Activia Properties Inc.
（Code: 3279/API）

Financial Results Presentation for the 25th Fiscal Period Ended May 2024 (July 2024)

Thank you very much for watching this results announcement video for the
25 th fiscal period, ended May 2024, of Activia Properties Inc.
I am Nobuhide Kashiwagi, Executive Director of Activia Properties Inc., andManaging Director, Chief Division Officer of the Activia Management Division of
TLC REIT Management Inc.
I will now explain the results for the period ended May 2024.
Please turn to page 3.

1

Section1
1. Executive Summary
2. Financial Results & Forecasts

Section2
3. Internal Growth
4 .External Growth
5. Financial Management & ESG

Appendix

Tokyu Plaza Omotesando “Omokado”

2

1. Executive Summary

Executive Summary

3

Initiatives so far

Current status

Occupancy recovered throughstrategic leasing activities

The stabilized EPU (*) of ¥8,700
based on the current portfolio is
now in view

• Flexible leasing activities at properties withvacancies enabled a recovery in occupancy
and secured long-term stability• Value enhancement measures led torise in occupancy and rents• Regional office and suburban retailproperties maintained stable occupancy• The Greater Shibuya area is
growing• Tenants sales of Urban Retail
Properties and Hotels haveincreased• Regional officeproperties
remainstable• Suburban retailproperties

Future policies
Will continue measures
for further EPU growth,aiming to achievea stabilized EPU of¥8,700 yen by FP30
ending Nov. 2026
Internal growth• Increase rents and ancillary income, mainlyin the greater Shibuya area, where thegroup’s capabilities can be leveraged• Replace tenants, etc. in high-demandretail areas

Conducted measures to enhance
portfolio profitability
and improve EPU(Results for FP21 through FP25)• Acquired assets of ¥44.9 billion
through asset replacement• Improved EPU through unit buybacks
conducted three times totaling ¥12 billion(equivalent to 3.7%)• Increase rents by providing valueenhancement works and other added value

Improving market conditions• Office demand has recovered due to strong
corporate earnings• Retailers’ appetite to open stores hasrecovered due to stronger sales• Hotel demand has increased, partly due tothe effects of inbound tourists

External growth (portfolio strategy)• Acquire assets with a focus on stability andgrowth potential(Stability) Hotel, regional office andsuburban retail properties(Growth potential) Hotel; office andretail properties in the greater
Shibuya area
• Consider continuous unit buybacks* EPU = Basic earnings per unit excluding disposal gain
The same shall apply throughout this document

These are the highlights of this results announcement.
First, allow me to review our initiatives so far.
Until now, our initiatives were focused on improving occupancy at the properties with vacancies,
such as the Shiodome Building, and A-PLACE Shinagawa-Higashi, through flexible leasing
strategies and measures to enhance the value of the properties.
Moreover, we have been working to improve portfolio profitability and EPU, through asset
replacements and 3 rounds of investment unit buybacks, totaling 12 billion yen.
As a result of these initiatives, we made progress in building the foundation for EPU growth, andwe are now in view of a stabilized EPU of ¥8,700, based on the current portfolio.
Market conditions are improving, with the recovery in office demand backed by robust corporate
earnings, the recovery in demand from retail tenants to open stores driven by sales growth, andthe clear recovery in hotel demand also backed by the effect of inbound tourists.
Based on this situation, our policy is to aim for a stabilized EPU of ¥8,700 by the fiscal period
ending November 2026, and continue initiatives to further grow EPU.
Initiatives will include, in terms of internal growth, we will seek to raise rents as well as growancillary revenue from properties in the greater Shibuya area, where we can utilize the Group’s
strengths, as well as replace tenants in retail properties for which the demand from tenants toopen new stores is strong, as well as other measures, to realize EPU growth.
For external growth, we will acquire properties focusing on stability and growth potential, as wellas continuously considering investment unit buybacks based on the market environment at thetime.
Please turn to the next page.

3

2. Financial Results / Forecasts

DPU Summary (FP25 Ended May 2024 vs. Forecast)4

 Net income per unit was ¥568 higher than the forecast due to higher rent revenue and lower expenses,
as well as the effects of unit buyback and cancellation
 There was no reversal of internal reserve, which had been anticipated, because of the higher-than-forecast results

Other revenue/cost
+255

9,300

Cancellation
penalty +72
Lower repair cost
+71
Lower otherexpenses +83
One-off retailincome, etc. +65

Reversal ofinternal
reserve
505

Sales-linked rent
at hotels +10
at retail properties+15
Advertisement
revenue +40

Unitbuyback/
cancellation+174

SG&A /financial
cost, etc.
+80
AM fee -47
Lower interest
expenses +95

9,365

Utilities
income/expenses-74

Rent revenue, etc.
+68

Net income
per unit
8,795
Forecast for FP25
ended
May 2024

FP25
ended
May 2024
ActualThe DPU for the May 2024 period was 9,365 yen, up 65 yen from the previous
forecast.
Net income per unit was 568 yen higher than forecast. This was driven by theincrease in rent revenue, etc. as well as sales-linked rent from the hotel andretail properties, lower expenses including for repair & maintenance, as well as
the effect of the buyback and cancellation of our own investment units.
Because our earnings were stronger than expected, we did not have to use theinternal reserves as was planned, and were able to keep it as a source forstable distribution in the future.
Please turn to the next page.

4

2. Financial Results / Forecasts

DPU Forecast (FP26 Ending Nov. 2024 and FP27 Ending May 2025)

5

 While factoring in a lack of disposal gain and higher costs, we anticipate rent revenue to keep recovering and EPU to grow
 Utilizing internal reserves, DPU is expected to be ¥9,300 for FP26 ending Nov. 2024 and ¥8,700 for FP27 ending May 2025

Increase in rent revenue

total +¥489/unit

9,365

9,300

Accumulated
internal reserve¥1,347/unit(Assumed forthe end of FP27)

Other
revenue/cost+26

Impact from
asset
disposition-699
Disposal gain -619
Shortfall of NOI -80

Utilities
income/expenses-62

Reversal ofinternal
reserve
1,040(*)

One-off retailincome, etc.
+93
Rent
revenue, etc.
+188

Sales-linked rent
at hotels +88

Rent revenue,
etc.
+301

One-off retailincome, etc.
-139

8,700

Utilities
income/expenses+6
Lower repair cost
+34
Office tax -14

Reversal ofinternal
reserve
231 (*)

SG&A/financial cost,
etc.
-98

Sales-linked rent
at hotels -98
at retail properties -18
Facility revenue -23

AM fee -17
Increased interest
expenses -77

Otherrevenue/cost-459
Cancellation penalty -45
Property-related taxes -222

SG&A
/financial
cost, etc.
-45

Increased repair cost -119

Lower AM fee +97
Interest expenses -135

Expensed -120
Revaluation -102

FP25
ended
May 2024
ActualForecast for FP26
endingNov. 2024

Forecast forFP27
endingMay 2025* Amount depends on whether or not there is a gain on sale

Next are the forecasts for the November 2024 and May 2025 fiscal periods.
The DPU forecast for November 2024 is 9,300 yen.
Compared to the previous fiscal period, there is the lack of disposal gain, thepayment of property taxes for properties acquired in the 23rd fiscal period, as
well as an increase in interest expenses.
Meanwhile, rent revenue etc. is expected to continue to grow, and by using ourinternal reserves, we plan to pay out 9,300 yen of distribution, which is thesame level as the previous forecast.
The expected DPU for the May 2025 period is 8,700 yen.
Period-on-period, we expect an increase in interest expenses, with the rise ininterest rates, while we expect the growth in rent revenue etc. to continue.
The total increase in rent revenue etc. in the 26th and 27th periods will be 489
yen, making a sizable contribution to EPU growth.
We set the forecast DPU of 8,700 yen for May 2025 using the stabilized EPU
target of 8,700 yen.
Let me explain the details on the next page.
Please turn to the next page.

