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・・・・・・・・・・・・・・・・・・・32
6. Overview of Financial Results for 21st Fiscal Period・・・・・35
7. APPENDIX ・・・・・・・・・・・・・・・・・・・・・・43
This material includes forward-looking statements based on present assumptions and future outlook.
Actual results may differ from the forward-looking statement values due to various factors.
This material is not intended as a solicitation to acquire investment securities of Hankyu REIT nor is it
intended as a solicitation to sign contracts relating to transactions of other financial instruments. Whenundertaking any investment, please do so based on your own judgment and responsibility as an investor.
Before purchasing investment securities of Hankyu REIT, please consult with a securities company thatis a “Type I Financial Instruments Business Operator.”
This material is an English translation of the original, which was issued in the Japanese language.
There are sections that display property names in abbreviated form.

11. Executive Summary2

1-1. Results for 21st Fiscal Period (Issues Explained in Financial Results Briefing for 20th Fiscal Period)

Financial
Strategies

Internal
GrowthExternal
GrowthIssuesResults for 21st Fiscal Period

・How to acquire properties that will
enable planning of target distributions
amidst the heated competition forproperty acquisition

・Maintenance and improvement ofcompetitiveness of properties held・Leasing of Sphere Tower Tennozu

・Continued to implement initiatives such as searching and consideringdevelopment-type properties through joint efforts with the sponsor group
toward securing quality properties at the appropriate price・Along with exercising appropriate property acquisition judgment
accumulated through operational management, promoted expansion ofproperty acquisition methods and property information sourcing channels
・Maintained high level of portfolio occupancy rate
(end of 21st fiscal period: 98.8%)
・For Sphere Tower Tennozu,
achieved expansion of floor area within the same property for 1 floor(occupancy rate: 39.0% ⇒ 42.8% (January 2016, 22nd fiscal period))・For HEP Five and Namba-Hanshin Building,
implemented tenant replacement contributing to income increase・Implementation of LTV control

・Lowered LTV through appraisal value rise, etc.
(44.4% ⇒ 43.2% (end of 21st fiscal period))・Continuation of stable financial
operations and diversification offund procurement methods

・Continued stable financial operations
by striking a balance between reduction of debt financing costs, andextension of borrowing periods and diversification of debt repayment dates

Net assets per unit

JPY 122,552

Net assets per unit
JPY 136,742
after reflecting unrealized income/loss

Results for 21st fiscal period (ended November 2015)
Distribution per unit

JPY 2,620
3

1-2. Profitability and Financial Status● Profitability of Portfolio
End of 18th FP(End of May 2014)

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

End of 20th FP(End of May 2015)

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

Average NOI yield(Note)

4.7%

4.8%

4.8%

4.8%

Average NOI yield
after depreciation(Note)

3.2%

3.4%

3.4%

3.4%

Unrealized income/loss(Note)-JPY 0.9 bn

JPY 1.6 bn

JPY 4.7 bn

JPY 8.4 bn● Stability of Financial Foundation
End of 18th FP(End of May 2014)

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

End of 20th FP(End of May 2015)

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

LTV(Note)

47.3%

45.4%

44.4%

43.2%

Interest-bearing
debt ratio

43.4%

42.9%

42.9%

43.0%

Averagedebt financing costs

1.23%

1.08%

1.07%

1.06%

2.7 years

3.6 years

5.1 years

4.8 years(including investment corporation bonds)

Averageremaining years on
long-term loans payable andinvestment corporation bonds(Note) Details of the calculation method for “Average NOI yield,” “Average NOI yield after depreciation,” “Unrealized income/loss” and “LTV”
are presented on page 57.

41-3. Internal Growth Initiatives (Sphere Tower Tennozu)

Progress in Improving Leasing Environment
・Achieved expansion of floor area within the same
property by an existing tenant (1 floor), boosting
occupancy rate to 42.8% in January 2016
・As rents are on an upward trend due todecreased vacancy rate in the Tokyo
metropolitan area, areas that can provide large
space all at once at undervalued rent arebecoming limited to pretty much just the bay area
・In addition to the described environment,
property viewings have doubled from theprevious year and concrete talks, too, areincreasing as a result of engaging in finely-tuned
leasing activities, such as showcasing building
features, location and other strengths

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

Value-Enhancement Initiatives
・Implemented value-enhancement work on
atrium and entrance in December 2014
・Subsequent measures also underway toenhance convenience and comfort for building
occupants, such as implementing renovation
work on underground entrance, 1F lounge, etc.
Underground entrance(B1F)

Lounge(back of 1F entrance)51-4. Topics on Properties Held (Kita-Aoyama 3 cho-me Building)Received Award for Local Green City Development Issued by City of Minato, Tokyo<Recognition from City of Minato>
A program to commend private buildings for their environmental considerations and outstanding greening planning at the City of
Minato, this year a total of 92 candidate buildings were screened, from which 4 buildings—including the Property—were chosen
for the award. The Property was recognized for the following points:●Provides contact with unique greenery through various aromas of citrus trees and other flowers●The trees are well maintained, dramatically boosting the attractiveness of the neighborhood where many tasteful shops exist<Future initiatives>
With Kita-Aoyama 3 cho-me Building receiving the award, not to mention HANKYU NISHINOMIYA GARDENS and HEP Five
receiving “DBJ Green Building Certification” and such, high recognition has been received for convenience of tenant users,
consideration for communities and other points.
Hankyu REIT will continue its pursuit to meet such social requirements while cooperating with property management companies
in an aim to enhance the asset value of its portfolio.

61-5. Initiatives toward Strengthening Financial Foundation
Continued stable financial operations
by striking a balance between reduction of debt financing costs, andextension of borrowing periods and diversification of debt repayment dates
Overview of Refinancing

Diversification of Debt Repayment Dates（JPY bn）(As of January 22, 2016)

10.0

8.0

Investment corporation bonds
JPY 6.0 bn

Amount ofdebt
Borrowing
financing
period(JPY mn)

Date ofrefinance②

6.0

Variable/
Fixed①

Sep. 30, 2015

1,200

9 years

Variable②

Jan. 21, 2016

1,000

9 years

Variable

1.0

4.0
7.0

7.0
6.0

6.0

5.5

5.0

5.0

2.0

5.2

4.0
2.0
1.0

2.0

①

4.0

Long-Term Debt Ratio and Fixed Debt Ratio

1.2

1.0

0.0
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

Trends of Debt Financing Costs and Average Remaining Years(As of November 30, 2015)

1.50%

Long-term debt ratio

Fixed debt ratio

End of 21st FP(Nov. 30, 2015)

100％

91.6%

Jan. 22, 2016

100％

90.0%

6.0 years

5.1 years
1.40%

Date

5.0 years

1.36%
1.33%

1.34%

4.8 years

1.30%

4.0 years

Status of Ratings

1.23%

3.6
years

1.20%

2.0
years
1.10%

2.4
years

2.7 years
1.06%

2.2 years
1.08%

1.00%

As of end of
15th period

3.0 years

As of end of
16th period

As of end of
17th period

As of end of
18th period

As of end of
19th period

2.0 years

RatingJCR

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

1.07%
As of end of
20th period

Rating agency

As of end of
21st period

1.0 years

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

R&I(Rating and Investment Information, Inc.)A+(Stable)71-6. Objectives for 22nd and Subsequent Fiscal Periods
Expand Opportunities to Acquire Properties through Joint Efforts with the Sponsor Group,and Enhance Portfolio Quality

External
Growth・Utilize real estate networks and warehousing functions of the sponsor group
・Consider acquisition of properties utilizing the real estate development capabilities
coming from the sponsor group in an aim to acquire properties at appropriate prices
・Continue to consider measures for enhancement of portfolio quality
with the Investment Planning Office, which was newly established in the 20th fiscal period, at the core

Maintain and Improve High Level of Portfolio Occupancy Rate

Internal
Growth・Aim to maintain and improve rent through measures based on the competitiveness of each property
while establishing favorable relationship with tenants
・For Sphere Tower Tennozu,
work toward early improvement of occupancy rate and distributions by promoting leasing activities
based on location and building features while showcasing value-enhancement work on common-use
portions, etc.

