Table of Contents

1. Executive Summary • • • • • • • • • • • • • • • • • • • • • • • • • • • • •2

2. Summary of Kansai Area • • • • • • • • • • • • • • • • • • • • • • • •9

3. External Growth Strategies • • • • • • • • • • • • • • • • • • • • • • • • 14
4. Internal Growth Strategies • • • • • • • • • • • • • • • • • • • • • • • • • 21
5. Financial Strategies • • • • • • • • • • • • • • • • • • • • • • • • • • • • • 31
6. Overview of Financial Results for 20th Fiscal Period • • • • • • • 34
7. APPENDIX • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • 42
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.

Hankyu REIT implemented a five-for-one split of its investment units with December 1, 2014 as the effective date.

11. Executive Summary2

of 20th Fiscal Period
1-1. Results(Issues Explained in Financial Results Briefing for the 19th Fiscal Period)■ Financial
Strategies■ Internal
Growth■ External Growth

Issues• How to acquire properties that will
enable planning of target
distributions amidst the heatedcompetition for property acquisition• Maintenance and improvement ofcompetitiveness of properties held
• Leasing of Sphere Tower Tennoz• Implementation of LTV control• Extension of borrowing periods,
diversification of debt repayment
dates, and diversification of fundprocurement methods

Results of 20th Fiscal Period• Proactively implemented initiatives such as searching and consideringdevelopment-type properties through joint efforts with the sponsor group
toward securing quality properties at the appropriate price• Regarding investment in hotels, implemented increasing the investment
ratio from 10% to 20%• Newly created Investment Planning Office in an aim to enhance portfolio
management including future expansion of asset scale and asset
replacement• Maintained high level of portfolio occupancy rate (end of 20th fiscal period:
98.7%)• For Sphere Tower Tennoz, focused on leasing activities which appeal
value-enhancement work at common-use portions, etc.
• Achieved tenant attraction at the level higher than the market rent
(Shiodome East Side Building and Ueroku F Building)• LTV performed on an ongoing basis (end of 20th fiscal period: 44.4%)• Achieved further stabilization by reducing debt financing costs, extending
borrowing periods and diversifying debt repayment dates

Results for 20th fiscal period (ended May 2015)
Distribution per unit

2,567 yen3

1-2. Profitability and Financial Status● Profitability of portfolio
Average NOI yield(Note)

Average NOI yield
after depreciation(Note)

Unrealized income/loss(Note)End of 17th FP(End of Nov. 2013)

End of 18th FP(End of May 2014)

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

End of 20th FP(End of May 2015)

4.8%

4.7%

4.8%

4.8%

3.3%

3.2%

3.4%

3.4%

-JPY 3.6 bn-JPY 0.9 bn

JPY 1.6 bn

JPY 4.7 bn

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

End of 20th FP(End of May 2015)● Stability of financial foundation
End of 17th FP(End of Nov. 2013)
LTV

End of 18th FP(End of May 2014)(Note)

48.6%

47.3%

45.4%

44.4%

Interest-bearing
debt ratio

43.2%

43.4%

42.9%

42.9%

Averagedebt financing costs

1.34%

1.23%

1.08%

1.07%

2.2 years

2.7 years

3.6 years

5.1 years(Including investment corporation bonds)

Average remaining periodof long-term borrowings
and investment corporation
bonds(Note) Details of the calculation method for “Average NOI yield,” “Average NOI yield after depreciation,” “Unrealized income/loss” and “LTV”
are presented on page 61.

41-3. Internal Growth Status
Changes in market rent and new contract rent

Status of new contracts for owned office-use (Note)• Achieved tenant attraction at the level higher than the market
rent which is on an upward trend

130
New
新規契約
contract rent
賃料Market rent
市場賃料

120
110

(Note) Calculated by covering office-use zone of four office properties otherthan those under fixed-type master lease contract (Shiodome East
Side Building, Ueroku F Building, Namba-Hanshin Building andSphere Tower Tennoz)(Market rent is based on CBRE’s materials)

100
90

18th FP
第18期
May 2014

19th FP
第19期
Nov. 2014

20th
FP
第20期
May 2015(Graph) Market rent:
Relative value by fiscal period based on (100%) the average of market
rent in each property in the 18th fiscal period
New contract rent:
Relative value of new contract rent by fiscal period based on (100%) the
average of market rent in each property in the 18th fiscal period

Changes in unrealized income/loss• Unrealized income increased even after the transition to unrealized income position, due to the further decrease in cap rate
(million yen)

●Asset replacement
Acquired two properties,
transferred two properties

12,0008,000●Asset Acquisition
Acquired three properties●Asset Acquisition
Acquired four properties

4,744 million yen
4,0000

Newly acquired
新規取得物件
properties

既存物件
Existing properties-4,000

合計
Total-8,000-12,000

12th FP
第12期
May 2011

13th FP
第13期
Nov. 2011

14th FP
第14期
May 2012

15th FP
第15期
Nov. 2012

16th FPMay 2013

第16期

17th FP
第17期
Nov. 2013

18th FP
第18期
May 2014

19th FP
第19期
Nov. 2014

20th FP
第20期
May 20155

1-4. Internal Growth Initiatives
Acquired DBJ Green Building Certification for “HANKYU NISHINOMIYA GARDENS” and “HEP Five”“HANKYU NISHINOMIYA GARDENS” received “five stars” for the first time in retail facilities owned by J-REITs

Implementation of following initiatives under joint efforts with the sponsor
group in an aim to improve convenience of users and contribute to thesurrounding environment and communities were highly assessed by DBJ.
l Consideration for environment and energy-savingl Working on greening and implementing events at a rooftop garden called
Sky Gardenl Introducing history and dispatching culture at the Hankyu Nishinomiya
Gallery
Events at Sky Garden

HANKYU NISHINOMIYA GARDENSHEP Five[★★★★★/ five stars]
Properties with the best classenvironmental & social
awareness[★★★★★/ four stars]
Properties withexceptionally highenvironmental & social
awareness• Overview of DBJ Green Building Certification (DBJ: Development Bank of Japan Inc.)
It is a program which DBJ grants certifications after assessing properties under five categories of “Ecology (environment),” “Diversity(diverseness),” “Risk Management (crime and disaster prevention),” “Community (region and landscape)” and “Partnership (collaboration
with stakeholders)” in five ranks using a scoring model developed independently by DBJ in an aim to increase and promote “Green
Buildings,” real estate properties evincing high environmental and social awareness.

61-5. Initiatives toward Strengthening Financial Foundation
Fund procurement indicators improved significantly over the past three years through improvement in financial position by obtaining AA rating
and conducting public offerings two years in a row, and other factors
Extended average remaining period (2.1 years→5.1years), diversified debt repayment dates and reduced debt financing costs (1.43%→1.07%)

Overview of refinancing
in the 20th fiscal period

Diversification of Repayment Dates（JPY bn）
10.0

Investment corporation bonds
JPY 6.0 bn

8.0Date of refinance

①

6.0

③
④

4.0
7.0

7.0

6.0

6.0

5.5

②

5.0

2.0

5.0

5.2

4.0
1.2

2.0

4.0
2.0

1.0

1.0

0.0
21st 22nd 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 period period

Amount ofdebt
Borrowing
financing
period(million yen)①*

December 24, 2014

5,000

8 years②

January 23, 2015

2,000

7 years③

February 27, 2015

5,200

9 years④

May 15, 2015

4,000

10 years* Made early repayment

Trends of Debt Financing Costs and Average Remaining Years
1.50%

6.0 years

1.43%

5.1years
1.36%

1.40%

1.33%

1.30%

1.23%

1.20%

2.1 years
1.10%

5.0 years

1.34%
3.6 years

4.0 years
3.0 years

2.4 years
2.0 years

2.2 years

2.7 years

1.08%

1.07%

2.0 years

Long-term debt ratio and fixed debt
ratio in the end of 20th fiscal period
Long-term
debt ratio

Fixed Debt Ratio

100%

93.5%

1.0 years

1.00%
As of end of As of end of As of end of As of end of As of end of As of end of As of end of
14th FP
15th FP
16th FP
17th FP
18th FP
19th FP
20th FP

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

71-6. Objectives for the 21st and Subsequent Fiscal Periods

External
GrowthExpand Opportunities to Acquire Properties through Joint Efforts with theSponsor Group• Utilize real estate networks and warehousing functions of the sponsor group• Consider acquisition of properties utilizing the real estate development capabilities comingfrom the sponsor group in an aim to acquire properties at appropriate prices

Maintain High Level of Portfolio Occupancy Rate

Internal
Growth• Aim to maintain/improve rent through measures based on the competitiveness of each
property while establishing favorable relationship with tenants• For Sphere Tower Tennoz, work toward early improvement of occupancy rate and increasing
distribution amount by promoting leasing based on the features of locations and buildings
while appealing value-enhancement work at common-use portions, etc.