5

2. Financial Results / Forecasts

DPU Policy

6
Reset the current minimum DPU target from ¥9,300 to ¥8,700,
which is the stabilized EPU target(¥)

10,000 In response to a decrease in EPU due to lower
occupancy during the pandemic, continued to utilize
unrealized gain for stable distributions,with the stabilized EPU of ¥9,300 (assumed at thattime) set as the minimum DPU

EPU
DPU

¥9,3009,000

Utilize unrealized
gain to stabilize
DPU¥8,700 Subsequently, despite the impact of higher costs,
progress was made in leasing, and the portfolio
strategies proved effective, bringing the stabilized
EPU of the existing portfolio based on
the current market within view of ¥8,700

EPU has increased,
and the stabilized EPUof ¥8,700 is now
within view

8,000

 With a belief that building a foundation thatenables stable distributions over the long term

will contribute to unitholder value, we have set
a distribution target at a level that can be
maintained, without depending on disposal gain

7,000
FP27

（Forecast）

FP26（Forecast）

FP25

FP24

FP23

FP22

FP21

FP20

 Internal reserve and disposal gain to be newly realized
will be used to stabilize distributions

2021.11 2022.5 2022.11 2023.05 2023.11 2024.5 2024.11 2025.5

We reviewed the minimum DPU target, which we explained in the previous
results announcement, and reset it to 8,700 yen, which is the current target forstabilized EPU.
Let me explain the rationale for the 8,700 yen number.
In order to address the decline in EPU resulting from lower occupancy due to
COVID, we set the stabilized EPU of 9,300 yen as of the November 2022 fiscal
period as the minimum DPU target, and have been continuing to pay out stable
distribution while using disposal gains.
Since then, with the impact of higher expenses, progress made in leasing, andthe effects of the portfolio strategy, we set the stabilized EPU of the existing
portfolio based on current market conditions at 8,700 yen.
We believe it is in the interests of our unitholders for us to establish afoundation to pay out long-term stable distribution, and set 8,700 yen as theminimum DPU target, which is the level at which we can continue paying
distribution without relying on disposal gains.
We will utilize internal reserves, as well as disposal gains that are newly
generated through asset replacements, to stabilize the distribution.
Please turn to the next page.

6

2. Financial Results / Forecasts

Strategies for EPU Growth7 Minimum DPU is currently set at ¥8,700 for FP 27 ending May 2025 and thereafter With the recovery in rent revenue, we aim to achieve stabilized EPU of ¥8,700 by FP30 ending Nov. 2026, despite factoringin higher costs
Further EPU growthTarget date of achievement

Re-setting EPU targets for2027 and beyond

By FP30 ending Nov. 2026
Stabilized EPU: ¥8,700

DPU

Minimum DPU currently set at ¥8,700¥8,700

Portfolio strategy(Asset acquisition/unit buyback)Utilize unrealized gain

Internal growthEPU:¥8,469Own units
Higher costs (incl. early buyback) Internal growth in the greater Shibuya area
EPU: Higher rents through value enhancement
construction works¥8,260 Rent growth through upward rent revision/tenant
replacement for retail areas
 Internal growth driven by higher office rents

~ ~~
EPU:

¥8,1422024.11

FP26 ending
Nov. 2024
Forecast(Previous
announcement)
FP26

Forecast

FP26 ending
Nov. 2024
Forecast(Latestannouncement)
2024.11
FP26

Forecast

FP27 ending
May. 2025
Forecast(Latestannouncement)
2025.5
FP27

Forecast

We will set the minimum DPU at 8,700 yen for the May 2025 fiscal period andonwards.
Meanwhile, we are aiming to achieve the stabilized EPU of 8,700 yen by theNovember 2026 period, mainly through internal growth from properties in areas
such as greater Shibuya, as well as continuing to pursue our portfolio strategy.
We will also continue our initiatives to achieve further EPU growth, and areplanning to re-set our EPU target for 2027 onwards.
Please turn to page 9.

7

Section1
1. Executive Summary
2. Financial Results & Forecasts

Section2
3. Internal Growth
4 .External Growth
5. Financial Management & ESG

Appendix

A-PLACE Aoyama

8

3. Internal Growth

Trends in Office Space Available for Tenants

9 Office space available for tenants has continued to decrease in the central 5 wards of Tokyo, the Osaka area and the Saitama
area, while remaining largely stable in the Nagoya area Of the central 5 wards of Tokyo, Shibuya Ward was the first to see a decrease in office space available for tenants whileabsorbing new supply
1. Trends in office space available for tenants (indexed using April 2022 as 100)*Central 5 wards of Tokyoand major cities
120

Office space
available for tenants
has decreased in
the central 5 wardsof Tokyo

Central 5 wards of Tokyo

120

100

100

80

80

Nagoya city
Osaka city

Shinjuku ward

Yokohama city

Minato ward

Saitama city

Chuo ward
Chiyoda ward

2022

2023

2024

60

Shibuya ward

Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar

Central 5 wards

Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar

60

Office space available
for tenants decreasedin Shibuya Wardahead of others

2022

2023

2024

* Compiled the data only for properties with standard floors of 50 tsubo or more and properties completed in 1966 or later, based on data from “estie market research,”a real estate data analysis platform provided by estie, inc.

From here, I will explain the operational status of our properties.
First, the macro market for office.
Office space for lease is on a declining trend overall, and market conditions are
improving.
These graphs show the trend in office space available for tenants.
The graph on the left shows how space available is decreasing in the central 5
wards of Tokyo, and in the Osaka and Saitama areas.
The graph on the right shows how, even in the central 5 wards of Tokyo,
Shibuya Ward has been absorbing new supply, and is leading the decline inavailable space.
Please turn to the next page.