Continue Stable Financial Operations and Improve Distributions

Financial ・Realize equity financing that enables both distributions to be improved and LTV to be maintained
Strategies ・Make progress in considering diversifying fund procurement methods
while continuing stable financial operations through cooperation with financial institutions

Forecast for 22nd fiscal period (ending May 2016)
Distribution per unit

JPY 2,600■Aim to be poised for stable distributions of JPY 2,600 level
82. Summary of Kansai Area9

2-1. Status of Retail Facilities in Osaka
Sales of Department Stores, Supermarkets, Etc. Going Strong
・ Sales of supermarkets in central areas and department stores are on an increasing trend due to increase in inbound tourists
and return of the population to central city, and the outlook is that this trend will continue into the future
・ Population increase/decrease is becoming clearer in certain areas, leading to a state of progress in polarization
・ Sales of department stores in Osaka increased by 1.6% over the previous year
・ Duty-free sales of department stores in the Kansai region (first half of fiscal 2015) significantly increased,
approximately quadrupling over the same period of the previous year (Note 1)
・ Sales of supermarkets in Osaka City
Significantly surpassed nationwide and Tokyo’s increase over the same month of the previous year to maintain strong sales⇒ Number of stores: 5.5% increase (Tokyo: 1.6% increase) (rate of increase attributable to new openings in fiscal 2014) (Note 2)
Same-store sales: 6.2% increase (Tokyo: 4.0% increase) (change in first half of fiscal 2015 over the same period of the previous year) (Note 3)
Sales of Department Stores by District(change over the previous year)

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

6.0%

25.0%
20.0%

4.0%

3.4%

2.0%

1.6%

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

10.0%

8.6%

5.0%

0.0%

-0.2%

0.7%

0.0%

0.2%

-2.0%
-4.0%

15.0%

Last minutedemanddue to theconsumption
tax rate hike

-5.0%
2011

2012

2013

2014

Osaka

Tokyo

Nationwide-10.0%
Apr.
H25.4
2015 (year)(Source) Japan Department Stores Association(Note 1) Source: Bank of Japan Osaka Branch “Department Store Duty-Free Sales (Kansai Region)”(Note 2) Source: Calculated by Hankyu REIT Asset Management, Inc. (December 2015)(Note 3) Source: Ministry of Economy, Trade and Industry “Current Survey of Commerce”

2013

Oct.
H25.10
2013

Apr.
H26.4
2014

Oct.
H26.10
2014

Apr.
H27.4
2015

Oct.
H27.10
2015

Osaka
Tokyo
(special wards)
Nationwide
大阪市
東京（特別区）
全国
City(Source) Ministry of Economy, Trade and Industry “Current Survey of Commerce”

102-2. Status of Offices in Osaka
Decreasing Trend of Office Vacancy Rate Continuing in Osaka
・Metabolism of Osaka office market and concentration of city functions are advancing
・Outlook is that the decreasing trend of vacancy rate will continue(Vacancy rate of Umeda area in December 2015 is the same level as that of Tokyo’s business areas in August 2014 (6.02%))

・Relocation of offices from Yodoyabashi and Hommachi area, etc. into Umeda area, especially into
high-spec buildings, is advancing
・New office supply in the future is limited
Change in Vacancy Rate of Osaka’s Major Business Areas

Vacancy Rate As of December 2015

14.0%

Umeda area

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

12.0%

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

6.07%

8.27%

8.78%

6.66%

10.0%

Umeda area

8.0%

Yodoyabashi and
Hommachi area
Shinsaibashi andNamba area
Shin-Osaka area

6.0%
4.0%

Jan.
2012

Apr.
2012

July
2012

Oct.
2012

Jan.
2013

Apr.
2013

July
2013

Oct.
2013

Jan.
2014

Apr.
2014

July
2014

Oct.
2014

Jan.
2015

Apr.
2015

July
2015

Oct.
2015

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

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

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

New supply in the future are limited

20
200

Nakanoshima
Festival Tower West
Approx. 70,000m²

15
150
10
100

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

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

5
50
00

2010
H22

2011
H23

2012
H24

2013
H25

2014
H26

2015
H27

2016
H28

2017
H29

2018
H30

2019
H31

2020
H32

2021
H33

2022
H34

(Source) Calculated by Hankyu REIT Asset Management, Inc. based on materials from office brokerage companies (include some estimates) (December 2015)11

2-3. Status of Hotels in Kansai Region
・ Increase in inbound tourists is keeping Kansai region’s hotel occupancy rate at a high level andthe increase in guest room unit price is also gaining momentum
・ With still strong hotel demand in Osaka Prefecture and Kyoto Prefecture,
the outlook is that development projects will continue to be on an increasing trend

・ Significant rise in RevPAR in Osaka City・ Guest room occupancy rate is a high level in Osaka
Prefecture and Kyoto Prefecture, causing a state where
accommodation facilities continue to be in shortage⇒ Of all guests staying overnight in Osaka Prefecture,foreign tourists visiting Japan is accounting for asignificantly increasing percentage in the past 3 years(14% ⇒ 32%) (Note 1)(Note 1) Source: Japan Tourism Agency “Accommodation Survey”
Actual results for first half of fiscal 2015 and first half of fiscal 2012

140.0
120.0

Approx. 57,100 rooms

Kyoto Prefecture

Approx. 23,600 rooms

Hyogo Prefecture

Approx. 27,700 rooms

1

Osaka Prefecture (89.0%)

136
122

2

Tokyo Metropolis (86.4%)

113

3

Kyoto Prefecture (85.5%)

4

Hyogo Prefecture (83.6%)

5

Ishikawa Prefecture (82.5%)

100.0
80.0
2011
2012
2013
2014 (FY)Osaka city
Kyoto city
Kobe cityTokyo(Graph) Relative value based on fiscal 2010 set as 100(Source) Ohta Publications Co., Ltd. “HOTERES”

・ In Osaka Prefecture and Kyoto Prefecture, the state is one where
the number of guest rooms that needs to be newly supplied tomeet the future increase in demand (number of rooms
additionally required) far exceeds the number of guest rooms thatis scheduled to be newly supplied (number of rooms in planning)

Osaka Prefecture(Note 2)

158

160.0

Hotel Demand Exceeding Supply Continues(Reference)
Number of Rooms in Existing Supply by Prefecture (As of End of Fiscal 2014)

Ranking of Business Hotel
Guest Room Occupancy Rate

Change in RevPAR

RevPAR in Kansai Region Continues to Rise2010

(Note 2) Source: Japan Tourism Agency
Actual results forfirst half of fiscal 2015

Status of Number of Rooms in Planning andNumber of Rooms Additionally Requiredin Kansai Region
Kyoto
1,600 1,800
Prefecture

9,900

Hyogo
Prefecture(Source)
Number of rooms additionally required: Number of guest rooms expected to be in shortage in 2020
when Tokyo will be hosting the Olympic Games
Estimated by Hankyu REIT Asset Management, Inc. usingmaterials prepared by Mizuho Research Institute Ltd.
(August 2015) as reference (December 2015)
Number of rooms in planning:
Estimated by Hankyu REIT Asset Management, Inc. using
Ohta Publications Co., Ltd. “HOTERES,” etc. as reference(December 2015)
Number of rooms in existing supply:
Statistics Bureau “Report on Public Health Administrationand Services FY2014”

2,400
Osaka
Prefecture

10,700<Major Development Areas Within Osaka City>

4,400

Yodoyabashi and Hommachi area

1,400 rooms

Shinsaibashi and Namba area

1,200 rooms

Umeda area
Number of rooms
additionally required(rooms)700 rooms
Number of rooms
in planning(rooms)12

2-4. Main Investment Area of Hankyu REIT “Umeda”

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

ＮＵ chayamachi
ＮＵ chayamachi Plus

Hotel New
Hankyu Osaka

LAXA OSAKAHERBISOSAKAGRAND FRONTOSAKA

Kita-Hankyu
Bldg.