Maintain Financial Standing and Increase Distribution AmountFinancial
Strategies• Realize equity financing that enables both distributions to be improved and LTV to be
maintained• Make progress in consideration of diversifying fund procurement methods while securing
financial stability through cooperation with financial institutions

Forecast for 21st fiscal period (ending November 2015)
Distribution per unit

2,550 yen

■ Strive for stable distributions of 2,500 yen level and aim further build up(Secure 2,400 yen at the least)8

2. Summary of Kansai Area9

2-1. Status of Retail Facilities in Osaka

Sales of department stores, supermarkets, etc. are going strong••

In 2014, sales of department stores in Osaka grew 3.3% year-on-year, which surpassed growth rate of nationwide and Tokyo’s
Although being impacted by the consumption tax rate hike, sales of supermarkets in Osaka City maintained positive figures throughout
fiscal 2014 when compared to that of same month in the previous year
➪ Consumptions at supermarkets in central areas and department stores are on an increasing trend due to the increase in inboundtourists and return of the population to central city, and this trend is expected to continue into the future•

Sales of GRAND FRONT OSAKA in fiscal 2014 achieved 44.4 billion yen (11% above the target), which exceeds the sales in initial fiscal
year
In Umeda area, number of incoming and outgoing passengers increased approximately 5% (Note) due to the opening of GRAND FRONTOSAKA and other retail facilities➪ Umeda area’s advantage of being the most competitive area is expected to stand firm into the future

•

6.0%

Sales of department stores by district(change over the previous year)

25.0%
20.0%

4.0%
2.0%
0.0%

3.3%

15.0%

1.5%

10.0%

0.3%

5.0%

Sales of supermarket by district(change over the same month of the previous year)
Last minutedemand due tothe consumption
tax rate hike

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

19.1%

9.1%
7.9%

0.0%
-2.0%

-5.0%
-4.0%
2011

2012
Osaka
大阪

2013
Tokyo
東京

(Source) Japan Department Stores Association2014 (year)
Nationwide
全国-10.0%
2013.4Apr.
2013

2013.10Oct.
20132014.4
Apr.
2014(Source) Ministry of Economy, Trade andIndustry “Results of the Census ofCommerce”(Note) Source: Osaka Statistic Year Book
Comparison of incoming and outgoing passengers in Umeda area for fiscal 2010 and fiscal 2013
Umeda area: Umeda Station (Hankyu, Hanshin, Osaka City), Osaka Station (JR), Kitashinchi Station (JR),Nishi-Umeda Station (Osaka City), Higashi-Umeda Station (Osaka City)

2014.10Oct.
20142015.4
Apr.
2015

Osaka city
大阪市
東京（特別区）
Tokyo (special wards)
Nationwide
全国10

2-2. Status of Office in Osaka

Decreasing trend of office vacancy rate is continuing in Osaka••

Relocation of offices from Yodoyabashi and Hommachi area into Umeda area, especially into high-spec buildings, is progressing and old
buildings are being converted into apartment buildings ⇒ metabolism of Osaka office market and concentration of city functions areadvancing
New supply in the future are limited and decreasing trend of vacancy rate is expected to continue (As of May 2015, vacancy rate of Umeda
area is about the same level of that in Tokyo’s business areas in December 2013 (7.34%))
Change in Vacancy Rate of Osaka’s Major Business Areas
14.0%

Vacancy rate as of May 2015

Vacancy rate increased due tothe impact from opening of
GRAND FRONT OSAKA

12.0%

Umeda area

7.26%

Yodoyabashi
Shinsaibashi
and Hommachi andNamba area
area

9.77%

7.90%

Shin-Osaka
area

6.93%

10.0%
8.0%

梅田地区
Umeda area

6.0%

淀屋橋・本町地
Hommachi area
区
Shinsaibashi and心斎橋・難波地Namba area
区
Shin-Osaka area
新大阪地区

Yodoyabashi and

4.0%
Jan.
2012.1 Apr.
2012.4
2012
2012

Oct.
Jan.
July
Oct.
Jan.
July
Oct.
Jan.
July
2012.72012.102013.1 Apr.
2013.4 2013.7
2013.102014.1 Apr.
2014.4 2014.7
2014.102015.1 Apr.
2015.4
2012

2012

2013

2013

2013

2013

2014

2014

2014

2014

2015

2015

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

Change in floor area of major new supply in Osaka(thousands
m²)
(万㎡)

200
20
150
15

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

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

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

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

100
10
50
5

00
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
H22
H23
H24
H25
H26
H27
H28
H29
H30
H31
H32
H33
H34
(year)(Source) Calculated by Hankyu REIT Asset Management, Inc. based on materials from office brokerage companies (include some estimates)112-3. Status of Inbound Tourists in Kansai Area
Foreign tourists to Japan who visit Kansai is
continuously increasing

Increase in ratio of foreign tourists visiting Japanin accommodation facilities• At Kansai International Airport, number of foreigners using international flights
surpassed the number of Japanese for the first time in domestic major airports• Total number of over-night guests among foreign tourists visiting Japan surpassed• In 2014, 13.41 million foreign tourists visited Japan and among that, record highnumber of 3.76 million people visited Osaka Prefecture (44% increase over theprevious year) (Note)• In 2014, ratio of foreign tourists visiting Japan surpassed 20% in Osaka and Tokyo
prefectures

Status of International Flight Passengers at Kansai International Airport(million people)

40 million people

Ratio of Foreign Tourists Visiting Japan in Total Numberof Over-Night Guests

30%

10.0
1,000
Number of Japanese passengers
8.0
800
6.98 million people
6.0
600

20%

6.29 million people

400
4.0

Osaka
Prefecture
大阪府

9%

10%

Tokyo
Prefecture
東京都

200
2.0

Number of foreign passengers
1994

1998

2002

2006

2010

2014

2011

(Fiscal year )(Source) New Kansai International Airport Company, Ltd.
(Note) Source: Osaka Convention & Tourism Bureau

2012

2013

2014 (year)(Source) Japan Tourism Agency

Hotels in Osaka and Kyoto continues to be strong• Occupancy rates of business hotels and city hotels in Osaka and Kyoto prefectures are
performing highly even when compared to hotels nationwide

Ranking of Guest Room Occupancy Rate (2014)
City Hotels

Nationwide average
全国平均

0%

00

Rank

25%
22%

RevPAR of hotels are on an upward trend• In hotels of the sponsor group, RevPAR, a revenue indicator, is on an upward trend inboth Kansai region and Tokyo metropolitan area(yen)

Business Hotels

Change in RevPAR of Hankyu Hanshin Hotels

16,00014,045 yen

1Osaka Prefecture (86.7%)

Kyoto Prefecture (86.1%)

14,000

2

Tokyo Prefecture (84.2%)

Tokyo Prefecture (86.0%)

12,0003

Kyoto Prefecture (83.4%)

Osaka Prefecture (84.2%)

4Kanagawa Prefecture (83.0%)

Kanagawa Prefecture (81.5%)

5

Aichi Prefecture (82.3%)

Fukushima Prefecture (79.1%)

10,000Tokyo metropolitan area
10,709 yen
Kansai region

8,000
6,000

(Source) Japan Tourism Agency

2008

2010

2012

2014 (Fiscal year )(Source) Prepared by Hankyu REIT Asset Management, Inc. based on financial results
briefing material of Hankyu Hanshin Holdings Group for fiscal 201412

2-4. Flow of People in Kansai Area Focused on Inbound Tourists

Kawaramachi

Kyoto Prefecture

Kiyomizu-dera
Kyoto

Hyogo Prefecture

HEP Five

Kobe Port Tower
Osaka
International Airport(Itami Airport))
Takarazuka

Tōdai-ji

ShinOsaka
Kobe-Sannomiya

Umeda Area

Universal Studios Japan

Namba and Shinsaibashi Area

Kintetsu Nara

Dotonbori
Kobe Airport

Nara Prefecture

Golden Route

Osaka Prefecture
Kyoto

NagoyaMt. FujiTokyo

HakoneOsaka
Kansai International Airport

1313

3. External Growth Strategies14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 HoldingsGroup that has deeply rooted
connections in the community

Office-use
zones
Retail-use
zones

Office-use
zones

Zones forother uses

Zones forother uses

Retail-use
zones
Zones forother uses

Kansairegion50%
or more* In principle, the maximum investment ratio for hotel-use portion (part ofretail-use zones) is 20% of all assets under management

Portfolio Status

Other
1.1%

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

Urbanretail facilities
16.7%

Office27.3%

Total acquisition price:
JPY 139.3 bn
Total number of properties：
23 properties

Hotel
9.4%

Community-based
retail facilities
45.5%

Other region
3.1%

Retailuse
zone
71.6%
Other Kansai
region8.0%

Umeda area
17.5%

Tokyo
24.6%
Areas along
Hankyu andHanshin lines
46.8%

Kansairegion72.3%

15

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 andstability amidst the heated competition for property acquisition. Aiming to further expand the route to obtain property
information while strengthening joint efforts with the sponsor group.
Trends of Information Leads(leads)

1,000
900
800
700
600
500
400
300
200
100
0

Information leads checked

Information leads considered

1st
2nd
3rd
4th
5th
6th
7th
8th
9th
10th
11th
12th
13th
14th
15th
16th
17th
18th
19th
20th
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
Namba-Hanshin Building
HANKYU NISHINOMIYAGARDENS
Kotocross Hankyu Kawaramachi

Property developedby sponsor group
Shiodome East Side Building
Hotel Gracery Tamachi

On-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
Richmond Hotel Hamamatsu
AEON MALL
SAKAIKITAHANADA (site)

Direct acquisition
from outside
Takatsuki-Josai Shopping Center
Kohnan Hiroshima NakanoHigashi Store (site)
Sphere Tower Tennoz
Kita-Aoyama 3 cho-me Building