9

3. Internal Growth

Office Leasing Status10

 Occupancy rate is expected to stabilize in the target range through flexible leasing strategies that prioritize occupancy
and value enhancement measures Continue to aim for rent growth by increasing tenant satisfaction and conducting further value enhancement measures while
maintaining stable occupancy

1. Occupancy rate (actual and forecast)Occupancy rate (as end of May 2024)
Occupancy rate on cash basis (as end of May 2024)

99.1%

99.5%

98.5%

Office occupancy target range(upon delivery of the space)

97-98%

97.7%

98.2%

96.8%

95.6%
93.6%
91.2%
89.4%

The occupancy rate reached
the target range

Aim for rent growth

while maintaining stable occupancy

due to flexible leasing and valueenhancement measures

May 2023

Nov. 2023

ActualActualMay.2024
2024
May
ActualActualNov 2024
Nov.
2024
Forecast
Forecast

May 2025
May
2025
Forecast
Forecast

This is the status of office leasing.
The green line shows the occupancy based on the delivery of space, while theblue line shows the cashflow-based occupancy.
Occupancy based on the delivery of space has been stable, trending within thetargeted range, at 99.1% at the end of the previous period, and 99.5% at theend of this period.
We will maintain stable occupancy, while aiming for rent growth by enhancing
tenant satisfaction and conducting further value-up initiatives.
Please turn to the next page.

10

3. Internal Growth

Status of Tokyo Office Properties11

 As tenant replacements at properties with vacancies, etc. were completed, the rate of rent increase for FP25 was positive boththrough rent revisions and tenant replacement
 For FP26, a certain level of rent growth is expected, particularly in the greater Shibuya area, and the rate of rent increase is
projected to remain positive
1. Rent revision at lease renewals

2. Tenant replacements¥ mn/period¥ mn/period

125
100
75
50

50%

Decreased rent amount3 properties* which had challenges
Increased rent amountRate of rent increase

75
25%

-25

0%

-0.3%

-3.1%

-3.1%

0%

-4.9%

-50
-25%

-75

-7.7%
-15.9% -17.9%

-75

-25%

-100

-100
-125

0.1%

0
-25

-1.2%

-50

25%

*Shiodome Building,
A-PLACE Shinagawa Higashi
A-PLACE Shinbashi

25

0.9%

0

50

50%

Decreased rent amount3 properties* which had challenges
Increased rent amountRate of rent increase

100*Shiodome Building,
A-PLACE Shinagawa Higashi
A-PLACE Shinbashi

25

125

2022.52022.112023.052023.112024.5(FP21)(FP22)(FP23)(FP24)(FP25)

Area withincreased rent(tsubo)

598

688

425

1,321

1,274

Replaced area(tsubo)

4,647

2,471

2,842

4,849

4,275

Area withdecreased
rent (tsubo)

714

1,264

1,206

1,721

43

-50%

-125

2022.52022.112023.052023.112024.5(FP21)(FP22)(FP23)(FP24)(FP25)

Area withincreased rent(tsubo)

1,112

252

488

427

395

Replaced area(tsubo)

557

66

252

4

238

Area withdecreased rent(tsubo)

1,591

2,497

1,939

3,134

495

-50%

This is the status of Tokyo Office properties.
We completed the tenant replacements for the properties with vacancies, andachieved positive rent growth in the 25th period for both rent revisions andtenant replacements.
We are expecting further rent growth in the 26th period, mainly in the greater
Shibuya area, and the rent growth rate will remain positive.
Please turn to the next page.

11

3. Internal Growth

Status of Activia Account Offices12 Upward rent revisions at lease renewals and at tenant replacements stably continued mainly in the Osaka area
1. Rent revision at lease renewals

2. Tenant replacements¥ mn/period¥ mn/period

20

Increased rent amount

50%

20

25%

10

Increased rent amount
Decreased rent amountRate of rent increase

Decreased rent amountRate of rent increase
10

0.3%

0.8%

18.5%

18.5%

50%

25%

14.7%

6.4%

1.7%

0.7%

0

0

0%

0%

-0.3%

-3.9%

-10

-25%

-20

-50%
2022.52022.112023.052023.112024.5

-10

-25%

-20

-50%
2022.52022.112023.052023.112024.5(FP21)(FP22)(FP23)(FP24)(FP25)(FP21)(FP22)(FP23)(FP24)(FP25)

Area withincreasedrent(tsubo)

399

240

1,346

0

603

Area withincreasedrent(tsubo)

297

561

339

935

266

Replacedarea(tsubo)

2,343

2,648

2,898

4,495

3,290

Replacedarea(tsubo)

0

0

0

0

0

Area withdecreasedrent(tsubo)

131

0

0

270

0

Area withdecreasedrent(tsubo)

117

99

59

186

268

This is the status of the Activia Account offices.
We are maintaining stable levels of rent, both through rent revisions and tenant
replacements.
The rent declined for tenant replacements in the 25th period.
This was due to a replacement in a space for which the previous rent was
higher than market rent, and we believe this was one-off.
Please turn to the next page.

12

3. Internal Growth

Office Leasing Status

13Market rents in some areas including the greater Shibuya area continued to rise. Rent gap at end of May 2024 was -2%
Continued to build the foundation for internal growth in the greater Shibuya area and regional areas

1. Trend in rent gap

2. Examples of upward rent revisions
TO-2(¥ thousand/per tsubo per month)Market rent

A-PLACE Ebisu Minami

Upward rent
revision

Rent gap at endof May 2024
Rent gap-2%

Greater Shibuya area

Rent increase
+7.1%

Area

305 tsubo

Actual rent
TO-20

Rent gap at
end of Nov. 2023
Rent gap
-0%

Nov.
2020

May

Nov.

May

2021

Nov.

May

2022

Nov.

Rent increase
+2.3%

2024

Area

204 tsuboMarket rent increase (*1)

Greater Shibuya area+
Tokyo Office Properties
outside the Greater
Shibuya Area

Activia Account (AA)Upward rent
revision

May

2023

Meguro Tokyu Building

7%

Market rent increase (*1)

5%+MarketActual

AA-13

A-PLACE Shinsaibashi

Upward rent
revision

Activia AccountRent increase
+6.8%

Area

471 tsubo

Rent gap (*2)6%-(*1) Growth rate for the period from the end of FP22 (Nov. 2022) to the end of FP25 (May 2024)(*2) As of the end of FP25 (May 2024)

I will now explain the office leasing status.
Section 1. at the upper left shows the rent gap for offices.
Market rents bottomed in the November 2022 fiscal period, and have been on
the rise since then.
The rent gap as of the end of the May 2024 period is minus 2%.
We are building the foundation for future internal growth, in the greater
Shibuya area where the growth of market rents is strong, as well as offices inregional cities, which are categorized as Activia Account properties, for which
the rent gap is relatively large.
Section 2. on the right shows examples of rent growth.
We achieved rent growth in the greater Shibuya area, which is doing well, as
well as in the surrounding area of Meguro, and in the Osaka area.
Please turn to the next page.