HERBIS ENT

Kitano Hankyu
Bldg.

HANKYUTERMINAL Bldg.

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

Chayamachi
Applause

HankyuCorporation
Head Office
Bldg.

Hankyu GrandBldg.

ＪＲ Osaka Sta.

Hankyu Umeda Sta.
Hankyu-Sanbangai
Umeda Center Bldg.

OS Bldg.
Shin Hankyu Bldg.
(under construction)

HEP Five

Umeda Hankyu Bldg.
(Hankyu Department Store)

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

■Property owned and developed by Hankyu Hanshin Holdings Group13
13

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
16.6%

Office27.4%

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
71.5%
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 and stability amidst the heatedcompetition for property acquisition. Will keep obtaining quality property information utilizing the comprehensive strengths of the sponsor
group through joint efforts, such as setting up a weekly forum for property information sharing and consideration with the sponsor group.
In addition, will keep aiming for further expansion of also the asset management company’s own property information sourcing channels.

Trends of Information Leads(leads)
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 21st
period period period period period period period period period period period period period period period period period period period period period

Diverse Property Acquisition Methods
Acquisition method
Sponsor group’s property
HEP Five
Kitano Hankyu Building
Dew Hankyu Yamada
Nitori Ibaraki-Kita Store (site)
LaLaport KOSHIEN (site)
LAXA Osaka
Namba-Hanshin Building
HANKYU NISHINOMIYAGARDENSkotocross 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 Tennozu
Kita-Aoyama 3 cho-me Building

16

3-3. Information Leads and Leads Considered (21st Fiscal Period)* Outer circle: Information leads

Inner circle: Leads actually considered

Area
Urban vicinity

City center

Use

OfficeMixed(Complex)

2

1

15

102

21

3

1

7

11

10

1

14

1

Hotel

Other*

7

1

1

37
12

6

1

6

42

6

0

0

0

33

6

0

0

0

2

4

8

31

20

6

2

0

3

4

0

8

6

1

1

8

69

18

4

2

6

1

1

63

42
1

95
RetailSuburban

5

30

36

* 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 in the Kansai region, Tokyo metropolitan area andregional major cities, such as Nagoya, Fukuoka and Hiroshima, etc.

173-4. Retail Facilities ①
Investment in community-based retail facilities and urban retail facilities
Community-based retail facilities

Urban retail facilities

Provides products and services
to serve needs of daily life

Provides extraordinary urban
entertainment space

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

Core area (Note)
Umeda area

HANKYUNISHINOMIYAGARDENS

Dew Hankyu
YamadaDAILY QANAT
Izumiya Horikawa
Marutamachi Store(site)

Urban vicinity areas in the Kansai region

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

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

Rail terminals and other bustling areasin the Kansai region
Kita-Aoyama 3
cho-me Building

Other bustling areas18

3-4. 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.

19

3-5. Concrete Property Acquisition Policy for Future
Area

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

Urban vicinity

SuburbanCommunity-based
retail facilities

Urban
retail facilities

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

HEP Five

RetailDepartment stores

Kitano Hankyu Building
Large specialty shops

Kita-Aoyama 3 cho-me Building

Dew Hankyu Yamada

Takatsuki-Josai Shopping Center

MANDAI Toyonaka Honan Store
Kohnan Hiroshima Nakano-Higashi StoreMANDAI 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 zone20

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)
Stable Occupancy Rates Maintained Since 1st Fiscal Period（％）

100
99.5 100.0 99.3 98.5 99.3 98.8

95

98.1 98.5 98.7 98.4 98.7 99.0

99.4 98.5 99.0 99.5 98.6 98.6 98.7 98.7 98.8

90
85
80

1st
2nd
3rd
4th
5th
6th
7th
8th
9th 10th 11th 12th 13th 14th 15th 16th 17th 18th 19th 20th 21st
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 '13/05 '13/11 '14/05 '14/11 '15/05 '15/11(Note) Figures indicate the values at the end of each fiscal period.

Total Portfolio Occupancy Rate of 98.8% (end of 21st fiscal period)
(％)

100

Total portfolio

90

HEP

80

Kitano Hankyu
Hankyu Yamada

70

Ueroku F Bldg.

60

Tennozu

50

Shiodome

40

Namba-Hanshin

30Kita-Aoyama
2015/06

2015/07

2015/08

2015/09

2015/10

2015/11(Note) Figures express the value at the end of each month.

The graph excludes the 15 properties (Takatsuki-Josai, Nitori Ibaraki, Kohnan Hiroshima, Tamachi, LaLaport KOSHIEN, LAXA
Osaka, 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%).
23

4-3. Topics on Properties Held ①
HEP Five
Attracted tenants serving to revitalize the facility
・Initiatives underway to attract tenants that aresuitable as the fashion trendsetter in Kansai.
Attracted fashion retail shops targeting teens andthose in their 20s, which are the core targets,to the 2F large space through tenant replacement.
Along with contributing to income increase,advanced revitalization of the facility.
・Increase in inbound tourist users increased thenumber of Ferris wheel riders by 50% year-on-year,
which contributed to income.

New tenants on 2F

Namba-Hanshin Building
Attracted tenant leading to asset value enhancement
・Attracted a convenience store to the 1F store portion
through tenant replacement.
Along with contributing to income increase,heightening convenience for building occupants
led to the property’s asset value enhancement.
New tenant on 1F (currently under construction)24

4-3. Topics on Properties Held ②
Initiatives to Maintain and Improve Asset Value
Proceeded with adequate maintenance, repair and renewal of properties heldin order to secure stable income over the medium to long term andmaintain and improve the profitability of portfolio properties overall.
Will keep steadily implementing renovation work based on maintenance andrepair plans to improve the physical and functional value of properties held.
Case Examples of Initiatives Implemented in 21st Fiscal Period<Kitano Hankyu Building><Dew Hankyu Yamada><Namba-Hanshin Building>

Implemented elevator modernization work

Switched to LED lighting in common-use portions

Completed exterior wall repair work

Managed to keep utilities expense down throughenergy efficiency by switching to LED lighting for
passages in common-use portions.
Planning work to switch to LED lighting for
perimeter passages outside the building in the
22nd fiscal period.

Implemented repair work on
exterior walls in 3 phases. In thisphase, implemented repair of
window seals, painting of wall
surfaces, etc. on the south-facing
and west-facing exterior walls.

Car interior (perspective view)

Winch

In addition to implementing beautification
work on elevator doors, car interior, etc.,
also replaced winch, control panel, etc.
Transformed car interior into a modern
design with stainless steel finish.

25Systems and Present Conditions of 23 Portfolio Properties
4-4. Rent(End of 21st Fiscal Period)①

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

Present conditions

HANKYU NISHINOMIYAGARDENS
RSC (Note 1)

Long-term, fixed

Rent income is stable based on a fixed-type master lease method (Note 2) with Hankyu Corporation.
Due in part to the renewal implemented in March 2014, sales increased for the sixth consecutive
year since opening in 2008 to reach JPY 79.0 billion in fiscal 2014.
Sales in fiscal 2015, too, are going strong.

Dew Hankyu Yamada
NSC (Note 1)

Long-term, fixed(partly overage)

Period-end occupancy rate performance is stable at 100%.
As measures against LaLaport EXPOCITY that opened in November 2015, implementing measures
to retain local daily customers, such as selling premium cash vouchers and holding events in whichcustomers can earn bonus loyalty program points.

Kitano Hankyu Building
Specialty shop building(urban SC)

Fixed(partly overage)

Period-end occupancy rate was 98.0%, maintaining the same level from the end of the previous
period (20th fiscal period).
A 30th anniversary event was held in October 2015.
Along with continuously advancing leasing activities for tenants that will have synergistic effects
with existing tenants and for tenants that will serve to revitalize the facility, continuing to focus
efforts on improving attractiveness to customers, such as holding events in conjunction with local
events, etc.