16

3-3. Information Leads and Leads Considered (20th Fiscal Period)* Outer circle: Information leads

Use

Inner circle: Leads actually considered

17

Mixed
(Complex)

8

Retail

2

18

Hotel

Other
(Note)

4

1

26

1

1

56

7

0

0

4

28

10

8

17

4

0

0

2

10

0

0

6

2

4

1

0

0

27

2

5

1

4

5

38

2

14

2

7

53

1

SuburbanUrban vicinity

City center

Office

Area

6

3

34

3

8

22

4

4

13

5

2

7

56

20

2

9

(Note) Properties anticipating property development of the sponsor group such as at old buildings and former sites of factories, etc.
Kansai region (Osaka, Kyoto, Hyogo,
Nara, Shiga, Wakayama)

Tokyo metropolitan area
(Tokyo, Kanagawa,
Saitama, Chiba)

Other areas

Leads considered were primarily community-based retail facilities
in the Kansai region, Tokyo metropolitan area andregional major cities, such as Nagoya, Fukuoka and Hiroshima

Community-based
retail facilities173-4. Concrete Property Acquisition Policy for Future
Urban retail facilities and community-based retail facilities set
as investment targets of focus among retail facilities
Area

OfficeCity center

Urban vicinity

Namba-Hanshin Building
Ueroku F Building
Hankyu Corporation Head Office Building
Sphere Tower Tennoz
Shiodome East Side Building

SuburbanCommunity-based
retail facilities

Urban
retail facilities

RSC (regional shopping centers)
LaLaport KOSHIENHANKYU NISHINOMIYA GARDENSAEON MALL SAKAIKITAHANADANSC (neighborhood shopping centers)
Dew Hankyu Yamada

Retail

Kohnan Hiroshima Nakano-Higashi Store

Kitano Hankyu Building
Large specialty shops

Takatsuki-Josai Shopping Center

MANDAI Toyonaka Honan StoreHEP Five

Department stores

Kita-Aoyama 3 cho-me Building

MANDAI Gojo Nishikoji Storekotocross Hankyu Kawaramachi
GMS (general merchandise stores) /SM (supermarkets)
DAILY QANAT Izumiya Horikawa Marutamachi Store
LIFE Shimoyamate StoreSpecialty shops
Nitori Ibaraki-Kita Store
Street-level shops

Hotel*

Use

Urban SCLAXA Osaka
Richmond Hotel Hamamatsu
Hotel Gracery Tamachi

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

Primary
investment target zone

Investment targets of focus
among retail facilities18

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
HEP Five Kitano Hankyu Building

MANDAI Gojo
Nishikoji Store (site)

LIFE
Shimoyamate
Store (site)
HANKYU NISHINOMIYA GARDENS,
Dew Hankyu Yamada, etc.
DAILY QANAT
Izumiya Horikawa
Marutamachi Store(site)

Urban vicinity areas in the Kansai region

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.

kotocross
HankyuKawaramachi

Rail terminals and other bustling areasin the Kansai region

Kita-Aoyama 3
cho-me Building

Other bustling areas19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.

20

4. Internal Growth Strategies21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

22

4-2. Occupancy Rate for Individual Properties (Occupancy by End-Tenants)
Total portfolio occupancy rate of 98.7% (end of 20th fiscal period )The graph excludes the 15 properties (Takatsuki-Josai, Nitori Ibaraki, Kohnan Hiroshima, Tamachi, LaLaport KOSHIEN, LAXA
Osaka, Hamamatsu, 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%).
(%)
100

Total portfolio

90

HEP

80

Kitano Hankyu

70

Hankyu Yamada

60

Ueroku F Bldg.
Tennoz50

Shiodome

40

Namba-Hanshin
30
Dec. 2014

Jan. 2015

Feb. 2015

Mar. 2015

Apr. 2015

May 2015

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

Stable occupancy rates maintained since 1st fiscal period
(%)
100
95

99.5 100.0 99.3 98.5 99.3 98.8
99.4 98.5 99.0 99.5 98.6 98.6 98.7 98.7
98.1 98.5 98.7 98.4 98.7 99.0

90
85
80

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

11st
periodNov.
2010(Note) Figures indicate the values at the end of each fiscal period.

12nd
period
May
2011

13rd
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

23

4-3. Topics on Properties Held
Sphere Tower Tennoz

Hotel Gracery Tamachi

Promote leasing activities that appeal completion ofvalue-enhancement work
As rents are on an upward trend due to decreased vacancy rate in
the Tokyo metropolitan area, areas that can provide large space allat once at undervalued rent are being limited to just the Bay area.
Promoting leasing activities based on area/building features while
continuously appealing value-enhancement work at common-use
portions, etc. amidst environment where tenant attraction being
improved.

Filed counterclaim claiming increase in rent
Fujita Kanko Inc., a lessee, filed for reduction in the amount of rent
against Hankyu REIT in October 2014.
Hankyu REIT recently decided existing rent should be increased inamount given the latest land market value and other economic
indicators and sales indicators, status of improvement in hotel
income and expenditures, and the results of a rent appraisal as at
May 1, 2015, and thus filed the counterclaim on July 6, 2015
claiming increase in amount of rent.

Status of value-enhancement work at Sphere Tower Tennoz● Atriumafter● Signboards

after

beforebeforeRichmond Hotel Hamamatsu

Ueroku F Building

Conducted a major renewal

Achieved occupancy rate of 100%

In an aim to improve customer satisfaction, carried out a major
renewal such as updating of air conditioning and beautifying guest
rooms at the burdens on tenant. Entire hotel was closed forapproximately one month from the early February 2015 for the
renewal.
RevPAR, a revenue indicator, is on an upward trend after the
renewal due to the increase in ADR.

Attracted a tenant with the rent at a level above market rents andachieved occupancy rate of 100%. (93.8% at end of the 19th fiscal
period)Will continue to strengthen tenant relations through cooperation
with the PM company

24Systems and Present Conditions of 23 Portfolio Properties ①4-4. Rent(End of 20th Fiscal Period)
Properties mainly using the fixed-rent system
Property name

HANKYU NISHINOMIYAGARDENS

Main rent system

Present conditions
Rent income is stable based on a fixed-type master lease method (Note 2) with Hankyu
Corporation.

Long-term, fixed

RSC (Note 1)

Tenants are performing well, as evident by such as sales increasing for six consecutive years since
opening in 2008 to reach JPY 79.0 billion in fiscal 2014 due in part to the renewal implemented in
March 2014.
The occupancy rate is performing stably at 100%.

Dew Hankyu Yamada
NSC (Note 1)

Long-term,
Fixed(partly overage)

Sales of Toys“R”Us and Babies“R”Us, where sales-based overage rent system has been
introduced, continues to be strong.
As a large-scale retail facility will open nearby in fall 2015, considerations on sales promotion
strategies, etc. are underway.
The occupancy rate at the end of the period was 97.9%, maintaining the same level from the end of
the previous period (19th fiscal period).

Kitano Hankyu Building
Specialty shop building(urban SC)

Fixed(partly overage)

In June 2015, attracted new stores into vacant spaces in the B1F.
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, focusing efforts inimproving attractiveness to customers such as by holding events in conjunction with local events,
etc.

Event at HANKYU NISHINOMIYA GARDENS

Event at Dew Hankyu Yamada(Note 1) RSC: Regional Shopping Center; NSC: Neighborhood Shopping Center(Note 2) Fixed-type master lease method: Hankyu REIT receives rent income from the master lessee (sublessor). The amount received is fixedirrespective of the rent received by sublessor from end-tenants.

25

Systems and Present Conditions of 23 Portfolio Properties ②4-4. Rent(End of 20th Fiscal Period)
Properties mainly using the fixed-rent system
Property name
Takatsuki-Josai
Shopping Center

Main rent system

Long-term, fixed

NSC (Note 1)
Hankyu Corporation
Head Office Building

Specialty shop building(urban SC)DAILY QANAT Izumiya
Horikawa Marutamachi
Store (site)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. Sales results of the tenant have been maintained to be favorable.
Rent income is stable based on a fixed-type master lease method (Note 2) with Hankyu Corporation.

Long-term, fixedLongterm, fixedSM (Note 1)
MANDAI Gojo Nishikoji
Store (site)

SM (Note 1)

Comprised of merchandise shops, restaurants and service shops as a property that features thecharacteristics of a landmark, facing the Shijo-Kawaramachi crossing.
Rent income is stable based on a contract for fixed-term land lease for business purposes with
Izumiya Co., Ltd.
Opened in December 2013. Morning fair held once a week continues to perform well.
The store is becoming more well-known and sales are steadily increasing.
Rent income is stable based on a contract for fixed-term land lease for business purposes withMandai Co., Ltd.

Long-term, fixed

The building was completed on November 25, 2014 and opened on December 3, 2014.
As a community-based retail facility, tenants are comprised of a supermarket, clothing shop, drug
store, 100 yen shop and other shops closely connected to living.

NSC (Note 1)

LIFE Shimoyamate
Store (site)

As a community-based retail property, it is comprised of shops that fulfill the needs of nearby
residents, such as a home center, supermarket, electronics store and sporting goods shop.

Long-term, fixedSpecialty shop
kotocross Hankyu
Kawaramachi

Rent income is stable based on a fixed-type master lease method (Note 2) with Kohnan Shoji Co.,Ltd.

