5 / 5'0 5 / 1 1' 06/ 5

' 06/ 11

Source: QUICK, Tokyo Stock Exchange'0 7 / 5' 07/1 1'0 8 / 5

Hankyu REＩT

'0 8 / 1 1'0 9 / 5' 09/1 1

TSE REIT Index' 10/ 5

'1 0 / 1 1'1 1 / 5' 11/ 11

Nikkei Stock Average'1 2 / 5'1 2 / 1 1' 13/5' 13/ 1160

7-13. Analysis of Unitholder Attributes at End of 16th Fiscal Period
Unitholder Composition
O wnership by category

Number ofunitholders (persons)

Top 10 Unitholders

Rati o to ownership

Number ofinvestment units held
( units)

Unitholder name

Ratio to numberof investment un its

Number of units
held (units)

Ownership

16,73819.60%

5,675

6.65%

Financial institutions( excludi ng trust banks)

54

0.62%

15,77718.47%

Trust banks

8

0.09%

28,29233.13%

Japan Trustee Services Bank, Ltd.
(Trust account)
The Master Trust Bank of Japan, Ltd.
(Trust account)

8,345

96.00%

24,89529.15%The Senshu Ikeda Bank, Ltd.

4,150

4.86%

O ther organization s

188

2.16%

10,06811.79%

Hankyu Corporation

3,500

4.10%

Foreign organizations, etc.

98

1.13%

6,368

7.46%

2,796

3.27%

8,693

100%

85,400100%

The Nomura Trust and Banking Co., Ltd.
(Investment accounts)
Trust & Custody Services Bank, Ltd.
(Securities investment trust account)

2,479

2.90%

Shikoku Railway Company

1,768

2.07%

Sumitomo Mitsui Banking Corporation

1,332

1.56%

Nomura Bank (Luxembourg) S.A.

910

1.07%

North Pacific Bank, Ltd.

854

1.00%

Total investment

40,20247.07%

Number of outstanding units

85,400100%

Individuals, etc.

Total

Ratio of Units by Unitholder Category

4 7.27%

1 3.39%43.48%

27.24%

44.25 %

28.39 %

2 2.27%36 .4 6%

33 .6 0%9.63%

3 3.83%3 3.96%37.17%

32.53%

1 3.46%13.44%

35 .81 %32 .70 %38 .2 2%

3 9.22%

17 .05 %18 .4 4%

9.12%

9.78%

31 .72 %26.31%

27 .56 %2 1.38%23.20%

24 .78 %1 1.22%

11.31%

2 3.71%29 .0 2%34.34%

2 5.9 5%

2 9.7 2%

7.3 7%

7.33%

8.62 %

8 .2 3%

8 .11 %

8.8 2%

12 .9 8%1 0.14%

8 .6 2%

5.32%

4.55%

4.47 %

4 .8 3%

4 .6 1%

9.01%

As of end of
1st period

As of end of
2nd period

As of end of
3rd period

As of end of
4th period

As of end of
5th period

As of end of
6th period

As of end of
7th period

As of end of
8th period

As of end of
9th period

As of end of
10th period

As of end of
11th period

As of end of
12th period

Individuals, etc.

Trust banks

23 .9 1%

1 8.47%

3 3.13%

12.69%

12.78 %

13 .6 3%7.18 %

8 .7 2%

9.03%

7.46%

As of end of
13th period

As of end of
14th period

As of end of
15th period

As of end of
16th period

1 1.8 6%

7 .80 %

7.78%

23.77 %

19 .0 2%

34 .4 1%

11 .33 %9.29%

22.67 %

32.07 %

28.52%

11.16 %

Other organizations

26.32%

2 3.4 6%13.38%

Foreign organizations, etc.

25.30%

Financial institutions(excluding trust banks)

2 9.15%

1 1.79%61

7-14. Organization of Hankyu REIT Asset Management, Inc.
(As of May 31, 2012)

Corporate Data

General meeting ofshareholders
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 andemployees

22

Auditors
Board of Directors

President &Representative Director

Internal Audit Department
Compliance Committee

Investment Management
Committee

Executive
officers

President &Representative Director

Yoshiaki Shiraki

Director

Toshinori Shoji

Director

Yasuki Fukui

Corporate Auditor (parttime)
Corporate Auditor (parttime)Compliance Department

Toru Ono
Ken Kitano

Financial instruments trading(investment management business)

Investment
Management
Department 1

Investment
Management
Department 2

Corporate
Planning
Department

Corporate
Administrationand Supervision
Department

Principal
businesses Financial product trader:
Director-General of the Kinki Finance
Bureau Ministry of Finance (Kinsho) No. 44
 Real Estate Transaction License:
The Governor of Osaka Prefecture (2) No. 50641
 Approval of discretionary dealing trustee etc.:
No.23 by Minister of land, infrastructure,transportation and tourism

62

7-15. Compliance and Internal Audit Systems of Hankyu REIT Asset Management, Inc.
Systematically ensure multiple checking functions.
Focus on promoting a compliance-conscious corporate
culture.
Constituent members
Directors, Corporate Auditors

Implementation
Implementation

Decision criteria
A majority of directors in attendance, andapproval of a majority of the attending directors
are required.

Board
Board ofof Directors
Directors

President
President && Representative
Representative Director
Director

Constituent members
Chairman: Compliance Officer
Committee members: President & Representative
Director, full-time Directors and outside experts
Observers: auditors and other persons recommended by
the Chairman and approved by the Committee (notparticipating in resolutions)

Compliance System
・ Achieve comprehensive compliance by establishinga Compliance Department and a Compliance
Officer・ The Compliance Committee, including outside
experts, deliberates on conflicts of interest
transactions with interested parties
・ The Compliance Officer attends the Investment
Committee Meeting and checks compliance issues
・ Appointed a person to be in charge of efforts toprevent improper requests and the exclusion ofanti-social forces

Internal Audit System

Decision criteria

Compliance
Compliance Committee
Committee

Approval of all of the attending committee
members is required under the condition where
3/4 or more of them have attended including theCompliance Officer and two outside experts.

Constituent members
Investment
Investment Management
Management Committee
Committee

Proposals
Proposals by
by Departments
Departments

Chairman: President & Representative Director
Vice chairman: Full-time director designated by thechairmanMembers: full-time directors and equivalent directors(excluding the Compliance Officer), general managers ofrespective departments (other than those who are full-time
directors, equivalent directors or the Compliance Officer)

Decision criteria
Approval of all of the attending committee
members is required under the condition where
3/4 or more of them including the chairman andvice chairman are in attendance together with theCompliance Officer.

・Implemented PDCA cycle by systematically
implementing the internal audit system every fiscal
year based on the annual internal auditing plan
・Utilize external consulting entity to secure
independence of internal audit and obtain a highly
effective internal audit
・Introduced semi-full-time Corporate Auditor systemand strengthened auditing functions(Independent system of the Hankyu Corporation andthe group companies. Recognized as part-time
Corporate Auditor under the Companies Act.)・Established the internal control system andstrengthened check and balance functions as aconsolidated subsidiary of Hankyu Hanshin
Holdings, Inc.

63

7-16. Company Structure of Hankyu REIT
(As of May 31, 2013)(Note) In preparation for the event that the number of 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 29, 2012.

64