30th anniversary event at Kitano Hankyu Building

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

26

Systems and Present Conditions of 23 Portfolio Properties
4-4. Rent(End of 21st Fiscal Period)②

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

Present conditions

HEP Five
Specialty shop building(urban SC)

Overage(fixed + variable)

Attracted fashion retail shops targeting teens and those in their 20s, which are the core targets, tothe 2F large space through tenant replacement. Along with contributing to income increase,advanced revitalization of the facility. Increase in inbound tourist users increased the number of
Ferris wheel riders by 50% year-on-year, which contributed to income.

Properties Using the Fixed-rent System
Property nameMain rent system

Present conditions

Kita-Aoyama 3 cho-me
Building
Urban retail facility

Fixed

Period-end occupancy rate was 100%. Occupied by THREE AOYAMA, the flagship store of THREE,a natural cosmetics brand operated by an affiliate of Pola Orbis Holdings Inc. In October 2015,
received an award for local green city development issued by the City of Minato, Tokyo.

kotocross Hankyu
Kawaramachi
Specialty shop building(urban SC)

Long-term, fixed

Rent income is stable based on a fixed-type master lease method (Note 2) with Hankyu Corporation.
As a retail facility that features the characteristics of a landmark, facing the Shijo-Kawaramachi
crossing, it houses merchandise shops, restaurants and service shops.

Takatsuki-Josai
Shopping Center
NSC (Note 1)

Long-term, fixed

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

Event at HEP Five

Christmas light display at Kita-Aoyama 3 cho-me Building(Note 1) NSC: Neighborhood Shopping Center(Note 2) Fixed-type master lease method: Hankyu REIT receives rent income from the master lessee (sublessor).
The amount received is fixed irrespective of the rent received by sublessor from end-tenants.

27

Systems and Present Conditions of 23 Portfolio Properties
4-4. Rent(End of 21st Fiscal Period)③

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

Present conditions

Ueroku F Building
OfficeFixed

Period-end occupancy rate is being maintained at 100%.
Continue striving to strengthen tenant relations through cooperation with the property managementcompany.

Sphere Tower Tennozu
OfficeFixed

Achieved expansion of floor area within the same property (1 floor), boosting occupancy rate to42.8% in January 2016.
Continue to work toward early improvement of occupancy rate and distributions by promoting
leasing activities based on location and building features.

Shiodome East Side
Building
OfficeFixedWith a tenant reaching the end of a contract for fixed-term building lease, achieved contract renewal
at a higher amount of rent.
Occupancy rate continues to be 100%. Continue to promote strengthening relations with existing
tenants.

Namba-Hanshin Building
OfficeFixed

Attracted a convenience store to the 1F store portion through tenant replacement. Along with
contributing to income increase, heightening convenience for building occupants led to theproperty’s asset value enhancement. Period-end occupancy rate was 96.0%, maintaining the samelevel from the end of the previous period (20th fiscal period).

Hankyu Corporation
Head Office Building
OfficeLong-term, fixed

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

Hotel Gracery Tamachi
HotelLong-term, fixed

Based on a contract for long-term and fixed lease with Fujita Kanko Inc. As guest room occupancy
rate remains at a high level and guest room unit price is also increasing, the tenant’s profitability isimproving.
Fujita Kanko Inc., the lessee, filed an action for reduction in the amount of rent against Hankyu
REIT in October 2014, but Hankyu REIT has filed a counterclaim in July 2015 for increase in theamount of rent.

LAXA Osaka
Hotel

Long-term, fixed

Rent income is stable based on a fixed-type master lease method (Note) with Hanshin Electric
Railway Co., Ltd.
Guest room occupancy rate of Hotel Hanshin, which is under a sublease contract, remains at a highlevel and guest room unit price is also increasing.

Richmond Hotel
Hamamatsu
HotelLong-term, fixed

Rent income is stable based on a fixed-type master lease method (Note) with RNT HOTELS Co.,
Ltd. (consolidated subsidiary of ROYAL HOLDINGS Co., Ltd.).
Maintaining strong performance even after the large-scale renewal implemented in February 2015.

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

28

Systems and Present Conditions of 23 Portfolio Properties
4-4. Rent(End of 21st Fiscal Period)④

Properties mainly using the fixed-rent system
Property nameMain rent system

Present conditions

Nitori Ibaraki-Kita Store(site)
Specialty shop

Long-term, fixed

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

Kohnan Hiroshima
Nakano-Higashi Store(site)NSC (Note)

Long-term, fixed

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

LaLaport KOSHIEN(site)RSC (Note)

Long-term, fixed

Rent income is stable based on a contract for fixed-term land lease for business purposes with
Mitsui Fudosan Co., Ltd.
Improvement work on Hanshin Railway Koshien Station, the nearest station, is underway.
With the east ticket gate (east side station building) entering service in August 2015, convenience
improved for visitors who use the station.

AEON MALL
SAKAIKITAHANADA(site)RSC (Note)

Long-term, fixed

Rent income is stable based on a contract for fixed-term land lease for the shopping center landwith land leasehold right, which occupies most of the site. Boasts favorable market potential, andhouses AEON and Hankyu Department Store as anchor tenants and about 160 shops forming amall of specialty shops.

MANDAI Toyonaka
Honan Store (site)
NSC (Note)

Long-term, fixed

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

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

Long-term, fixed

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

MANDAI Gojo Nishikoji
Store (site)
NSC (Note)

Long-term, fixed

Rent income is stable based on a contract for fixed-term land lease for business purposes with
MANDAI Co., Ltd. It opened in December 2014. As a community-based store, it houses shops
closely related to daily life, such as a grocery store, clothing shop, drugstore and 100 yen shop.

LIFE Shimoyamate
Store (site)
SM (Note)

Long-term, fixed

Rent income is stable based on a contract for fixed-term land lease for business purposes with Life
Corporation. Opened in January 2014. Sales have been strong since it is becoming more wellknown among the neighboring areas along with its efforts, including personal delivery service, being
highly evaluated.

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

29

4-5. Appraisal Value

Appraisal value increases by 2.1% and unrealized income is JPY 8,479 mn
Cap rate decreases for 22 properties out of 23 properties

Change in Unrealized Income/Loss（JPY mn）

・Asset acquisition
Acquired 3 properties
・Asset acquisition
Acquired 4 properties

12,000JPY 8,479 mn

8,000
4,000

5.2%
5.1%

・Asset replacement
Acquired 2 properties,
transferred 2 properties

5.0%

0

4.9%

-4,0004.8%-8,000

4.7%-12,000

4.6%
12th FP 13th FP 14th FP 15th FP 16th FP 17th FP 18th FP 19th FP 20th FP 21st FP
May 2011 Nov. 2011 May 2012 Nov. 2012 May 2013 Nov. 2013 May 2014 Nov. 2014 May 2015 Nov. 2015
Newly acquired properties

Existing properties

Total

Weighted average cap rate (right axis) (Note)(Note) Cap rates are the weighted average based on appraisal values30

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

Acquisition
price

HEP Five (14% of the quasi co-ownership of thetrust beneficiary interests)① End of previous period(20th fiscal period-end)
Appraisalvalue

Cap rate(Note)

6,468

7,994

4.0%

② End of current period(21st fiscal period-end)
Appraisal value

Cap rate(Note)

8,372

3.9%

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

378

4.7%

5,650

2,721

Value to book
ratio
②/③

148.2%

Kitano Hankyu Building

7,740

6,610

5.0%

6,630

4.9%

20

0.3%

7,650

-1,02086.7%

Dew Hankyu Yamada

6,930

7,930

4.9%

8,160

4.8%

230

2.9%

5,690

2,469

143.4%

Takatsuki-Josai Shopping Center

8,600

7,890

5.4%

7,990

5.3%

100

1.3%

7,282

707

109.7%

Nitori Ibaraki-Kita Store (Site)

1,318

1,590

5.3%

1,620

5.1%

30

1.9%

1,340

279

120.8%

Kohnan Hiroshima Nakano-Higashi Store (Site)