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

OfficeNitori Ibaraki-Kita Store(site)

Present conditions

Rent income is stable based on a contract for fixed-term land lease for business purposes with Life
Corporation.
Long-term, fixed

Opened in January 2014. Sales have been performing well since it is becoming more well-known
among the neighboring areas along with its efforts including personal delivery service being highly
evaluated.

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

26

Systems and Present Conditions of 23 Portfolio Properties ③4-4. Rent(End of 20th Fiscal Period)
Properties mainly using the sales-based overage-rent system
Property nameMain rent system

Present conditions
Continuing to look for shops targeting women in their teens and 20s, the core targets.

HEP Five
Specialty shop building(urban SC)

Overage(fixed + variable)

Although the customer unit price decreased, the number of cash-register-sale customers has been
maintained at more than 100% in year-on-year comparison throughout the period.
The point card that can be commonly used at Hankyu Hanshin Group facilities, the “Hankyu
Hanshin Odekake Card” was introduced in April 2015 aiming to concentrate customers, increase
sales and attract more people. Measures to increase visitors and cash-register-sale customers will
be continued to be promoted.

Properties using the fixed-rent system
Property nameKita-Aoyama 3 cho-me
Building
Urban retail facilities+Office
Shiodome East Side
Building

Main rent system

Present conditions

Fixed

The occupancy rate is 100% as of the end of the period. Occupied by THREE AOYAMA, theflagship store of THREE, a natural cosmetics brand operated by an affiliate of Pola Orbis Holdings
Inc.

Fixed

OfficeSphere Tower Tennoz
OfficeNamba-Hanshin Building
OfficeUeroku F Building
Office

Fixed

Fixed

Attracted a new tenant with the rent at a level above market rents and maintained occupancy rate of100%.
Will continue to promote strengthening tenant relations while reducing costs through preventive
building maintenance efforts.
Promote leasing activities based on area/building features while appealing value-enhancement
work at common-use portions, etc. and turn them into early improvement of occupancy rate anddistribution amount.
Attracted a new tenant with the rent at a level above market rents by utilizing the close proximity toterminal station.
Period-end occupancy rate was 96.0%, up 1.1 points from the end of the previous period (94.9%).

Fixed

Period-end occupancy rate was 100%, up 6.2 points from the end of the previous period (93.8%),due to attracting a new tenant with the rent at a level above market rents.
Will continue to strengthen tenant relations through cooperation with the PM company.

27

Systems and Present Conditions of 23 Portfolio Properties ④4-4. Rent(End of 20th Fiscal Period)
Properties using mainly the fixed-rent system
Property nameMain rent system

LaLaport KOSHIEN(site)RSC (Note 1)

Long-term, fixed

LAXA Osaka
Hotel

Long-term, fixed

Hotel Gracery Tamachi
Hotel

Kohnan Hiroshima
Nakano-Higashi Store(site)NSC (Note 1)
Richmond Hotel
Hamamatsu

Long-term, fixedLong-term, fixedLong-term, fixed

Hotel
AEON MALL
SAKAIKITAHANADA(site)RSC (Note 1)
MANDAI Toyonaka
Honan Store (site)
NSC (Note 1)

Long-term, fixedLong-term, fixed

Present conditions
Rent income is stable based on a contract for fixed-term land lease for business purposes with
Mitsui Fudosan Co., Ltd.
Convenience improved for visitors who use the Koshien Station, the nearest station, as
improvement works by Hanshin Electric Railway Co., Ltd. including expanding width of theplatforms had been made.
Rent income is stable based on a fixed-type master lease method (Note 2) with Hanshin Electric
Railway Co., Ltd. The room occupancy rate of Hotel Hanshin, which is under a sublease contract,
remains at a high level, and the guest room unit price is also increasing.
Based on a contract for long-term and fixed lease with Fujita Kanko Inc. The room occupancy rate
remains at a high level, the guest room unit price is also increasing and profitability is improving.
Fujita Kanko Inc., a lessee, filed for reduction in the amount of rent against Hankyu REIT in October
2014. Hankyu REIT recently decided existing rent should be increased in amount given the latest
land market value and other economic indicators and sales indicators, status of improvement inhotel income and expenditures, and the results of a rent appraisal as at May 1, 2015, and thus filed
the counterclaim on July 6, 2015 claiming increase in amount of rent.
Based on a contract for fixed-term land lease for business purposes with Kohnan Shoji Co.,
Ltd. Although this retail facility offers high transportation convenience with a home center and agrocery store as tenants, the tenant’s management balance sheet is in a tough situation and thus
joint efforts will continue to be underway for balance improvement, such as reduction of costs andeffective utilization (subleasing) of parking space.
Rent income is stable based on a fixed-type master lease method (Note 2) with RNT HOTELS Co.,
Ltd. (consolidated subsidiary of ROYAL HOLDINGS Co., Ltd.).
In an aim to improve customer satisfaction, carried out a major renewal such as updating of air
conditioners and beautifying guest rooms at the burdens on tenant. Entire hotel was closed forapproximately one month from the early February 2015 for the renewal.
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 and formed as a mall of specialty shops that houses about 160
shops with AEON and Hankyu Department Store as the core tenants.
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 a community-based store, it houses shops closely related to daily life such as a grocery store,
drugstore and dry cleaner.

(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 fixedirrespective of the rent received by sublessor from end-tenants.

28

4-5. Appraisal Value
Appraisal value increases by 1.8% and unrealized income is JPY 4,744 mn
Cap rate decreases for 22 properties out of 23 properties（JPY mn）
24,000

6.0%

20,0005.0%

16,000

4.0%

12,000

3.0%

8,000

2.0%

4,000

1.0%

0

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

HEP (Note 1)

Kitano Hankyu

Hankyu Yamada

Ueroku F Bldg.

Takatsuki-Josai

Nitori Ibaraki

Kohnan Hiroshima

NU

Tennoz

Shiodome

Tamachi

LAXA Osaka

LaLaport KOSHIEN

Namba-Hanshin

Hamamatsu

Nishinomiya G

Head
Office Building
Marutamachi

KITAHANADA

Honan Store

Kita-Aoyama

kotocrossShimoyamate

Nishikoji

0.0%

Weighted average CAP rate (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 differsfrom the equity ratio ownership of 14% . For comparison, 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.

29

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

Acquisition
price① End of previous period(19th fiscal period-end)
Appraisalvalue

Cap rate(Note)② End of current period(20th fiscal period-end)
Appraisal value

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

Value to book
ratio
②/③

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

6,468

7,882

4.1%

7,994

4.0%

112

1.4%

5,689

2,304

140.5%

Kitano Hankyu Building

7,740

6,570

5.1%

6,610

5.0%

40

0.6%

7,714

-1,104

85.7%

Dew Hankyu Yamada

6,930

7,810

5.0%

7,930

4.9%

120

1.5%

5,727

2,202

138.4%

Takatsuki-Josai Shopping Center

8,600

7,745

5.5%

7,890

5.4%

145

1.9%

7,357

532

107.2%

Ueroku F Building

2,980

2,630

5.7%

2,690

5.6%

60

2.3%

2,710

-20

99.2%

Nitori Ibaraki-Kita Store (Site)

1,318

1,560

5.5%

1,590

5.3%

30

1.9%

1,340

249

118.6%

Kohnan Hiroshima Nakano-Higashi Store (Site)

2,175

1,880

6.1%

1,880

6.0%

0

0.0%

2,280

-400

82.4%

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

9,405

6,732

4.7%

6,732

4.7%

0

0.0%

8,723

-1,991

77.2%

Shiodome East Side Bldg.

19,025

13,2004.5%

13,400

4.4%

200

1.5%

17,723-4,323

75.6%

Hotel Gracery Tamachi

4,160

4,010

5.0%

4,080

4.9%

70

1.7%

3,815

264

106.9%LAXA Osaka

5,122

5,120

5.3%

5,270

5.2%

150

2.9%

4,422

847

119.2%

LaLaport KOSHIEN (site)

7,350

6,950

4.8%

7,140

4.7%

190

2.7%

7,748

-608

92.1%

Namba-Hanshin Building

4,310

2,410

5.2%

2,450

5.1%

40

1.7%

3,905

-1,455

62.7%

Richmond Hotel Hamamatsu

2,100

2,021

6.1%

2,060

6.0%

39

1.9%

1,542

517

133.5%

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

18,30022,1204.8%

22,568

4.7%

448

2.0%

17,986

4,581

125.5%

Hankyu Corporation Head Office Building

10,20010,900

4.6%

11,200

4.5%

300

2.8%

9,965

1,234

112.4%AEON MALL SAKAIKITAHANADA (site)

8,100

8,840

4.8%

9,010

4.7%

170

1.9%

8,189

820

110.0%

MANDAI Toyonaka Honan store (site)

1,870

2,150

4.9%

2,180

4.8%

30

1.4%

1,889

290

115.4%

Kita-Aoyama 3 cho-me Buiding

1,680

1,760

4.0%

1,810

3.9%

50

2.8%

1,744

65

103.8%DAILY QANAT Izumiya Horikawa Marutamachi
Store (site)

3,100

3,250

4.8%

3,290

4.7%

40

1.2%

3,127

162

105.2%

kotocross Hankyu Kawaramachi

2,770

3,010

4.9%

3,090

4.8%

80

2.7%

2,765

324

111.7%

LIFE Shimoyamate Store (site)