13

3. Internal Growth

A Virtuous Cycle for Offices in the Greater Shibuya Area


14

The greater Shibuya area continues to grow in a virtuous cycle, with a concentration of high-growth tenants due toredevelopment of office properties, etc.
The sponsor group has grown along with the evolution of Shibuya by providing office properties that meet diverse demands
Evolution of office space provisions by sponsor group

Expanding demands

2010
and before

Greater
Shibuya area
continues to
enjoy
a virtuous
cycle

2010s
and onwards

Focused on middle-sized office properties

A-PLACE
Shibuya Nampeidai

TLC Ebisu
Building

Shibuya Place

Shibuya Minami
Tokyu Building

Provide spaces for growing companies
Provide large-sized offices through redevelopment

Technology
companies

Provide offices topromote concentration
Head office
functions

Concentration ofhigh-growth tenantcompanies

Returning to
ShibuyaProvide small-sized offices/serviced offices

Start-ups

Integration ofgroup companies
into the area

Let me now explain the virtuous cycle for offices in the greater Shibuya area.
Shibuya is popular among tech companies.
However, the problem we had in the past was that when these tech companies
grow, they end up moving out of the Shibuya area, due to the lack of large
office spaces that can accommodate them.
Our sponsor group continues to grow together with the entire town of Shibuya
by creating a virtuous cycle. Alongside mid-sized offices, which has always been
the group’s focus, they are providing large-scale offices as well as small-sized
and serviced offices, to companies that are achieving strong growth. The aim is
to create a concentration of such high-growth companies, including techcompanies and start-ups, to create new demand on top of the demand fromexisting tenants.
We believe this virtuous cycle is behind the strong momentum in the greater
Shibuya area, and Activia is playing an important role in this virtuous cycle.
Please turn to the next page.

14

3. Internal GrowthInternal Growth through Value Enhancement, etc.


15Continued to take measures for promoting new leases through value enhancement works
Continued to promote tenant move-ins and rent increases by introducing ready-to-use offices

1. Examples of value enhancement works
TO-16

2. Examples of introducing ready-to-use offices

A-PLACE Shinagawa Higashi

TO-18

Ebisu Prime Square

Promotion of new leases

Basic setup with tenant flexibility(Pre-renovation ⇒ FP25 end)

Promotion of new leases

Occupancy rate

+30%

Rent increase(FP 24 results ofrent increases)

BEFORE

+7.1%

TO-4

A-PLACE Aoyama

TO-15

A-PLACE Gotanda Ekimae

Higher tenant satisfaction

Basic setup with tenant flexibility

Promotion of new leases

Promotion of new leases
Rent increase(FP 25 results ofrent increases)+9.4%

Use of denim-derived
upcycled materials

Next, I will explain our value enhancement initiatives.
At A-PLACE Shinagawa Higashi and A-PLACE Aoyama, we conducted valueenhancement work by renovating the entrance and elevator halls, in order topromote new leasing and enhance tenant satisfaction.
At Shinagawa Higashi, the renovation of the entrance made a big contribution
to leasing activities, and occupancy improved 30%.
At Ebisu Prime Square and A-PLACE Gotanda Ekimae, we enhanced the value
by introducing ready-to-use office space, to promote new leasing and raise
rents.
Aside from the positive impact to rents, such value enhancement work
contributes to shortening the leasing period, and we will continue suchinitiatives while assessing tenant needs.
Please turn to the next page.

15

3. Internal Growth

Stabilized Occupancy and Sales-Linked Rent of Retail Properties16

 Occupancy rate continued to recover with ongoing improvements in tenants’ appetite to open stores. With no lease expiration forlarge tenants for the being, occupancy is expected to stabilize
 Revenue from sales-linked rent continued to increase in line with higher tenant sales
1. Occupancy rate in UR properties
99.9%

100.0%

99.8%

99.7%

98.6%

98.8%

97.8%
97.5%

97.7%

97.7%
FP24⇒FP25
Higher occupancy

96.6%

97.5%

 Q plaza HARAJUKU Kobe Kyu Kyoryuchi 25Bankan
 DECKS Tokyo Beach2018.112019.52019.112020.52020.112021.52021.112022.52022.112023.052023.112024.05(FP14)(FP15)(FP16)(FP17)(FP18)(FP19)(FP20)(FP21)(FP22)(FP23)(FP24)(FP25)

2. Lease expiry dispersion

3. Trends in sales-linked rent

■ Contracted

9,077
tsubo
7,517
tsubo

829
tsubo

1,320
tsubo

655
tsubo

2,022
tsubo

DECKS Tokyo Beach
Tokyu Plaza Omotesando “Omokado”
Other

8,474
tsubo

Vacancy risk is limited despite the few
lease expiries that are coming up

1,079
tsubo

2024.112025.52025.112026.52026.112027.52027.112028.5(FP26)(FP27)(FP28)(FP29)(FP30)(FP31)(FP32)(FP33)

2020.52020.112021.52021.112022.52022.112023.052023.112024.5(FP17)(FP18)(FP19)(FP20)(FP21)(FP22)(FP23)(FP24)(FP25)

Let me move on to our retail properties from here on.
Section 1 at the top shows the trend in occupancy for our Urban Retailproperties.
With the improvement in tenants’ appetite to open new stores, occupancy has
been on an upward trend, after bottoming at the end of the November 2022
fiscal period.
We made progress in leasing up the vacancies at Harajuku, Kobe and Decks
during the 24th and 25th periods, and occupancy improved to 98.6%.
There are no major lease expiries for the time being, and we expect stable
operations to continue.
With the improvement in tenant sales, the increase in sales-linked rent is also
continuing.
Please turn to the next page.

16

3. Internal GrowthInternal Growth Utilizing the Group’s Capabilities and Locational Advantages (Harajuku/Jingumae Area)17
 The sponsor promotes urban development to position the Harajuku/Jingumae area as a global platform for cultural creation
 Assets owned by API have also achieved internal growth through rent increases and higher revenue,
partly helped by the opening of Tokyu Plaza Harajuku “Harakado”
1. Harajuku/Jingumae area

UR-17

Q plaza HARAJUKUUpward rent
revision• Achieved a fixed rent
increase along with larger
sales at multiple stores

V28 Building

Tokyu Plaza Harajuku“Harakado”

Increase rate +5%
Covered area

126 tsubo

New tenant • A distribution-type live studio moved into the building,NEW!

Number of pedestrians annually

89 million people(Estimated by Tokyu Land)

The Ice
Cubes

UR-1

evaluating the Harajuku area’s high potential for
information dissemination

Tokyu Plaza Omotesando “Omokado”•

Held an event in collaboration with Harakado by utilizing a newly
introduced signage•

With strong demand for advertising, continuous advertising revenue isanticipatedCollaborative event with Harakado

Advertisement revenue(estimate)¥45,000k/year

Asset with sponsor involvement

Asset owned by API

Next, let me explain our internal growth initiatives, utilizing the group’s
capabilities, and the locational advantages of our properties.
In the Harajuku / Jingumae area, the Tokyu Plaza Harajuku “Harakado”,
developed by our sponsor, opened in April.
Thanks in part to the opening of Harakado, we achieved increases in fixed rent
from multiple tenants at Q plaza Harajuku.
With recognition of the Harajuku area as a hub of information, a broadcastingtype live studio moved in, as well.
At Tokyu Plaza Omotesando “Omokado”, we newly introduced digital signage
targeting the Jingumae crossing, through which 89 million people a year passthrough.
We are getting many inquiries, including the use at collaborative events with
Harakado, and we are expecting 45 million yen a year of advertising revenue,
including for the entrance area.
Please turn to the next page.