2,175

1,880

6.0%

1,890

5.9%

10

0.5%

2,280

-390

82.9%

Hotel Gracery Tamachi

4,160

4,080

4.9%

4,240

4.7%

160

3.9%

3,779

460

112.2%

LaLaport KOSHIEN (site)

7,350

7,140

4.7%

7,320

4.6%

180

2.5%

7,748

-428

94.5%

Richmond Hotel Hamamatsu

2,100

2,060

6.0%

2,160

5.7%

100

4.9%

1,493

666

144.6%

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

18,30022,568

4.7%

23,044

4.6%

476

2.1%

17,852

5,191

129.1%AEON MALL SAKAIKITAHANADA (site)

8,100

9,010

4.7%

9,210

4.6%

200

2.2%

8,189

1,020

112.5%

MANDAI Toyonaka Honan store (site)

1,870

2,180

4.8%

2,200

4.7%

20

0.9%

1,889

310

116.5%DAILY QANAT Izumiya Horikawa Marutamachi
Store (site)

3,100

3,290

4.7%

3,350

4.6%

60

1.8%

3,127

222

107.1%

kotocross Hankyu Kawaramachi

2,770

3,090

4.8%

3,150

4.7%

60

1.9%

2,743

406

114.8%

LIFE Shimoyamate Store (site)

1,421

1,510

4.7%

1,540

4.6%

30

2.0%

1,434

105

107.4%

MANDAI GOJO Nishikoji Store (site)

4,182

4,390

4.8%

4,470

4.7%

80

1.8%

4,213

256

106.1%

Shiodome East Side Bldg.

19,025

13,4004.4%

13,600

4.3%

200

1.5%

17,610-4,01077.2%

Hankyu Corporation Head Office Building

10,200

11,200

4.5%

11,400

4.4%

200

1.8%

9,895

1,504

115.2%

Ueroku F Building

2,980

2,690

5.6%

2,740

5.5%

50

1.9%

2,676

63

102.4%

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

9,405

6,732

4.7%

6,732

4.7%

0

0.0%

8,668

-1,936

77.7%

LAXA Osaka

5,122

5,270

5.2%

5,380

5.1%

110

2.1%

4,346

1,033

123.8%

Namba-Hanshin Building

4,310

2,450

5.1%

2,600

5.0%

150

6.1%

3,853

-1,253

67.5%

1,680

1,810

3.9%

1,840

3.8%

30

1.7%

1,740

99

105.7%

139,307

136,7644.8%

139,638

4.7%

2,874

2.1%

131,1588,479

106.5%

Kita-Aoyama 3 cho-me Buiding
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.

31

5. Financial Strategies32

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

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

As of end of
20th period

As of end of
21st period

JPY 61.9bn

JPY 61.9bn

As of November 30, 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%
6,400
10.3%

9,700
15.7%

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

1.05%

1.04%

Avg. debt financing cost (including
investment corporation bonds)

1.07%

1.06%

5.1 years

4.8 years

100.0%

100.0%

Fixed debt ratio

93.5%

91.6%

LTV (Note)

44.4%

43.2%

Interest-bearing debt ratio

42.9%

43.0%

JPY 6 bn

JPY 6 bn

Investor rating(R&I)

A+（stable）

A+（stable）

Planned value of issuance (upper limit):

Investor rating(JCR)

AA（stable）

AA（stable）

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

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

Investment corporation bonds(Note) Details of the calculation method for “LTV” are presented on P57.

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 ofInvestment Corporation Bonds (As of January 22, 2016)

JPY 100,000 mn

33

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

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

Capital increaseby 2nd public offering
Capital increaseby 3rd public offering

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

60.0

53.5
48.6 47.3
45.4

180
28.8

55.2

46.0
49.4

31.0 30.0 30.7（％）
55.6 56.1 55.9 56.0 55.9 55.8

40.8 40.3

46.9 46.2 45.4 45.5
45.2 45.5 45.5 46.7

43.2 43.4 42.9

44.4 43.2

50.0

42.9 43.0

40.0

39.1

30.0

120
21.3

90
60

20.0

18.0 18.2 18.9

10.0

30
0

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

No. ofproperties

5

6

7

8

9

11

11 16 15 15 15 15 15 15 15 16 19

19

23 23 23

LTV remains on an ongoing basis
34

6. Overview of Financial Results for 21st Fiscal Period356-1. Financial Highlights（Unit:JPY mn）
Item

Forecast for 21st Fiscal Period (A) Results for 21st Fiscal Period (B)(as of Jul. 15, 2015)(Jun. 1, 2015 to Nov. 30, 2015)

Change(B)-(A)

Operation period (days)

183

183

―

Operating revenues

4,865

4,875

10

Operating income

1,923

1,961

38

Ordinary income

1,524

1,566

41

Profit

1,523

1,565

42

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

597,500―

Distribution per unit (JPY)

2,550

2,620

70

FFO per unit (JPY)

4,178

4,242

63

(Main factors for increase/decrease)①②③① Increase in income from lease (mainly HEP)+JPY 3 mn
Increase in income from HEP Ferris wheel+JPY 3 mn② Decrease in utilities expense
Decrease in depreciation+JPY 18 mn+JPY 4 mn③ Decrease in debt financing costs+JPY 2 mn

36

6-2. Distribution Forecast for 22nd Fiscal Period
Forecast for22nd fiscal period

Distribution per unit forecast

JPY 2,600[Main factors for increase/decrease from 21st fiscal period]
・Increase in income from lease+8 (Namba +5, Ueroku +3, etc.)
・Decrease in air-conditioning usage fee income-6 (Kitano -4, etc.)
・Increase in advertising and promotion expenses-5 (Yamada -6, etc.)
・Increase in repair expense-4 (Takatsuki -15, Namba +7, etc.)（Unit: JPY mn）
Item

Results for 21st Fiscal Period ① Forecast for 22nd Fiscal Period ②(Dec. 1, 2015 to May 31, 2016)(Jun. 1, 2015 to Nov. 30, 2015)

Results for 20th Fiscal Period ③(Dec. 1, 2014 to May 31, 2015)

Change②-①

Change②-③Operation period(days)

183

183

―

182

1

Operating revenues

4,875

4,843

-31

4,842

1

Operating income

1,961

1,948

-12

1,939

9

Ordinary income

1,566

1,555

-11

1,535

19

Profit

1,565

1,553

-11

1,534

19

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

597,500―

597,500―

Distribution per unit (JPY)

2,620

2,600

-20

2,567

33

FFO per unit (JPY)

4,242

4,188

-53

4,197

-9

[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 period37

6-3. Income Statement / Cash Distribution Statement
Income Statement
Item

20th Fiscal Period

21st Fiscal Period(Operation period:182 days)(Operation period:183 days)

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

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

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

Percentage

100.0
59.9

40.1
0.0

8.4

31.7

1

-0
1,534
0
1,534

Cash Distribution Statement（Unit: JPY mn）
Jun. 1, 2015 to Nov. 30, 2015
Amount

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

Percentage

100.0

33

59.8

10

0
1,565
0
1,565

①

Unappropriated income forcurrent period
Distributions②(Distribution per unit (JPY))
Retained earnings carried forward

ChangeAmountAmountAmount1,534,203

1,565,759

31,556

1,533,782(2,567)420

1,565,450(2,620)309

31,667(53)-111(Main factors for increase/decrease)
40.2
0.0

22
-0

① Increase in operating revenues

8.1

-8

② Increase in operating expenses

32.1

30

32.1

31

1
31.7

Item

Change(Unit: JPY thousand)20th Fiscal Period 21st Fiscal Period

Increase in utilities expense income+JPY 31 mn

Increase in utilities expense+JPY 24 mn
Expensed tax and public dues ofproperties acquired in the 19th FP for full period +JPY 15 mn
Decrease in advertising and promotion expenses -JPY 6 mn
Decrease in repair expense-JPY 6 mn
Decrease in depreciation-JPY 4 mn
Decrease in other expenses-JPY 8 mn

Lease operating revenues/costs
Breakdown: See pages 40 and 4138

6-4. Balance Sheet（Unit: JPY mn）
Item

20th Fiscal Period

21st Fiscal Period(as of May 31, 2015)(as of Nov. 30, 2015)