1,421

1,490

4.8%

1,510

4.7%

20

1.3%

1,434

75

105.3%

MANDAI GOJO Nishikoji Store (site)

4,182

4,340

4.9%

4,390

4.8%

50

1.2%

4,213

176

104.2%

139,307134,380

4.9%

136,764

4.8%

2,384

1.8%

132,0194,744

103.6%

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

30

5. Financial Strategies31

5-1. Basic Financial Policy / Debt Outstanding
Basic Financial Policy

Debt Outstanding by Lender (JPY mn)● Maintain sound financial position● Maintain favorable trading relationship with financial institutions● Realize lower fund procurement costs(effective use of security deposits/guarantees)● Reduce financing risks (diversification of debt repayment dates)● Reduce interest rate risks (focus on long-term, fixed-rate loans)
As of end of
19th period

As of end of
20th period

As of May 31, 2015
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%

JPY 61.9bn

JPY 61.9bn

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

1.06%

1.05%

Avg. debt financing cost (including
investment corporation bonds)

1.08%

1.07%

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

3.6年

5.1年

Long-term debt ratio

91.9%

100.0%

Fixed debt ratio

73.8%

93.5%

LTV (Note)

45.4%

44.4%

Interest-bearing debt ratio

42.9%

42.9%

JPY 6 bn

JPY 6 bnA+
（stable）

A+（stable）

Planned value of issuance (upper limit):

Investor rating(R&I)

Investor rating(JCR)

AA（stable）

AA（stable）

Planned issuance period: Dec. 19, 2013 to Dec. 18, 2015

Interest-bearing debt

Investment corporation bonds(Note) Details of the calculation method for, “LTV” are presented on P61.

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 corporate bonds

Total JPY 61.9 bn
Registration for Issuance of Investment
Corporation Bonds

JPY 100,000 mn

32
32

5-2. Asset Scale and LTV (Loan to Value)
Capital increaseby 2nd public offering

Total acquisition priceTotal appraisal value at the end of period

Capital increaseby 3rd public offering

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
240

46.1

45.6

210

57.9

150

55.6 56.1 55.9 56.0 55.9 55.8

60

53.5
48.6 47.3
45.4

49.4
28.8

55.2

46.0

180
31.0 30.0 30.7（％）

46.9 46.2 45.4 45.5
45.2 45.5 45.5 46.7

40.8 40.3

43.2 43.4 42.9

44.4

50

42.9

40

39.1

30

120
21.3

90
60

20

18.0 18.2 18.9

10

30
0

0
1st
2nd
3rd
4th
5th
6th
7th
8th
9th
10th
11th
12th
13th
14th
15th
16th
17th
18th
19th
20th
period period period period period period period period period period period period period period period period period period period period'05/11 '06/05 '06/11 '07/05 '07/11 '08/05 '08/11 '09/05 '09/11 '10/05 '10/11 '11/05 '11/11 '12/5 '12/11 '13/05 '13/11 '14/05 '14/11 '15/05

No. ofproperties

5

6

7

8

9

11

11 16

15

15

15

15 15 15 15 16 19 19

23

23

LTV remains on an ongoing basis
33

6. Overview of Financial
Results for 20th Fiscal Period346-1. Financial Highlights（Unit:JPY mn）
Item

Operation period (days)

Forecast for 20th Fiscal Period①(as of Jan. 22, 2015)

182

Results for 20th Fiscal Period②(Dec. 1, 2014 to May 31, 2015)

182

Change②-①(Main factors for increase/decrease)①―

Operating revenues

4,842

4,842

0

Operating income

1,921

1,939

18

Ordinary income

1,513

1,535

22

Net income

1,511

1,534

22

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

597,500―

Distribution per unit (JPY)

2,530

2,567

37

FFO per unit (JPY)

4,166

4,197

31

Decrease in maintenance and repair fees
+JPY 14 mn① Decrease in advertising and promotion
expenses+JPY 3 mn②②
Decrease of borrowing cost

+JPY 3 mn

35

6-2. Distribution Forecast for 21st Fiscal Period
Forecast
for the 21st fiscal period

Distribution per unit forecast

JPY 2,550[Main factors for increase/decrease from 20th FP]
・Expensed tax and public dues of properties acquired in the 19th FP for full period:-15 (kotocross -6, Nishikoji -3, Marutamachi -3, etc.)（Unit: JPY mn）
Item

Results for 20th Fiscal Period ①(Dec. 1, 2014 to May 31, 2015)

Forecast for 21th Fiscal Period ②(Jun. 1, 2015 to Nov. 30, 2015)

Results for 19th Fiscal Period ③(Jun. 1, 2014 to Nov. 30, 2014)

Change②-①

Change②-③Operation period(days)

182

183

1

183

―

Operating revenues

4,842

4,865

22

4,786

79

Operating income

1,939

1,923

-15

1,928

-5

Ordinary income

1,535

1,524

-10

1,517

7

Net income

1,534

1,523

-10

1,515

7

597,500

597,500―

119,500

478,000

Distribution per unit (JPY) *

2,567

2,550

-17

FFO per unit (JPY) *

4,197

4,178

-19

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

2,537(12,685)
4,164(20,822)13
13* Hankyu REIT implemented a five-for-one split of its investment units with December 1, 2014 as the effective date.
“Distribution per unit (JPY)” and “FFO per unit (JPY)” in the results for 19th Fiscal Period ③ are figures where the actual values indicated in parentheses are divided by 5.

[Main preconditions]•There will be no transfer of portfolio properties from the presently held 23 properties•There will be no additional issuance of investment units to the present 597,500 units until the end of the period366-3. Income Statement / Cash Distribution Statement
Income statement

Cash distribution statement（Unit: JPY mn）

Item

19th Fiscal Period

20th Fiscal Period(Operation period:183 days)(Operation period:182 days)

Jun. 1, 2014 to Nov. 30, 2014

Dec. 1, 2014 to May. 31, 2015

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

4,786
4,786
2,857
2,433
309
3
17
33
8
51
1,928
2
0
1
413
308
44
37

Pretax net income for current period

3
7
11
1,517
1,517

Corporate, local and enterprise tax

1Adjustment for corporate tax, etc.

0
1,515
0
1,515

Investment unit issue costs
Other expenses
Ordinary income

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

Percentage

100.0
59.7

40.3
0.0

8.6

31.7

Amount

4,842
4,842
2,903
2,459
333
3
18
37
8
42
1,939
1
0
0
405
304
52
38
3
―
7
1,535
1,535

Change

-0
1,534
0
1,534

Item

100.0

56

①

59.9

45

②

19th Fiscal
Period20th Fiscal
PeriodChangeAmountAmountAmountUnappropriated income
for current period

1,515,948

1,534,203

18,254

Distributions

1,515,857

1,533,782

17,925(2,537)(2,567)

(30)

90

420

329

Percentage(Distribution per unit
(JPY)) *Retained earnings carriedforward* Hankyu REIT implemented a five-for-one split of its
investment units with December 1, 2014 as theeffective date. Results for the 19th fiscal period are
calculated by dividing the actual figures by 5.

40.1
0.0

10
-0

8.4

-8

(Main factors for increase/decrease)① Increase in operating revenue
Increase in income from lease(Nishikoji and Namba-Hanshin Building)+JPY 99 mn
Decrease in utilities expense income-JPY 37 mn
Reactionary decrease in insurance proceeds-JPY 8 mn

31.7

18

31.7

18

1
31.7

(Unit: JPY thousand)Lease operating revenues / expenses
Breakdown: See pages 39 and 40② Increase in operating expenses
Increase in maintenance and repair fees
+JPY 63 mn
Decrease in utilities expense-JPY 52 mn
Increase in asset management remunerations
due to expansion of asset scale, etc.
+JPY 24 mn
Increase in advertising and promotion expenses+JPY 13 mn

37

6-4. Balance Sheet（Unit: JPY mn）

Item

19th Fiscal Period

20th Fiscal Period(as of Nov. 30, 2014)(as of May. 31, 2015)

AmountAmountRatio (%)

Ratio (%)

ChangeItem
AmountAssets19th Fiscal Period

20th Fiscal Period(as of Nov. 30, 2014)(as of May. 31, 2015)

AmountAmountRatio (%)

Ratio (%)

ChangeAmountLiabilities

I Current assets total

11,233

7.8

11,5548.0

320 I Current liabilities total

19,039

13.2

3,826

Currency and demand deposit

2,581

3,226

Operating accounts payable

511

414

Currency and demand depositin trust

8,403

7,970

Short term loans payable

5,000

―

Operational income receivable

6

4Long term loans payable(return within 1 year)

112

125

Deposit paid
Prepaid expense
Deferred income tax assets

II Fixed assets total

128

225

0

2

133,04192.2

132,580

92.0

-461

1. Tangible fixed assets
Buildings

2,117

2,051

Structures

241

228

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

0

0

9,485

9,485

30,80867

88,115

88,115

131,64791.2

130,984

OthersIntangible fixed assets total

957

90.9

-662

957

82
1,039

1,035

Income taxes payable1

1

Accrued consumption tax

31

99

Advance received

703

674

0

0

0.7

233
52,073

Interest-bearing
liabilities
JPY 61,900 mn

Total security
deposits
JPY 7,669 mn

246
36.1

67,123

Investment corporation bonds

6,000

6,000

Long term loans payable

38,50053,700

Security deposits

1,385

1,338

Security deposits in trust

6,188

6,085

46.6

15,049JPY 1,433 mn
was allocatedfor property
acquisitions

71,11349.3

70,95049.2-162

I Unitholders capital

71,65949.7

71,65949.7

II Total surplus

1,515

1.1

1,534

1.1

73,17550.7

73,19350.8

18144,288100.0

144,143

100.0

-144

Net assets

Unappropriated income for current
period

78
0.7

177

Liabilities total

2. Intangible fixed assets
Land leasehold

144

II Total noncurrent liabiliteies―

6

Accrued expenses(return within 1 year)