17

3. Internal GrowthInternal Growth Utilizing the Group’s Capabilities and Locational Advantages (Shinsaibashi/Ebisu/Sapporo Susukino Areas)18

1. Shinsaibashi area

3. Sapporo Susukino area

AA-13 A-PLACE Shinsaibashi

Tsukisamu Street

Susukino Station

 As the appetite to open stores rebounds, retail tenants are valuing our properties’ locations, resulting in rent increases at several properties Achieved revenue improvement at A-FLAG SAPPORO, thanks in part to the opening of COCONO SUSUKINO

A 4-minute walk from Shinsaibashi Stationand located along Midosuji Street

Upward rent revision

Rent increase

+44%

•
•

The property’s location was highly regarded
With almost no vacancies in the Shinsaibashi
area, the property’s scarcity value has
increased

UR-8

A 1-minute walk from Ebisu Station

Q plaza EBISU

Rent growththrough tenant
replacement••

Rent increase+13%

Locational advantages and highvisibility in front of a station wereappreciatedOpened in April 2024with the catchphrase“Finally, UNIQLO in Ebisu”

A-FLAGSAPPORO
Asset with sponsor involvementNew
tenant

2. Ebisu area
UR-3

Large billboardof Nikka

NEW!
Higherrevenue

Asset owned by API• Komeda Coffee Shop opened in
anticipation of increased daytime
foot traffic due to the opening of
COCONO SUSUKINO• Installed new wall banners inanticipation of increased foottraffic

Advertisement revenue

Higher • Reduced costs by leasing parking
revenuespaces to outside parties,

Parking revenue
Stabilized revenue of

improving and stabilizing
income and expenses¥720k/period¥7,500k/period

Next is our initiatives at Shinsaibashi, Ebisu and the Susukino area of Sapporo.
With the recovery in appetite of retail tenants to open stores, our locational
advantage, which is the key feature of Activia, is recognized by tenants, and isleading to several cases of rent increases.
In the Shinsaibashi area, we achieved a rent increase of 44% upon renewal,
thanks to the tenant highly appreciating the scarcity of the property, along theMidosuji street.
In the Ebisu area, the first UNIQLO store in the Ebisu area has opened,following a tenant replacement at higher rent. This was thanks to the great
location of the property, being right in front of the station, as well as its goodvisibility.
In the Susukino area in Sapporo, we achieved revenue improvement at A-FLAG
Sapporo, thanks in part to the opening of COCONO SUSUKINO, developed byour sponsor.
For example, Komeda Coffee shop has moved in, anticipating an increase intraffic during the day.
We are diversifying the source of revenue, placing new wall banners, as well as
leasing out part of the parking lot.
Please turn to the next page.

18

3. Internal Growth

Operational Status by Hotel19

 Room occupancy has stabilized at a high level, and RevPAR has recovered to the pre-pandemic level Hotel sales have recovered, reaching pre-pandemic levels; a record-high sales-linked rent revenue was achieved
at Kobe Kyu Kyoryuchi 25Bankan. Similar performance is expected for A-FLAG Sapporo in FP28
1. Room occupancy and RevPAR of hotels

2. Sales and sales-linked rent (excl. A-FLAG NISHI SHINSAIBASHI)
Status of hotel sales (indexed with 2019 as 100)

Room occupancy

84% 85%

77%

73% 76%

77%

82%

84%
75%

Exceeded
the pre-pandemic levels

108
92

100
76% 73% 78%
50

Ave. for FP24
Nov. 2023 79%

Kobe
SapporoAve. for FP25

May 2024 78%

0
Jun

108%
106%
101%
96%
95%
93%

93%
83% 81% 84%

Ave. for FP24
Nov. 2023 86%

Jun

2020

2021

2022

Actual and projected sales-linked rent of hotels

RevPAR (vs. 2019, excl. A-FLAG NISHI SHINSAIBASHI)

80%

2019

Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May

90%

Kobe

2023

Sales-linked rent revenue
is expected to accrue in
FP28

Record-high sales-linked rent

SapporoAve. for FP25

Forecast

May 2024 99%

Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May
FP17

FP18

FP19

FP20

FP21

FP22

FP23

FP24

FP25

FP26

FP27

FP28

Next is the operational status of our hotels.
On the left, we show how room occupancy stabilized at a high level, and
RevPAR has recovered pretty much to the pre-pandemic level.
Sales, shown on the right, as also recovered to the pre-pandemic level, and weachieved record high sales-linked rent for the Kobe hotel.
With the recovery in sales, we expect to generate sales-linked rent from the
Sapporo hotel in the 28th period.
Please turn to the next page.

19

3. Internal Growth

Status by Hotel20

 With a significant rise in the ratio of inbound tourists, Kobe Kyu Kyoryuchi 25Bankan saw a positive impact on its retail leasing
activity A-FLAG SAPPORO is expected to generate sales-linked rent starting in FY2024, while Nishi-Shinsaibashi has continued stable operation.
UR-7

Kobe Kyu Kyoryuchi 25Bankan

Hotel name: Oriental Hotel Kobe

Ratio of inbound tourists (accommodation)

22.…
22.9%

Hotel name: Sapporo Tokyu REI Hotel• To further improve ADR, a phased
guest room refurbishment effort
began in 2024

NEW!

FY2022

A-FLAG SAPPORO

Measures to raise average daily rate (ADR)• ARC’TERYX, an overseas
outdoor gear brand, recently
moved into the retail areaNew
tenant8.0%

UR-8

New tenant

FY2023

Actual and forecast rent of the Sapporo Tokyu REI Hotel• A full recovery of annual rent to prepandemic levels is expected in FY2024,
in anticipation of the accrual of sales-linked rent
fixed rent
sales-linked rent

fixed rent increased

UR-18

AｰFLAG NISHI SHINSAIBASHI

Hotel name: Tokyu Stay Mercure Osaka Namba• Continued a stable operation with
inbound tourists constituting over
90% of guests• Appraisal value has risen 5.4%
since acquisition

Fixed rent increased

2018

2019

2020

2021

2022

2023

• Fixed rent secures stable revenue
until 2037

2024

As for the status of each hotel, at Kobe Kyu Kyoryuchi Niju-go Bankan, thesignificant rise in the inbound ratio had a positive effect on the leasing of theretail space, and we were able to bring in an international outdoor gear brand.
Moreover, we plan to conduct a refurbishment of the rooms step by step fromthis year, in order to further grow ADR.
Meanwhile, the annual rent revenue in FY2024 for A-FLAG Sapporo is expected
to recover to the pre-pandemic level, thanks to sales-linked rent.
A-FLAG Nishi Shinsaibashi is continuing stable operations with its inbound ration
being above 90%, and we have secured long-term stable rent through thefixed-rent contract that lasts until 2037.
Please turn to page 22.