AmountAmountRatio (%)

Ratio (%)

ChangeItem

Amount20th Fiscal Period

21st Fiscal Period(as of May. 31, 2015)(as of Nov. 30, 2015)

AmountRatio (%)

AmountRatio (%)

ChangeAmountLiabilities

AssetsI Current assets total

11,5548.0

12,401

8.6

846 I Current liabilities total

Currency and demand deposit

3,226

4,013

Operating accounts payable

Currency and demand depositin trust

7,970

8,103

Investment corporation bonds(due within 1 year)

Operational income receivable

43

Deposit paid

125

115

Prepaid expense

225

162

2

2

Deferred income tax assets

II Fixed assets total

132,580

92.0

131,685

Long term loans payable(due within 1 year)

91.4

-894

1. Tangible fixed assets

Accrued expenses

177

174

Income taxes payable
Accrued consumption tax

215

0

0

9,485

9,485

(return within 1 year)

Buildings in trust

30,25329,517

II Total noncurrent liabiliteies

Structures in trust

593

573

Investment corporation bonds

Machinery and equipment in trust

189

171

Long term loans payable

Tools, furniture and fixtures in trust

67

62

88,115

88,115―9

130,98490.9

130,137

Advance received
Current deposit received

OthersIntangible fixed assets total

957

78

74

1,035

0.7

1,031

1

99

77

674

708

0

0

4,889

Interest-bearing
debt
JPY 61,900 mn

Total
security deposits
JPY 7,511 mn

260
46.6

62,1506,000―

53,70054,900

1,338

1,279

Security deposits in trust

6,085

Liabilities total

90.3

246
67,123

Security deposits

43.1-4,973-83

JPY 1,385 mn
was allocatedfor property
acquisitions

5,971

70,95049.2

70,86749.2

71,65949.7

71,659

49.7

1,534

1.1

1,565

1.1

-846 Net assets
I Unitholders capital

957

1

6.0

Security deposits

2. Intangible fixed assets
Land leasehold

6,000

10

1,985

Tangible fixed assets total

―

1,000

228

Trust construction account

484

12

2,051

Land in trust

8,716

2,200

Structures

Land

2.7

414

Accrued dividend

Buildings

Tools, furniture and fixtures

3,826

II Total surplus
Unappropriated income for current
period0.7-4 Net assets total

1,534

1,565

73,19350.8

73,22450.8

31144,143100.0

144,092

100.0

-51

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

IIITotal deferred assets
Investment corporation bondissuance costs

Assets total

550

506

10

10

560

0.4

516

0.4

-43

9

0.0

5

0.0

-3

9
144,143

5
100.0

144,092

100.0-51 Liabilities and net assets total

39

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
Hotel Gracery
Hiroshima
Kita Store (site)
SC
TamachiNakano-Higashi(Note)Store (site)

Number of operating daysof 21st fiscal period

183

183

183

183

Lease operating revenues
total

308

564

391

Income from lease

245

372

Utilities expense income

15

Other incomes183

NISHINOMIYAGARDENSAEON MALL(28% of theRichmond Hotel
SAKAI
quasi coHamamatsu
KITAHANADA
ownership of the(Note)(site) (Note)trust beneficiaryinterests)

LaLaport
KOSHIEN(site)

183

183

183

183

183

284

68

121

257

618

265

283

68

116

257

617

132

58

―

―

―

―

―

47

59

67

0

0

4

0

0

MandaiToyonaka
Honan Store(site) (Note)

183

183

186

432

247

138

6

54

106

211

Property/Facility
management fees

43

112

76

10

0

1

1

0

Utilities expense

26

164

62

0

―

―

―

―

3

0

1

22

―

―

0

6

27

5

0

―

―

―

―

―

Repair expense

9

13

14

2

―

0

0

0

Nonlife insurance
premium

0

1

0

1

―

0

0

2

Tax and public dues

23

49

26

26

6

15

102

59

6

1

3

0

―

0

1

0

44

81

61

75

―

35

0

141

Lease operating income

122

132

143

145

62

67

150

406

NOI
(Lease operating income +Depreciation)

166

214

204

221

60

62

103

150

65

548

211

53

5

18

23

0

―

―

0

―

―

6

―

―

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.

40

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

Item

Number of operating daysof 21st fiscal period

DAILY QANAT
IzumiyaHorikawa
MarutamachiStore(site) (Note)

kotocross
HankyuKawaramachi

LIFE
Shimoyamate
Store(site) (Note)

MANDAI Gojo
Nishikoji
Store (site)(Note)

183

183

183

183

HankyuCorporation
Head Office
Bldg.

Ueroku F Bldg.

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

183

183

183

183

183

183

Shiodome
East
Side Bldg.

LAXA Osaka

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

183―

Lease operating revenues
total

102

408

359

137

120

254

132

4,875

Income from lease

102

378

359

117

84

254

110

4,379

Utilities expense income

―

25

―

12

13

―

8

266

Other incomes

―

4

―

8

23

0

13

230

47

188

159

88

171

159

133

2,471

1

18

1

22

22

1

23

347

Utilities expense

―

30

―

12

44

―

18

359

Lease operating costs
total
Property/Facility
management fees

Rent paid

12

0

―

―

―

17

―

65

Advertising and promotion
expenses

―

―

―

―

0

―

―

34

Repair expense

―

1

―

3

12

7

17

83

Nonlife insurance premium

0

0

1

0

0

2

0

15

10

21

47

12

29

47

18

568

0

2

0

1

2

1

1

26

21

113

108

36

59

82

53

969

54

219

200

49

-51

95

-0

2,404

Tax and public dues
Other expenses
Depreciation
Lease operating income
NOI(Lease operating income +Depreciation)

88

76

34

109

333

308

85

8

177

52

36

3,373

Capital expenditure

―

―

―

―

―

38

2

4

6

1

―

108

(Main capital expenditure)
Hankyu Corporation Head Office Building

Lighting control equipment replacement

JPY 29 mn

Kitano Hankyu Building

Elevator modernization

JPY 16 mn

Dew Hankyu Yamada

Switch to LED lighting in common-use portions

JPY 13 mn(Note) Rent information is not disclosed as the consent of the tenant was not obtained.

41

6-6. Financial Indicators

Item

20th Fiscal Period

21st Fiscal Period

Remarks
20th fiscal period: Dec. 1, 2014 to May. 31, 2015
21st fiscal period: Jun. 1, 2015 to Nov. 30, 2015

182

183

1.1%

1.1%

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

2.1%

2.2%

Calculated from duration of operation

2.1%

2.1%

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

4.2%

4.3%

Calculated from days of operation

50.8%

50.8%

Net assets / Total assets

44.4%

43.2%

(45.9%)(45.9%)

42.9%

43.0%

8.3times

8.7times

Net Operating Income (NOI)

JPY 3,357 mn

JPY 3,373 mn

Net lease operating income + Depreciation

Funds From Operation (FFO)

JPY 2,508 mn

JPY 2,534 mn

Profit for current fiscal period +Depreciation - Income/loss on sale ofreal 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 profit for current fiscal period /Interest expenses

42

7. APPENDIX

43

7-1. Portfolio List (As of End of 21st Fiscal Period) ①
As of November 30, 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-ku,
Osaka City

Nov. 1998

17.1

6,337.37

100.0%

1(2,958.94)(99.7%)(130)

Kitano Hankyu Bldg.