189

68

12

-15,212Security deposits

593

194

2,200

13

Current deposit received

30,253609

12,400Accrued dividend

2.7-4 Net assets total

1,515

1,534

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

345

550

Guarantee money deposit

10

10

Investment, other assets total

IIITotal deferred assets
Investment corporation bondissuance costs

Assets total

355

0.2

560

0.4

205

12

0.0

9

0.0

-3

12
144,2889
100.0

144,143100.0-144 Liabilities and net assets total

38

6-5. Income and Expenditure by Property ①（Unit： JPY mn）
HEP Five

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

Dew Hankyu
YamadaKohnanNitori IbarakiTakatsuki-Josai
Hiroshima
Hotel Gracery
Kita Store (site)
SC
Nakano-Higashi
Tamachi(Note)Store (site)

Number of operating daysof 20th fiscal period

182

182

182

182

Lease operating revenues
total

308

545

389

Income from lease

248

376

Utilities expense income

15

Other incomes

182

NISHINOMIYAGARDENSAEON MALL
Richmond Hotel(28% of the
SAKAI
Hamamatsu
quasi coKITAHANADA(Note)
ownership of the(site) (Note)trust beneficiaryinterests)

LaLaport
KOSHIEN(site)

182

182

182

182

182

284

68

121

257

618

270

283

68

116

257

617

113

50

―

―

―

―

―

44

55

68

0

0

4

0

0

MandaiToyonaka
Honan Store(site) (Note)

182

182

200

413

237

159

6

53

109

211

Property/Facility
management fees

45

114

73

10

0

1

1

0

Utilities expense

25

152

55

0

―

―

―

―

3

0

1

22

―

―

0

6

36

1

2

―

―

―

―

―

Repair expense

7

9

11

23

―

―

2

0

Nonlife insurance
premium

0

1

0

1

―

0

0

2

Tax and public dues

23

50

26

26

6

14

102

58

7

2

5

0

―

0

1

0

51

81

61

75

―

36

0

141

Lease operating income

107

131

152

125

62

67

147

406

NOI
(Lease operating income +Depreciation)

158

213

213

200

60

62

103

147

65

548

211

53

12

29

0

―

―

―

―

―

―

24

―

―

Lease operating costs total

Rent paid
Advertising and promotion
expenses

Other expenses
Depreciation

Capital expenditure(Note) Rent Information is not disclosed as the consent of the tenant was not obtained.

39

6-5. Income and Expenditure by Property ②（Unit： JPY mn）

Item

Number of operating daysof 20th fiscal period

IzumiyaHorikawa
MarutamachiStore(site) (Note)

182

kotocross
HankyuKawaramachi

LIFE
Shimoyamate
Store(site) (Note)

MANDAI Gojo
Nishikoji
Store (site)(Note)

182

182

182

HankyuCorporation
Head Office
Bldg.

Ueroku F Bldg.

Sphere Tower
Tennoz(33% of thequasi coownership of
the trust
beneficiary

182

182

182

182

182

182

Shiodome
East
Side Bldg.

LAXA Osaka

Kita-Aoyama
Total
Namba-Hanshin
3 cho-me Bldg.
(23 properties)
Building(Note)

182―

Lease operating revenues
total

102

403

359

134

115

254

133

4,842

Income from lease

102

377

359

115

83

254

114

4,392

Utilities expense income

―

23

―

10

12

―

8

234

Other incomes

―

3

―

7

19

―

10

215

40

190

157

89

171

156

128

2,459

1

18

1

22

24

1

23

348

Utilities expense

―

28

―

11

44

―

16

335

Rent paid

12

0

―

―

―

17

―

65

Advertising and promotion
expenses

―

―

―

―

1

―

―

41

Repair expense

―

1

―

4

11

3

14

90

Nonlife insurance premium

0

0

1

0

0

2

0

15

Tax and public dues

3

21

48

12

28

48

19

555

Other expenses

0

4

0

2

2

1

1

33

21

115

106

36

59

81

52

974

61

213

201

44

-55

97

4

2,382

Lease operating costs
total
Property/Facility
management fees

Depreciation
Lease operating income
NOI(Lease operating income +Depreciation)

91

83

36

113

328

307

81

3

179

57

35

3,357

Capital expenditure

―

―

―

―

3

81

10

111

24

15

0

314

(Main capital expenditure)
Hankyu Corporation Head Office Building
Construction to update the air conditioning

JPY 28 mn

Sphere Tower Tennoz
Value-enhancement work at common-use portions

JPY 82 mn(Note) Rent Information is not disclosed as the consent of the tenant was not obtained.

40

6-6. Financial Indicators

Item

19th Fiscal Period

20th Fiscal Period

Remarks
19th fiscal period: Jun. 1, 2014 to Nov. 30, 2014
20th fiscal period: Dec. 1, 2014 to May. 31, 2015

183

182

1.1%

1.1%

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

2.2%

2.1%

Calculated from duration of operation

2.2%

2.1%

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

4.4%

4.2%

Calculated from days of operation

50.7%

50.8%

Net assets / Total assets

45.4%

44.4%

(45.9%)(45.9%)

42.9%

42.9%

8.2times

8.3times

Net Operating Income (NOI)

JPY 3,325 mn

JPY 3,357 mn

Net lease operating income + Depreciation

Funds From Operation (FFO)

JPY 2,488 mn

JPY 2,508 mn

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

Operation period

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

41

7. APPENDIX

42

7-1. Portfolio List (As of End of 20th Fiscal Period) ①
As of May 31, 2015
Classifi- Codecation (Note 1)

Name

Total leasablearea (m2)(Note 3)

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

Kita Ward,
Osaka City

Nov. 1998

16.6

6,337.37

100.0%

1(2,958.94)(100.0%)(133)

Kitano Hankyu Bldg.

Kita Ward,
Osaka City

Jun. 1985

30.0

28,194.15

100.0%

2(18,477.35)(97.9%)

(22)

R3(K)

Dew Hankyu Yamada

Suita City,
Osaka Prefecture

Oct. 2003

11.7

13,027.28

100.0%

R4(K)

Takatsuki-Josai
Shopping Center

Takatsuki City,
Osaka Prefecture

Apr. 2003

12.2

31,451.81

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

Ibaraki City,
Osaka Prefecture

―

―

R6

Kohnan Hiroshima NakanoHigashi Store (site)

Aki Ward,
Hiroshima City―

R8

Hotel Gracery Tamachi

Minato Ward,
Tokyo

R9(K)

LaLaport KOSHIEN(site)

R10

Richmond Hotel Hamamatsu

R11(K)

HANKYU NISHINOMIYAGARDERNSHEP Five

Retail-use Facilites

Location

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

R2(K)(28% of the quasi co-ownership of
the trust beneficiary interests)

Date of acquisition

Acqusition price Investme Appraisal value(JPY mn)(JPY mn )nt ratio

Cap rate(Note 5)

4.6%

Feb. 1, 2005

6,468

4.6%

7,994

4.0%

10.1%

Feb. 1, 2005

7,740

5.6%

6,610

5.0%

28

4.5%

Feb. 1, 2005

6,930

5.0%

7,930

4.9%

100.0%

1

6.1%

Nov. 15, 2005

8,600

6.2%

7,890

5.4%

6,541.31

100.0%

1―

Mar. 29, 2006

1,318

0.9%

1,590

5.3%

―

25,469.59
60.14

100.0%

1―

Oct. 2, 2006
Apr. 9, 2007

2,170
5

1.6%

1,880

6.0%

Sep. 2008

6.7

4,943.66

100.0%

1

10.3%

Dec. 25, 2008

4,160

3.0%

4,080

4.9%

Nishinomiya City,
Hyogo Prefecture――

126,052.16

100.0%

1

6.4%

Jan. 22, 2009

7,350

5.3%

7,140

4.7%

Naka Ward,
Hamamatsu City

Sep. 2002

12.7

6,995.33

100.0%

1

14.5%

Jan. 22, 2009

2,100

1.5%

2,060

6.0%

Nishinomiya City,
Hyogo Prefecture

Oct. 2008

6.7

65,372.41

100.0%

1

9.2%

Apr.16, 2013

18,30013.1%

22,568

4.7%

R12(K)AEON MALL
SAKAIKITAHANADA(site)

Kita Ward,
Sakai City――

64,104.27

100.0%

2―

June. 27, 2013

8,100

5.8%

9,010

4.7%

R13(K)

MANDAI Toyonaka Honanstore (site)

Toyonaka city
Osaka Prefecture――

8,159.41

100.0%

1―June. 27, 2013

1,870

1.3%

2,180

4.8%

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

Kamigyo ward,
Kyoto city――

3,776.15

100.0%

1―June 4, 2014

3,100

2.2%

3,290

4.7%

R15(K)

kotocross Hankyu
Kawaramachi

Shimogyo ward,
Kyoto city

Oct. 2007

7.7

4,400.13

100.0%

1

2.6%

June 4, 2014

2,770

2.0%

3,090

4.8%

R16(K)

LIFE Shimoyamate Store(site)

Chuo ward,
Kobe city――

2,397.83

100.0%

1―June 4, 2014

1,421

1.0%

1,510

4.7%

R17(K)

MANDAI Gojo
Nishikoji Store (site)

Ukyo-ku
Kyoto city――

9,182.80

100.0%

1―June 24, 2014

4,182

3.0%

4,390

4.8%

43

7-1. Portfolio List (As of End of 20th Fiscal Period) ②

Office-use
facilities
Mixed-use (complex) facilities

Total leasablearea (m2)(Note 3)

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

Location

Completion date

Building
age(Note 2)

O1

Shiodome East Side Bldg.