20

Section1
1. Executive Summary
2. Financial Results & Forecasts

Section2
3. Internal Growth
4 .External Growth
5. Financial Management & ESG

Appendix

Q plaza EBISU UNIQLO Opening day21

4. External Growth

Portfolio Strategy for EPU Growth22

 Pursue a portfolio strategy with the aim of achieving growth of stabilized EPU
 Stable EPU growth is the key focus when making decisions on fundraising and fund utilization

Stable growthof EPU[Acquisition criteria]
・Growth potential
・Stability
・Profitability

Asset acquisition

Unit buyback[Actual for FP21 - FP25][Actual for FP21 - FP25]¥44.9 billion¥12.0 billion

Select by comparing

how effective it is for increasing EPU
Fund collection through[Disposition criteria]
・Profitability
・Building age
・Competitivenessasset disposition[Actual for FP21 - FP25]¥51.1 billion

Select upon consideration ofunit price andtransaction market

Now, I will explain about external growth.
As shown in the image, we will promote our portfolio strategy, to stably grow
our EPU.
In consideration of the investment unit price and the real estate transaction
market, we will raise funding from the market if the investment unit price is at
an appropriate level, and use it to acquire properties.
If it is difficult to raise funding from the market, we will collect funding bydisposing properties as part of asset replacements, and choose from asset
acquisition or the buyback of our own investment units, depending on how
much it will grow our EPU.
Please turn to the next page.

22

4. External Growth

Utilization of Sponsor Support

23

 Combined strategy of fund-recycling model and asset-recycling model for external growth Higher possibility of mid- to long-term growth and quality improvement of the portfolio, utilizing the sponsor’s
development capabilities

Fund-recycling model Asset-recycling model(asset acquisition)

Asset
acquisition(asset replacement)

Substitute
asset

•

Stable revenue base by asset acquisition••

Realize unrealized gain through asset disposition••

Disposed assets to be put back into the pipeline

Development profit by selling assets to API
Promote redevelopment projects
by acquiring assets from API

after redevelopment

FundingAssetdisposition

We will continue to focus on external growth, pursuing both the fund-recycling
model and the asset-recycling model, using sponsor support.
Please turn to the next page.

4. External Growth

Acquisition criteria24

 Intend to achieve mid- to long-term NOI growth through asset acquisition, taking into consideration growth potential,
stability, and profitability
 Preferentially consider investments in the greater Shibuya area, hotels with anticipated demand growth, and Activia Account
Properties that contribute to improving portfolio profitability

Prioritize acquisitions

AA

AA

19.1％

Greater
Shibuya area

Tokyu Plaza Omotesando“Omokado”

A-PLACE Ebisu Minami

Sponsor Pipeline

Q plaza EBISU

Asset Manager’s own network

Hotel 7.4％
UR

Greater
Shibuya area
UR 14.8%
TO 14.3%

TO

Hotel

Activia Account

29.1％

Kobe Kyu Kyoryuchi 25Bankan

icot Mizonokuchi

A-PLACE Kanayama

icot Nakamozu

Market Square Sagamihara

A-FLAG NISHISHINSAIBASHI

UR & TOother than
the above44.4%

 Consider future conversion to other uses andwidening acquisition targets by leveraging
the sponsor’s development capabilities

Sponsor Pipeline

Asset Manager’s own network

Let me explain the property acquisition policy.
We will prioritize properties in the greater Shibuya area, where the entire area
is expected to grow, hotel properties for which demand is expected to grow,including inbound demand, and the Activia Account properties which contributeto enhancing portfolio stability, and further raise the ratio of such properties.
In the greater Shibuya area, we will mainly utilize the sponsor pipeline, while forhotels and Activia Account properties, we will acquire using the asset manager’s
own network as well.
For Activia Account properties, we will consider future conversions of property
type, using our sponsor’s development capabilities, and widening the scope of
property acquisitions.
Please turn to the next page.

24

4. External GrowthSponsor Pipeline25

 Expand acquisition opportunities by leveraging the rich sponsor pipeline concentrated in the greater Shibuya area
 Promote a recycling model with the sponsor, with the aim of further enhancing the area value of the greater Shibuya area
COERU SHIBUYAKOEN DORI

Sponsor-owned retail properties
Sponsor-owned office properties

Completion: Jul. 2024 (plan)
Leasable area: approx. 1.6k m2

Asset owned by API

SPLINE Aoyama
Tokyu Building

Shibuya Square B

Completed: Mar. 2004
Leasable area: approx. 1.4k m2

Completed: Jun. 2012
Leasable area: approx. 4.9k m2

Shibuya Minami
Tokyu Building
Completed: Jan. 2005
Leasable area: 14k m2

Shibuya Place

Completed: Jul. 2009
Leasable area: approx. 2.9k m2

Ebisu East Building

Shibuya Square A

Completed: Nov. 1998/Refurbished:
Mar. 2015
Leasable area: approx. 4.5k m2

Completed: Mar. 2004
Leasable area: approx. 7k m2

Other areas (Retail)Northport Mall

Tsuzuki Ward, Yokohama
Leasable area: approx. 56k m2

Abeno Q’s Mall

Abeno Ward, Osaka
Leasable area: approx. 69k m2

Sponsor-owned
81 buildings with GFA of
1,675k m2(As of Mar. 2024)

Land and buildings for sale
(Office/Retail)¥298.7 billion(As of Mar. 2024)

We will expand our acquisition opportunities, using the rich sponsor pipeline
concentrated in the greater Shibuya area.
We will promote a recycling model with the sponsor, aiming for further valueenhancement of the greater Shibuya area.
Please turn to the next page.

25

5. Financial Management・ESG

Stable Financial Management

26~ LTV Management and Continuous control of Debt Cost ~1. Trend in LTV
50%

 LTV at the end of the FP25 (May 2024) was 47.3% (appraisal LTV was 40.6%), being controlled within the guidance rangeof 40% to 50%
LTV

Appraisal LTV
46.9%

40%

46.7%

39.9%

40.1%

47.3%

Appraisal
LTV

47.3%

40.6%

Acquisition
capacity

Rating(JCR)¥30.0bn

AA(Stable)

40.6%*Eligible for
BOJ purchase2020.52020.112021.52021.112022.52022.112023.52023.112024.52024.5*at LTV 50%

FP17

FP18

FP19

FP20

FP21

FP22

FP23

FP24

FP25
FP25

* As of May 31, 2024

２. Trends in average period remaining to maturity and average interest rate
7.0年

1.00%

 While maintaining the current level of remaining years to maturity and interest rate, we willcontinue to work on debt cost reduction

Avg. remaining years to maturity

6.0年

5.0年

LTV

0.55%

0.56%

0.54%

0.53%

0.54%

0.54%

Avg. interest rate
0.56%
0.56%

0.80%

0.59%
0.60%

4.0年

0.40%

3.0年

4.2

4.0

years

3.9

years

years

2.0年

0.20%

Avg.
interest
rate

Fixed
interest
rate ratio

0.59%

92.4%

Avg.
remaining
years tomaturity

Longterm
borrowing
ratio

3.9

years

100%

0.00%

2020.52020.112021.52021.112022.52022.112023.52023.112024.52024.5

FP17

FP18

FP19

FP20

FP21

FP22

FP23

FP24

FP25
FP25

* As of May 31, 2024

This page is about our financial management.
The LTV was 47.3% as of the end of May 2024, and the appraisal LTV was
40.6%.
The LTV has gone up, due to the acquisition and cancellation of our own
investment units, conducted in the 25th fiscal period.
We have acquisition capacity of 30 billion yen, if we were to go up to 50% LTV,
which is the upper end of the expected range.
We are maintaining a rating of AA stable outlook by JCR.
Please see the bottom half of the slide.
As for our debt, the average period remaining to maturity is 3.9 years, and theaverage interest rate is 0.59%.
We will be mindful of the level of the average period remaining to maturity, andthe average interest rate, while continuing to address the risk of higher
borrowing costs.
Please turn to the next page.