Kita-ku,
Osaka City

Jun. 1985

30.5

28,194.15

100.0%

2(18,477.35)(98.0%)

(22)

R3(K)

Dew Hankyu Yamada

Suita City,
Osaka Prefecture

Oct. 2003

12.2

13,027.28

100.0%

R4(K)

Takatsuki-Josai
Shopping Center

Takatsuki City,
Osaka Prefecture

Apr. 2003

12.7

31,451.81

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

Ibaraki City,
Osaka Prefecture

―

―

R6

Kohnan Hiroshima NakanoHigashi Store (site)

Aki-ku,Hiroshima City―

R8

Hotel Gracery Tamachi

Minato-ku,
Tokyo

R9(K)

LaLaport KOSHIEN(site)

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%

8,372

3.9%

10.1%

Feb. 1, 2005

7,740

5.6%

6,630

4.9%

28

4.5%

Feb. 1, 2005

6,930

5.0%

8,160

4.8%

100.0%

1

6.1%

Nov. 15, 2005

8,600

6.2%

7,990

5.3%

6,541.31

100.0%

1―

Mar. 29, 2006

1,318

0.9%

1,620

5.1%

―

25,469.59
60.14

100.0%

1―

Oct. 2, 2006
Apr. 9, 2007

2,170
5

1.6%

1,890

5.9%

Sep. 2008

7.2

4,943.66

100.0%

1

10.3%

Dec. 25, 2008

4,160

3.0%

4,240

4.7%

Nishinomiya City,
Hyogo Prefecture――

126,052.16

100.0%

1

6.4%

Jan. 22, 2009

7,350

5.3%

7,320

4.6%

Naka-ku,
Hamamatsu City

Sep. 2002

13.2

6,995.33

100.0%

1

14.5%

Jan. 22, 2009

2,100

1.5%

2,160

5.7%

Nishinomiya City,
Hyogo Prefecture

Oct. 2008

7.2

65,372.41

100.0%

1

9.2%

Apr.16, 2013

18,30013.1%

23,044

4.6%

R12(K)AEON MALL
SAKAIKITAHANADA(site)

Kita-ku,
Sakai City――

64,104.27

100.0%

2―

June. 27, 2013

8,100

5.8%

9,210

4.6%

R13(K)

MANDAI Toyonaka Honanstore (site)

Toyonaka city
Osaka Prefecture――

8,159.41

100.0%

1―June. 27, 2013

1,870

1.3%

2,200

4.7%

Kamigyo-ku,
Kyoto city――

3,776.15

100.0%

1―June 4, 2014

3,100

2.2%

3,350

4.6%

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

kotocross Hankyu
Kawaramachi

Shimogyo-ku,
Kyoto city

Oct. 2007

8.2

4,400.13

100.0%

1

2.6%

June 4, 2014

2,770

2.0%

3,150

4.7%

R16(K)

LIFE Shimoyamate Store(site)

Chuo-ku,
Kobe city――

2,397.83

100.0%

1―June 4, 2014

1,421

1.0%

1,540

4.6%

R17(K)

MANDAI Gojo
Nishikoji Store (site)

Ukyo-ku
Kyoto city――

9,182.80

100.0%

1―June 24, 2014

4,182

3.0%

4,470

4.7%

44

7-1. Portfolio List (As of End of 21st Fiscal Period) ②

Office-use
facilities
Mixed-use (complex) facilities

Total leasablearea (m2)(Note 3)

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

Location

Completion date

Building
age(Note 2)

O1

Shiodome East Side Bldg.

Chuo-ku,Tokyo

Aug. 2007

8.3

9,286.58

100.0%

6

4.6%

Feb. 29, 2008

O2(K)Hankyu Corporation Head
Office Building

Kita-ku,
Osaka City

Sep. 1992

23.2

27,369.37

100.0%

1

3.7%

M1(K)

Ueroku F Bldg.

Chuo-ku,
Osaka City

Sep. 1993

22.2

4,611.82

100.0%

12

M2(33% of the quasi co-ownership of
the trust beneficiary interests)

Shinagawa-ku,
Tokyo

Apr. 1993(Note 6)22.7

8,807.71

39.0%

M3(K)

LAXA Osaka

Fukushima-ku,
Osaka City

Feb. 1999

16.8

30,339.91

100.0%

M4(K)Namba-Hanshin Building

Chuo-ku,
Osaka City

Mar. 1992

23.7

9,959.01

100.0%

1(6,452.69)（96.0%)(20)

M5

Kita-Aoyama 3 cho-me
Building

Minato-ku,
Tokyo

Sep. 2013

2.2

619.76100.0%

14.7

497,459.98(480,858.43)

98.9%(98.8%)Classifi- Codecation (Note 1)

Sphere Tower Tennozu

Total

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

Cap rate(Note 5)19,025

13.7%

13,600

4.3%

Apr.10 2013

10,2007.3%

11,4004.4%

3.2%

Nov. 1, 2005

2,980

2.1%

2,740

5.5%

20

2.7%

Oct. 2, 2007

9,405

6.8%

6,732

4.7%

1

3.7%

Jan. 22, 2009

5,122

3.7%

5,380

5.1%

5.1%

Jan. 22, 2009

4,310

3.1%

2,600

5.0%

3

7.4%

Nov. 12, 2013

1,680

1.2%

1,840

3.8%

89
(257)

3.5%

139,307100.0%

139,638

4.7%

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

45

7-2. Portfolio View (As of End of 21st 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)46

7-2. Portfolio View (As of End of 21st 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)47

7-2. Portfolio View (As of End of 21st Fiscal Period) ③
Community-based Retail Facilities ③
LaLaport KOSHIEN (site)

MANDAI Toyonaka Honan Store (site)

Takatsuki-Josai Shopping Center

Nitori Ibaraki-Kita Store (site)

Kohnan Hiroshima Nakano-Higashi Store (site)48

7-2. Portfolio View (As of End of 21st 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 Tennozu

49

7-3. Trends of Distribution per Unit

Distribution per unit forecast *

（JPY）

4,000
3,500
3,000
2,500
2,000

Distribution per unit *

3,792

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

2,991

2,860

2,714

2,560

2,998

2,820

3,068

3,000

JPY 2,620

3,473
2,862

3,300
2,820

2,538
2,483

2,600

2,322

2,537 2,464

2,420 2,400 2,460

2,400

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

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

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

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

Irregular period (303 days)(Compared with 21st FP forecast: +JPY 70 per unit; Profit + JPY 42 mn)
Increase in operating income+ JPY 38 mn

Increase in income from lease and income from HEP Ferris wheel +JPY 7 mn
Increase in utilities expense +JPY 11 mn…etc.

Decrease in non-operating expenses+ JPY 2 mn

(Decrease in interest expenses +JPY 2 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 the implementation of the five-for-one split.

50

7-4. Income Ratio by Rent Category and Sales-Based Overage Rent System Mechanism
Income Ratio by Rent Category
and Variation Factors
21st FP
Income Ratio
1.1%
Overage-rent
tenants

Fixed-rent
tenants

7.0%

91.9%

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

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

Concept Diagram ofGeneral Sales-Based Overage Rent System

Rent income

Variable-rent
portionFixed-rent
portionPoint from where
sales-based overage rentis generated

Tenant sales

Total rent income(excluding warehouse income)51

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 land52

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

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

106
105
104
103

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

102
101
100
99
98
97

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

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

53

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 1, 2015 of municipal regions with populations of 100,000 or more>

Population of Kansai is 20.51 million
Osaka Prefecture: approx. 8.66 million
Of which, 62% reside in the top
7 municipal regions(population of 300,000 or more)
including Osaka City
Hyogo Prefecture: approx. 5.54 million
Of which, 68% reside in the top
7 municipal regions(population of 200,000 or more)
including Kobe City

(Source) Japan Geographic Data Center “Population
Summary of the Basic Resident Registers” (2015)54

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 -0.6% (10-year period), thepopulation of city centers increasesuch as in Osaka City +2.3%
Areas along Hankyu/Hanshin lines
increased (+3.9%)
Reason for differentiation:
High transportation convenienceand high concentration of city
facilities
Positive factors to profitability andstability of Hankyu REIT

(Source) Japan Geographic Data Center “Population Summary of the Basic Resident Registers” (2005, 2015)(Note) With change of the research period for the Basic Resident Registers, comparison is of the population as at the end of March 2005 in the 2005
version and as at January 1, 2015 in the 2015 version.

1255

7-8. Overview of the Hankyu Umeda Area and the “Umeda 1-Chome 1-Banchi Project”

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

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

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

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 zone56

7-9. 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.