Chuo Ward,
Tokyo

Aug. 2007

7.8

9,286.58

100.0%

6

4.6%

Feb. 29, 2008

19,025

13.7%

13,400

4.4%

O2(K)

Hankyu Corporation Head
Office Building

Kita Ward,
Osaka City

Sep. 1992

22.7

27,369.37

100.0%

1

3.7%

Apr.10 2013

10,200

7.3%

11,200

4.5%

M1(K)

Ueroku F Bldg.

Chuo Ward,
Osaka City

Sep. 1993

21.7

4,611.82

100.0%

12

3.2%

Nov. 1, 2005

2,980

2.1%

2,690

5.6%

M2

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

Shinagawa
Ward,
Tokyo

Apr. 1993(Note 6)22.2

8,807.71

39.0%

20

2.7%

Oct. 2, 2007

9,405

6.8%

6,732

4.7%

M3(K)

LAXA Osaka

Fukushima
Ward,
Osaka City

Feb. 1999

16.3

30,339.91

100.0%

1

3.7%

Jan. 22, 2009

5,122

3.7%

5,270

5.2%

M4(K)

Namba-Hanshin Building

Chuo Ward,
Osaka City

Mar. 1992

23.2

9,959.01

100.0%

1(6,456.88)（96.0%)

(20)

5.1%

Jan. 22, 2009

4,310

3.1%

2,450

5.1%

M5

Kita-Aoyama 3 cho-me
Building

Minato Ward,Tokyo

Sep. 2013

1.7

619.76100.0%

3

7.4%

Nov. 12, 2013

1,680

1.2%

1,810

3.9%

14.2

497,459.98(480,862.62)

98.9%(98.7%)

89
(260)

3.5%

139,307100.0%

136,764

4.8%

Classifi- Codecation (Note 1)

Sphere Tower Tennoz

Total

Date of acquisition

Acqusition price Investme Appraisal value(JPY mn )(JPY mn)
nt ratio

Cap rate(Note 5)(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 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), AEON MALL SAKAIKITAHANADA (site) and LIFE Shimoyamate Store (site) are allocated a discount rateusing the DCF method.) and the portfolio total is the weighted average cap rate based on appraisal values.
(Note 6) The completion date for the office and store portions is indicated.

44

7-2. Portfolio View (as of end of 20th Fiscal Period) ①
Community-based retail facilities ①

Urban retail facilities
HEP Five

kotocross Hankyu Kawaramachi

HANKYU NISHINOMIYA GARDENS

Kita-Aoyama 3 cho-me Building

Kitano Hankyu Building

AEON MALL SAKAI KITAHANADA (Site)45

7-2. Portfolio View (as of end of 20th Fiscal Period) ②
Community-based retail facilities ②
DAILY QANAT Izumiya Horikawa Marutamachi Store (site)

Dew Hankyu Yamada

MANDAI Gojo Nishikoji Store (site)

LIFE Shimoyamate Store (site)46

7-2. Portfolio View (as of end of 20th Fiscal Period) ③
Community-based retail facilities ③
LaLaport KOSHIEN (Site)

MANDAI Toyonaka Honan Store (Site)

Takatsuki-Josai SC

Nitori Ibaraki-Kita Store (Site)

Kohnan Hiroshima Nakano-Higashi Store (Site)47

7-2. Portfolio View (as of end of 20th Fiscal Period) ④
Hotel
LAXA Osaka

Richmond Hotel Hamamatsu

OfficeHotel Gracery Tamachi

Shiodome East Side Building

Hankyu Corporation Head
Office Building

Ueroku F Building

Namba-Hanshin Building

Sphere Tower Tennoz

48

7-3. Trends of Distribution per Unit

Distribution per unit forecast *

（JPY）

4,000

3,792

3,500
3,000
2,500
2,000

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

2,991

2,860

2,714

2,560

2,998

2,820

3,068

3,000

Distribution per unit *JPY 2,567

3,473
2,862

3,300
2,820

2,483

2,538

2,537 2,464

2,600
2,420 2,400 2,460
2,322

2,400

2,445 2,361

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

2,540 2,460 2,480 2,530
2,400
2,300

2,550

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

Irregular period (303 days)(Compare with 20th FP forecast: +JPY 37 per unit, net income + JPY 22 mn)
Increase in operating income +JPY 18 mn(Decrease in maintenance and repair fees JPY 14 mn, etc.)

Decrease in non-operating expenses +JPY 2 mn
(Decrease in interest expenses JPY 3 mn, etc.)* 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 theimplementation of the 5-for-1 split.

49

7-4. Income Ratio by Rent Category and Sales-Based Overage Rent System Mechanism
Income Ratio by Rent Category
and Variation Factors
20th FP
Income Ratio
1.3%
Overagerent tenants

Fixed-rent
tenants

7.0%

91.6%

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

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

Income Ratio by Rent Category
and Variation Factors

Rent income

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

Tenant sales

Total rent income(excluding warehouse income)50

7-5. Acquisition of Site Properties
Policy for Handling of Site Properties
Hankyu REIT sees retailers to be headed toward increasing neighborhood shopping center, supermarket and otherstores to city center and urban vicinity locations in the future amidst progress in the return of the population to highlyconvenient regions, aging of the population, increase in one-person households, etc., and there will thus be anincrease in site properties of such stores.
In addition, sites are becoming recognized as one of the common investment assets as contracts for fixed-term landlease for business purposes, which have no renewal of contract period, becomes widespread.
Hankyu REIT intends to continue considering acquisition, taking into consideration the balance with building-attachedproperties.
Key Advantages of Site Properties① No depreciation means a high level of contribution to distributions② In general, tenant departure and risks at the time of departure are low compared to building-attached properties in
the case of neighborhood shopping centers, supermarkets, etc.
・ Tenant owns the building: This means asset retirement and removal costs burden would be required of the tenant
upon their departure, making departure highly difficult for the tenant・ Site properties are returned as vacant land in principle: This means that, in addition to attracting replacement
tenants, it would also be possible to consider disposition as vacant land
(Retailers often demand buildings to be in their own specifications, making risks at the time of tenant departure highin the case of building-attached properties)
Key Points to Keep in Mind and Hankyu REIT’s Countermeasures for Site Properties
Points to keep in mind

Hankyu REIT’s countermeasures

No depreciation means no internal reserve can bemade, and unrealized losses may possibly be
incurred when land prices drop because thecarrying amount does not decrease

For entire portfolio, acquire at the appropriate price, taking into
consideration the land/building ratio balance, as well as
conducting studies from various aspects that include stresssimulations of rent, etc. in the property acquisition stage

In general, substitutability and liquidity are low inthe event of tenant departure

In the property acquisition stage, examine the possibility of
attracting replacement tenants and the possibility ofdisposition of the property as vacant land51

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

105
104

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

103
102
101
100
99
98

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

97
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(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.

52

7-7. 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 31, 2014 of municipal regions with populations of 100,000 or more>

Population of Kansai is 20.57 million
Osaka Prefecture: approx. 8.67 million
Of which, 62% reside in the top
7 municipal regions(population of 300,000 or more)
including Osaka City
Hyogo Prefecture: approx. 5.56 million
Of which, 68% reside in the top
7 municipal regions(population of 200,000 or more)
including Kobe City

(Source) Japan Geographic Data Center “Population
Summary of the Basic Resident Registers” (2014)53

7-7. 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 -0.4% (10-year period), thepopulation of city centers such as in
Osaka City is +2.2%
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” (2004, 2014)(Note) With change of the research period for the Basic Resident Registers, comparison is of the population as at the end of March 2004 in the 2004
version and as at January 1, 2014 in the 2014 version.

54

of the Hankyu Umeda Area
7-8. Overview
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

Lot 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
Project area

Total floor area

Approx. 257,000m2

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
Oct. 2014: Start demolition of Shin-Hankyu Building
Feb. 2015: Start demolition of east side of Daihanshiin Building
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
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 zone55

7-9. Main Investment Area of Hankyu REIT “Umeda”
Aerial photograph takenfrom southeast side facing northwest(shot in December 2013)
NU chayamachi

Hotel New
Hankyu Osaka

Chayamachi
Applause

Kitano Hankyu Bldg.
LAXA OSAKAHERBISOSAKAGRAND FRONTOSAKAHERBIS ENT
Dai Hanshin Bldg.
(Hanshin Department Store)(under construction)

Kita-Hankyu
Bldg.

Hankyu Corporation
Head Office Bldg.

HANKYUTERMINAL Bldg.

Hankyu Grand
Bldg.
Umeda Center Bldg.
ＪＲ Osaka Sta.