5. Financial Management・ESG

Solid Financial Base ~ Diversified Lender Formation and Well-balanced Maturity Ladder ~１. Debt refinance

２. Lender formation (as of May 31, 2024)
 Diversified loan balance and lenders

Actual results (FP25 ended May 2024)
BeforeAfter

LoanamountFixed/Floating

DurationInterest rate
(note)¥17.5bn

Fixed

6.5years

0.542％¥13.0bn

Fixed

7.0years

0.981％¥4.5bnFloating

2.5years

T＋0.125％¥17.5bn-

5.8years

0.811％

10%

9%(Note) In total, the base rate T is calculated based on the actual 1M-TIBOR value on May 31, 2024

Actual results (FP26 ending November 2024)
BeforeInvestment
Corporation Bond

¥5.0bn27

Repay¥1.0bn21%

18 lenders¥265.8billion

19%

9%

After

19%

Borrowings¥4.0bn

MUFG Bank
Sumitomo Mitsui Trust Bank
Mizuho Bank
Sumitomo Mitsui Banking Corporation
Development Bank of Japan
Mizuho Trust & Banking
The Bank of Fukuoka
Resona Bank
The Norinchukin Bank
Shinkin Central Bank
The 77 Bank
THE NISHI-NIPPON CITY BANK
Nippon Life Insurance Company
Sumitomo Mitsui Insurance Company
Taiyo Life Insurance Company
The Yamagata Bank,Ltd.
Tokyo Marine & Nichido Fire Insurance
The Bank of Kyoto
Investment corporation Bonds

３. Maturity ladder (as of May 31, 2024)

 Diversified maturities in preparation for refinancing. Ability to flexibly meet funding needs with commitment line of ¥21bn（¥bn）

Borrowings

Investment corporation bonds

20
2.0
16

1.0

2.0

4.5

&

Credit line
¥12.0bn

5.0

12
17.1

8

19.7

16.8

4.0

19.5
15.5

14.1

12.0

15.3

12.3

12.9

2028.112029.5

1.0
20.6
14.4

12.7

14.4

9.1

4
0

Commitmentline ¥21.0bn

3.9

11.5

2.0
2024.112025.52025.112026.52026.112027.52027.112028.52029.112030.52030.112031.52031.112032.5・・・

2033.5

0.0
・・・

1.3
2036.5

0.0
・・・

1.0
2038.5

Section 1. at the top right is the result of the refinancing since May 2024.
In the May 2024 period, we refinanced 17.5 bn yen of existing debt toaccommodate rising interest rates, by including some floating interest debt andslightly shortening the maturity.
In the November period, we reduced the total amount of interest-bearing debt
by redeeming a 5 bn yen investment corporation bond, using 1 bn yen of cashon-hand, and refinancing into 4 bn yen of loans.
At the upper right is our lender formation.
As of the end of May 2024, we have borrowings totaling 265.8 bn yen from 18
institutions.
With this robust bank formation, and by continuing good communication, we
will maintain our stable financial management.
At the bottom is the maturity ladder.
While being mindful of diversifying the maturities, we have secured acommitment line of 21 bn yen to flexibly address funding needs.
Please turn to the next page.

5. Financial Management & ESG

Major ESG Initiatives

28

 API plans to participate in the CDP2024 to promote climate change initiatives and improve transparency of our disclosure.
2022/1-7
Participated in
GRESB Real Estate
Assessment for the
1st time

2023/5Set environment KPIs
・Greener portfolio
・Sustainable financing
・Procurement of renewableenergy2019/72013

Identified Materiality
Environment
・Reduce environmental
impact2023/10GRESB Real Estate
Assessment
Designated Regional Sector
Leader Asia and Global
Listed Sector Leader(Office/Retail)

MSCI ESG Rating
Upgraded to BBB

2022/5

API

ISO14001 acquired

2019/8Governance・Management framework
corresponding to multifacetedsocial demand towards
sustainable society

2016/12

BecameGRESBParticipant

TRM

UN Global Compact
Signatory
by sponsor Group

2019/22022/7

Rebalanced the asset
management fee(Lowered total assetbased fee and increased
DPU and NOI-based fee）

Social・Human capital development
as a group of professionals
・Contribution to local
communities
・Health and well-being of
tenants
・Supplier Engagement

Disclosure basedon TCFD’s
proposals
Governance/Strategy/Risk
Management/Metrics andtargets

2022/12021/12
Became signatoryof PRI (Principles
for Responsible
Investment)

Support of TCFD (Task
Force on Climate-related
Financial Disclosures)

・DE&I (Diversity, Equity andInclusive)
・Human capital management
・Supply chain management, etc.

Established Green
Procurement
Standards

2017

2018

2023/2Signatory to the
Principles for
Financial Action forthe 21st Century

2021/4
Organized Sustainability
Promotion Council andestablished Sustainability
Department

EstablishedSustainability
Policy2016

2019

Plan to participate in
CDP20242023/122020/92019/42024

2023/4
Enhanced Materiality(core issues)

2020

2021

2022

2023

Donation utilizing
Regional
Revitalization
Support Tax Scheme(To Hokkaido Pref.
and Kyoto City)

2024

Let me explain our ESG initiatives.
In this fiscal year, we are planning to participate in the CDP climate change
program, to promote our climate change initiatives, and enhance transparencyof our disclosure.
Please turn to the next page.

5. Financial Management & ESG

ESG Initiatives ~ Environmental KPIs. ~29

E (Environment)

Initiatives

API’s Materiality (core issues)

Initiatives
to address
climatechange・Reduce environmental impact• Energy use: Medium- to long-term target of 1% average annual reduction in energy use intensity• Energy-related CO2 emissions: 100% reduction of CO2 generated by electricity by the end of FY2025,
relative to FY2015 baseline• Water conservation: Medium- to long-term target of 0.5% average annual reduction in water use intensity• Waste generation: Medium- to long-term target of 0.5% average annual reduction in waste intensity

Renewable energy procurement

KPI Transition to renewable electricity in all
portfolio properties by the end of FY2025(Note)

 Transition to renewable electricity in all
portfolio properties by the end of FY2025,
relative to FY2015 baseline (Note)(Note)

Greener portfolio

Sustainable financing

 70% or more green-certified assets
by 2030

 100% of new issuances of investment
corporation bonds to be green bonds(Note)

 Consider diversification of sustainablefinancing methods

 Promote green leases for 100%of new contracts(Note) On condition of issuance based on the current framework

Excluding co-owned, sectionally owned, and land-only properties thathave not installed renewable electricity

63%

Renewable electricity
utilization rate
(Note)

Estimated based on FY2023
electricity consumption

63%
Progress

Green-certified
assets31%2023.112024.5

 Outlook (offset basis)(Estimated based on FY2023 electricity consumption for FY2024 onwards)(As of May 31, 2024)

74%

Green-certified
assetsproperties

34

after KPI setting
Green bond ratio inbond issuance

100%

(%)

100
80

100%

KPI set inJul. 2022

63%

60

Procured non-fossil
certificates from
ReENE, a member ofsponsor group, for
FY202340
20

31%

Green lease ratio100%

New green leases
contracted in

23(FP25 ended May 2024)

20%

0
FY2022

FY2023

FY2024114.6 billion

Issuance
capacity ¥FY2025

I will now explain the progress made in our environmental KPIs.
First, the procurement of renewable energy.
The utilization rate of renewable energy derived electricity has risen to 63% asof the end of the May 2024 period, and we are steadily introducing it towards
our goal of 100% by the end of fiscal year 2025.
For the FY2023 portion, we have procured non-fossil certificates from ReENE,
which is a member of the sponsor group.
In terms of making our portfolio greener, we have already achieved the 2030
target of 70% or more of the portfolio being green-certified assets.
Please turn to the next page.