57

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 north58

7-11. Dew Hankyu Yamada and Properties in Vicinity

Bampaku-kinenkoen

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 taken from south side facing north)59

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

DAILY QANAT
Izumiya Horikawa
Marutamachi Store(site)

SubwayKarasuma Line

Marutamachi
Sta.

Murutamachi-dori St.

Nijo Castle(Nijo-jo)SubwayTozai Line

Nijojo-mae Sta.

(Aerial photograph taken from south
side facing north)58
60

7-13. kotocross Hankyu Kawaramachi and Properties in Vicinity

KeihanMain line

Kawaramachidori St.

KAWARAMACHI
OPA

HankyuKyoto Line

Kyoto
Takashimaya

kotocross
HankyuKawarachi

Kyoto MARUI
Shijo-dori St.

(Aerial photograph taken from south side facing north)58
61

7-14. Portfolio PML and Anti-Seismic Measures
As of November 30, 2015
Classification

Retail-use
facilities

Office-use
facilities

Mixed-use(complex)facilities

Code

Name

PML

R1(K)

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

4.6%

R2(K)

Kitano Hankyu Building

10.1%

R3(K)

Dew Hankyu Yamada

4.5%

R4(K)

Takatsuki-Josai Shopping Center

6.1%

R5(K)

Nitori Ibaraki-Kita Store (site)―

R6

Kohnan Hiroshima Nakano-Higashi Store (site)―

R8

Hotel Gracery Tamachi

10.3%

R9(K）

LaLaport KOSHIEN (site) (Note)

6.4%

R10

Richmond Hotel Hamamatsu

14.5%

R11(K)

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

9.2%

R12(K)AEON MALL SAKAIKITAHANADA (site)―

R13(K)

MANDAI Toyonaka Honan Store (site)―

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

R15(K)

kotocross Hankyu Kawaramachi

2.6%

R16(K)

LIFE Shimoyamate Store (site)―

R17(K)

MANDAI Gojo Nishikoji Store (site)―

O1

Shiodome East Side Building

4.6%

O2(K)

Hankyu Corporation Head Office Building

3.7%

M1(K)

Ueroku F Building

3.2%

M2

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

2.7%

M3(K)

LAXA Osaka

3.7%

M4(K)

Namba-Hanshin Building

5.1%

M5

Kita-Aoyama 3 cho-me Building

7.4%

Total

3.5%

●What is PML?
PML (Probable Maximum Loss) refers to the estimatedamount of the maximum loss from earthquake damage
expressed as a percentage, and indicates the ratio of
projected maximum physical loss amount of a building
from a probable earthquake of maximum magnitude(assumed to happen once every 475 years, or a 10%
probability of occurring during any 50 year span) during
its use (a 90% non-exceedance probability) against theprice to reacquire it.
●Portfolio PML
The total PML value for multiple buildings scattering inwide areas is always smaller than the weighted average
PML value of each building. This is called the portfolio
effect. Hankyu REIT calculates the portfolio PML bytaking into account the geographical diversity ofbuildings over wide areas.
As shown in the table to the left, the portfolio PML ofHankyu REIT is 3.5%.
●Policy on earthquake insurance coverage
Hankyu REIT will decide to cover earthquake insurancein accordance with the following standard set forth in its
management guidelines:“Hankyu REIT will investigate earthquake insurance
coverage when the PML of an individual property
exceeds 15%.”(Note) PML of LaLaport KOSHIEN (site) is calculated for theparking garage space administration building (394.88m2).

62

7-15. Investment Unit Price
Relative Price (closing price basis) *Per Unit Trading Trends*(Relative value based on 100 of the closing price basis on April 1, 2014 / closing price basis)(Oct. 26, 2005 — Dec. 30, 2015)

160.00150.00High (closing price basis)

JPY 276,000(June 2007)

Low (closing price basis)

JPY 65,000(Dec. 2011)

140.00130.00120.00April 1, 2014 — Dec. 30, 2015110.00High (closing price basis)

JPY 167,200(Jan. 15, 2015)

Low (closing price basis)

JPY 104,400(Apr. 9/10/11, 2014)

100.00
90.00
80.00
'14/4

'14/7

Source: QUICK'14/10Hankyu REIT

'15/1

TSE REIT Index

'15/4

'15/7

'15/10Price on Dec. 30, 2015 (closing price basis)

Nikkei Stock Average

Unit Price (closing price basis)*

JPY 128,000(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 '15/11
Source: QUICK

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

63

7-16. Analysis of Unitholder Attributes at End of 21st Fiscal Period
Top 10 Unitholders

Unitholder Composition
Ownership by category

Number ofunitholders (persons)Ratio to ownership

Number ofinvestment units held
( units)

Financial institutions(excluding trust banks)

97

0.72%

104,898

17.56%

Trust banks

8

0.06%

244,552

40.93%

13,09096.81%

156,966

26.27%

Other organizations

223

1.65%

55,345

9.26%

Foreign organizations, etc.

103

0.76%

35,7395.98%

13,521

100%

597,500

100%

Individuals, etc.

Total

Number ofunits held

Ownership

145,842

24.41%

50,1658.40%

25,072

4.20%

Hankyu Corporation

21,0003.51%

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

17,333

2.90%

The Senshu Ikeda Bank, Ltd.

12,500

2.09%

STATE STREET BANK AND TRUSTCOMPANY 505223

8,634

1.45%

THE CHUKYO BANK, Ltd.

7,905

1.32%

Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.

7,113

1.19%

Bank of Kyoto, Ltd.

4,880

0.82%

Total investment

300,44450.28%

Number of outstanding units

597,500

100%

Unitholder name

Ratio to numberof investment units

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)

Ratio of Units by Unitholder Category
19.02%
33.83%

18.14%

16.09%

17.56%

39.73%

43.42%

40.93%

25.59%

23.59%

26.27%

9.26%

34.34%

47.27%
23.91%

13.39%

33.96%

26.31%

34.41%
22.27%

9.29%

13.46%

23.20%
13.63%

8.62%

9.59%

9.24%

9.03%

6.95%

7.65%

5.98%

As of end of
15th period

As of end of
19th period

As of end of
20th period

As of end of
21st period

11.31%

7.78%

10.14%

As of end of
1st period

As of end of
5th period

Foreign organizations, etc.

4.83%
As of end of
10th period

Other organizations

Individuals, etc.

Trust banks

Financial institutions(excluding trust banks)647-17. Organization of Hankyu REIT Asset Management, Inc.
(As of November 30, 2015)
Corporate Data

General Meeting of
Shareholders
Auditors
Board of Directors

Trade nameHankyu REIT Asset Management, Inc.

Headquarters

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

EstablishedMarch 15, 2004

Paid-in capital

JPY 300 mn

Shareholder

Hankyu Corporation (100%)

Number of
officers and employees

President &Representative Director

Internal Audit Department
Compliance Committee

25
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)

Ken Kitano

Corporate Auditor(part-time)

Koji Yoshida

Executive officers

Investment Management
Committee
Compliance Department

Financial instruments trading(investment management business)

Investment
Management
Department 1

Investment
Management
Department 2

Investment
Planning
OfficeCorporate
Planning
Department

Corporate
Administrationand Supervision
Department

Principal businesses

lFinancial product trader:
Director-General of the Kinki Finance Bureau
Ministry of Finance (Kinsho) No. 44
lReal Estate Transaction License:
The Governor of Osaka Prefecture (3) No. 50641
lApproval of discretionary dealing trustee etc.:
No.23 by Minister of land, infrastructure,transportation and tourism

65and Internal Audit Systems
7-18. Complianceof Hankyu REIT Asset Management, Inc.
Build robust compliance and internal audit systems by systematically ensuring multiple check functions based on thebasic policy for building internal control systems.
Constituent member

Compliance System

Directors, Corporate Auditors

Implementation(Note)

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

Board of Directors

President & Representative Director

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

Decision criteria

Compliance Committee

Investment Management Committee

Proposals by Department/Office

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

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

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

66

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