Hankyu Umeda Sta.
Hankyu-Sanbangai
OS Bldg.
HEP Navio
Shin Hankyu Bldg.
(under construction)■Property owned by Hankyu REIT

Umeda Hankyu Bldg.
(Hankyu Department Store)

HEP Five

Higashi Hankyu Bldg.

■Property owned and developed by Hankyu Hanshin Holdings Group

56

7-10. HANKYU NISHINOMIYA GARDENS and Properties in Vicinity

Hankyu Imazu LineACTA NISHINOMIYAWest Bldg.

ACTA NISHINOMIYA
East Bldg.

Hankyu Kobe Line

HANKYU NISHINOMIYAGARDENS

Nishinomiya
Kitaguchi Sta.

Hyogo Performing
Arts Center

Konan University

Aerial photograph takenfrom south side facing north57

7-11. Dew Hankyu Yamada and Properties in Vicinity

Bampaku-kinen-koen

Osaka Monorail
Chugoku Expressway
Osaka Central Circular Route
Osaka Monorail
Yamada Sta.
Hankyu Yamada Sta.

Hankyu Senri Line

Tsukumodai housing estate

Dew Hankyu Yamada

Aerial photograph takenfrom south side facing north58

QANAT Izumiya Horikawa Marutamachi Store (site)
7-12. DAILY
and Properties in Vicinity
Kyoto Imperial
PalaceHorikawa-dori St.
prefectural Office

DAILY QANAT Izumiya
Horikawa Marutamachi Store(site)

Marutamac
hi Sta.

Murutamachi-dori St.

SubwayKarasuma Line

Nijo Castle (Nijo-jo)

SubwayTozai Line

Nijojo-mae Sta.

Aerial photograph takenfrom south side facing north59

7-13. Location of Three Properties Acquired in Kyoto City

Kinkakuji Temple
Ritsumeikan Univ.

Kitano-tenmangu
ShrineDAILY QANAT Izumiya
Horikawa Marutamachi Store(site)

Nijojo Castle

Shimogamo-jinja
ShrineDoshisha Univ.

Prefectural
Officekotocross
Hankyu Kawaramachi

Heian-jingu
ShrineKyoto Imperial
PalaceMANDAI Gojo
Nishikoji Store(site)

Nishi-Honganji
TempleHigashi-Honganji
TempleJR Kyoto Sta.

Toji Temple

Aerial photograph takenfrom south side facing north60

7-14. Details of Value Calculation Methods

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 results. For public charges and taxes, they are posted in expense from the first fiscal year and yields on
an on-going basis are calculated.
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.

61

7-15. Portfolio PML and Anti-Seismic Measures
As of May 31, 2015
ClassifiCode
cationRetail-use Facilites
Officeusefacilities

PML

R1(K)

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

4.6%

R2(K)

Kitano Hankyu Bldg.

10.1%

R3(K)

Dew Hankyu Yamada
Takatsuki-Josai
Shopping Center

4.5%

R4(K)

Mixed-use(complex)facilities

Name

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%

R10

Richmond Hotel Hamamatsu

14.5%

HANKYU NISHINOMIYA GARDERNS
R11(K)(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 Bldg.

4.6%

O2(K)

Hankyu Corporation Head Office Building

3.7%

M1(K)

Ueroku F Bldg.
Sphere Tower Tennoz(33% of the quasi co-ownership of the trust beneficiary interests)
LAXA Osaka
Namba-Hanshin Building
Kita-Aoyama 3 cho-me Building
Total

3.2%

M2
M3(K)
M4(K)
M5

2.7%
3.7%
5.1%
7.4%
3.5%

●What is PML?
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
The total PML value for multiple buildings scattering inwide areas is always smaller than the weighted average
PML value of each building. This is called the portfolio
effect. Hankyu REIT calculates the portfolio PML bytaking into account the geographical diversity ofbuildings over wide areas.
As shown in the table to the left, the portfolio PML ofHankyu REIT is 3.5%.
●Policy on earthquake insurance coverage
Hankyu REIT will decide to cover earthquake insurancein accordance with the following standard set forth in its
management guidelines:“Hankyu REIT will investigate earthquake insurance
coverage when the PML of an individual property
exceeds 15%.”(Note) PML of LaLaport KOSHIEN (site) is calculated for the parking garage space administration building (394.88m 2).

62

7-16. Investment Unit Price
Relative Price (closing price basis) *(Relative value based on 100 of the closing price basis on January 6, 2014 / closing price basis)160.00150.00Per Unit Trading Trends*(Oct. 26, 2005 — June 30, 2015)
High (closing price basis)

JPY 276,000(June 2007)

Low (closing price basis)

JPY 65,000(Dec. 2011)

140.00130.00120.00January 6, 2014 — June 30, 2015110.00High (closing price basis)

JPY 167,200(Jan. 15, 2015)

High (closing price basis)

JPY 102,400(Mar. 20, 2014)

100.00
90.00
80.00
'14/1

'14/4

Source: QUICK'14/7

Hankyu REIT

'14/10TSE REIT Index

'15/1

'15/4

Nikkei Stock Average

Price on June 30, 2015 (closing price basis)

Unit Price (closing price basis)*

JPY 136,300（Unit: JPY thousand）（Units）

280

7,000

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
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 5-for-1split.

63

7-17. Analysis of Unitholder Attributes at End of 20th Fiscal Period
Top 10 Unitholders

Unitholder Composition
Ownership by category

Number ofunitholders (persons)Ratio to ownership

Number ofinvestment units held
( units)

Unitholder name

Ratio to numberof investment units

Number ofunits held

Ownership

157,92226.43%

54,802

9.17%

28,055

4.70%

Financial institutions(excluding trust banks)

95

0.79%

96,15916.09%

Trust banks

10

0.08%

259,44543.42%

11,54296.36%

140,955

23.59%

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

Other organizations

228

1.90%

55,212

9.24%

Hankyu Corporation

21,0003.51%

Foreign organizations, etc.

103

0.86%

45,729

7.65%

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

14,943

2.50%

11,978100%

597,500

100%

The Senshu Ikeda Bank, Ltd.

12,5002.09%

THE CHUKYO BANK, Ltd.

7,905

1.32%

STATE STREET BANK AND TRUSTCOMPANY 505223

7,622

1.28%

Nippon Tosho Fukyu Co.,LTD.

6,205

1.04%

NOMURA BANK (LUXEMBOURG) S. A.

5,905

0.99%

Total investment

316,85953.03%

Number of outstanding units

597,500

100%

Individuals, etc.

Total

Ratio of Units by Unitholder Category

47.27%

43.48%

44.25%

36.46%

33.83%

37.17%

35.81%

38.22%

39.22%

34.34%

31.72%

25.95%

29.72%
13.39%

27.24%

33.60%

7.78%

13.38%

11.16%

7.80%

7.37%

8.11%

32.53%

32.70%

29.02%

23.71%

26.32%

8.82%

9.63%

13.46%

13.44%

7.33%

8.62%

8.23%

12.98%

10.14%

8.62%

17.05%

18.44%

9.12%

9.78%

5.32%

4.55%

23.91%

32.07%

18.47%

17.13%

18.63%

33.13%

34.26%

33.54%

29.15%

29.75%

30.26%

18.14%

16.09%

39.73%

43.42%

25.59%

23.59%

34.41%

28.52%

12.69%

12.78%

13.63%

7.18%

8.72%

9.03%

23.20%

24.78%

11.31%

11.33%

11.86%

11.22%

4.61%

9.01%

4.83%

23.77%

19.02%

23.46%
21.38%

4.47%

22.67%

27.56%

28.39%

22.27%

9.29%

33.96%

26.31%

25.30%

11.79%

11.73%

10.73%

9.59%

9.24%

7.46%

7.14%

6.84%

6.95%

7.65%

As of end of As of end of As of end of As of end of As of end of As of end of As of end of As of end of As of end of As of end of As of end of As of end of As of end of As of end of As of end of As of end of As of end of As of end of As of end of As of end of
1st period
2nd period 3rd period
4th period
5th period
6th period
7th period
8th period
9th period
10th period 11th period 12th period 13th period 14th period 15th period 16th period 17th period 18th period 19th period 20th period

Foreign organizations, etc.

Other organizations

Individuals, etc.

Trust banks

Financial institutions(excluding trust banks)647-18. Organization of Hankyu REIT Asset Management, Inc.
(As of May 31, 2015)
Corporate Data

General meeting ofshareholders
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
Executive officers
Investment Management
Committee
Compliance Department

Investment
Management
Department 1

Investment
Management
Department 2

Investment
Planning Office

Corporate
Planning
Department

23
President &Representative
Director

Yoshiaki Shiraki

Director

Toshinori Shoji

Director

Hideo Natsuaki

Director

Hiroshi Aoyama

Director (part-time)

Yasuki Fukui

Director (part-time)

Toyoyuki Komori

Corporate Auditor(part-time)

Toru Ono (Note)

Corporate Auditor(part-time)

Ken Kitano

Corporate Auditor(part-time)

Koji Yoshida

Financial instruments trading(investment management business)

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(Note) Resigned as of June 15, 201565

and Internal Audit Systems
7-19. 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 Departments

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 by systematically implementing
the internal audit every fiscal year based on theannual 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.

66

7-20. Company Structure of Hankyu REIT
(As of May 31, 2015)(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.

67