29

5. Financial Management & ESG

ESG Initiatives

30~ Environment: Property-Based Initiatives and Sponsor-Initiated Initiatives ~E（Environment）
Related SDGs targets by 2030

API’s Materiality (core issues)・Reduce environmental impact

Biodiversity

7.3 By 2030, double the pace of improving energy efficiency globally
12.5 By 2030, substantially reduce waste generation through prevention, reduction, recycling and reuse
12.8 By 2030, ensure that people everywhere have the relevant information and awareness for sustainable
development and lifestyles in harmony with nature

Initiatives on the “ecological network”
in the greater Shibuya area

Tokyu Land Corporation achieves RE100(Sponsor-Initiated Initiatives)

Renewableenergy Worked with the sponsor to promote biodiversity
conservation in the greater Shibuya area

 Tokyu Land Corporation became the first Japanesebusiness company to achieve RE100
 TLC completed its transition to renewable electricity used in
all its office/retail properties in 2022

 Installed nest boxes for wild birds
at the “Omohara Forest” on
the rooftop of Tokyu Plaza
Omotesando “Omokado”

EnergysavingIntroduced free seating in the office (Asset Manager) Reduced electricity and paper consumption by employing
free seating at the officeAttention toenvironment

Green construction
 Continuously promote renewal and renovation using green
products in line with the Green Procurement Standardsof the Asset Manager
AA-10

AA-7

Electricity saved

8%

Paper saved

29%

Osaka Nakanoshima Building:
Conversion to LED lighting
Electricity
saved

34%

Umeda Gate Tower:
Conversion to LED lighting
Electricity
saved

66%

I will now explain some of the individual environmental initiatives.
In the greater Shibuya area, we are collaborating with our sponsor to promotebiodiversity conservation initiatives.
We placed nest boxes for wild birds at the roof of Tokyu Plaza Omotesando“Omokado”.
We have reduced electricity and paper usage by introducing free seating at theasset manager’s office. As for our individual properties, we are continuing
renewals and renovations using green products, in line with the Green
Procurement Standards of the asset manager, and have achieved reductions inelectricity usage in several properties.
Please turn to the next page.

30

5. Financial Management & ESG

ESG Initiatives ~ Social ~31

S (Social)
Related SDGs targets by 2030

API’s Materiality (core issues)
・Human capital development
・Contribution to local community
・Health and well-being of tenants
・Supplier engagement

Investors

11.3 Enhance inclusive and sustainable urbanization and capacity for participatory, integrated and sustainablehuman settlement planning and management in all countries
12.8 Ensure that people everywhere have the relevant information and awareness for sustainable
development and lifestyles in harmony with nature

Financial results presentations for retailinvestors

Communities

 Maintain relationships with retail investors•••

Donation to Expo 2025 Osaka, Kansai, Japan(Osaka Nakanoshima Building) Donated a portion of the proceeds from vending
machine sales to Expo 2025 Osaka, Kansai, Japan

Mariko Mabuchi's J-REIT Club on March 13, 2024
Daiwa J-REIT Caravan Osaka on March 19, 2024
Daiwa J-REIT Caravan Sapporo on May 9, 2024

Community
contribution

Distribution of sustainable offerings
 Distributed sachets made with Japanese larch at financial resultspresentations for retail investors

The discussion is available to view on YouTube*Available through October 11, 2024••

The sachets are
made from wood
harvested through forest
thinning at Tokyu Resort
Town Tateshina
Handmade by individuals
supported by local
disability service offices

With the heightened momentum for investing triggered by the new NISA
scheme, we have increased the frequency of retail investor presentations, andare working to reinforce the opportunities for communication.
Moreover, we handed out novelties using thinned wood to the attendees of thepresentations, and created opportunities for them to understand the group’s
efforts for recycling natural resources.
Please turn to the next page.

31

5. Financial Management & ESG

ESG Initiatives ~ Governance ~32

G (Governance)
API’s Materiality (core issues)
・ Management framework
corresponding to multifacetedsocial demand towards asustainable society

Organization

Related SDGs targets by 2030
12.8 By 2030, ensure that people everywhere have the relevant information and awareness for sustainable
development and lifestyles in harmony with nature
16.7 Ensure responsive, inclusive, participatory and representative decision-making at all levels

 Sustainability Department to be independent
organization in April 2024

 Property acquisition with related-parties requires a
resolution by the Compliance Committee including outside
experts as members to avoid conflicts of interest, etc. This
structure should protect interests of unitholders

Decisionmaking
process

Report to the Board of Directorsof TRM*This approval may made before or after
Investment Committee resolution*If acquisition is deemed to
be a related-party transaction*If acquisition is deemed to
be a related-party transaction

Prior approval by Board of Directors ofAPI

Reportto API

Total assets at end of thepreceding FP
×
0.25％（Upper Limit is 0.3％)

AM Fee type II（DPU / NOI based）
DPU
×
NOI
×
0.00021%(Upper Limit is 0.00021％)

Approval by each relevant Chief Division Officer

AM Fee type I(asset based）

Deliberation and resolutionof Investment Committee*Compliance Officer may order suspension of deliberations

 Raised type II ratio effective from FP ended May 2020 tostrengthen incentives to maximize unitholder value

Deliberation and resolution ofCompliance Committee

 API became the first J-REIT to introduce a DPU-linked
management fee structure

Approval by Compliance OfficerFeestructure

Proposal by responsible department

Resolution with two-thirds majority voteincluding the votes of the Compliance Officer
and all external experts

Resolution in unanimous vote of all
members present including an external
expert(Note) Ratio of the sum of the AM fee type I & type II to the total assets at end of each period cannot exceed 0.5%

At the asset manager, we set up the Sustainability Department, as anindependent organization reporting directly to the President, in order tostrategically strengthen ESG promotion, and to speed up our decision making.
It has been 12 years since our IPO.
We were able to end another fiscal period thanks to the support of many
stakeholders.
We thank you for your continuous support.
In the current environment, we need to closely monitor uncertainties, including
inflation, the rise in interest rates, as well as geopolitical risks.
However, the real estate leasing market is steadily improving, with the recoveryof corporate earnings, as well as the recovery in demand for new store
openings.
We will capture the recovery and improvement in the market, realize internaland external growth, and seek to enhance unitholder value through EPU growth.
That concludes my presentation. Thank you for your attention.