aeon reit investment corporation · store areas in the 10 km trading area rent of the existing...

AEON REIT Investment Corporation

Asset Manager:

AEON Reit Management Co., Ltd.

Securities Code: 3292

https://www.aeon-jreit.co.jp/en/index.html

Presentation Material for Investor Meeting For the 12th Fiscal Period Ended January 31, 2019

March 19, 2019

AEON MALL Kofu Showa

Table of Contents

2

I. Overview of Financial Results for the 12th Fiscal Period

Ended January 31, 2019

１．Financial Highlights of the 12th Fiscal Period Ended January 31,

2019--- P. 4

２． Topics for 12th Fiscal Period—External Growth/Internal Growth— --- P. 5３． Topics for 12th Fiscal Period—Financing Matters— --- P. 6

４．Overview of Financial Results for the 12th Fiscal Period Ended

January 31, 2019--- P. 7

５． Portfolio Indicators at the End of 12th Fiscal Period --- P. 8

II. AEON REIT’s Strengths and Growth Strategy

１． Trends in Results for Five-Year Period After Listing --- P. 10２． AEON REIT’s Advantages --- P. 11３． External Growth—Pipeline Support— --- P. 12

４．External Growth—AEON Group’s business domains and

pipelines—--- P. 13

５． External Growth—Advantages of investment targets— --- P. 14

６．External Growth—Stance on property acquisitions and future

initiatives—--- P. 15

７． Internal Growth—Investment for Expansion and Renewal— --- P. 16

８．Internal Growth—Robust Matter Lease Agreement with the AEON

Group—--- P. 17

９． Internal Growth—Lease Structure— --- P. 18

10． Introduction of Individual Property (AEON Mall Kurashiki) --- P. 19

11．Financing policy—Diversification of Lenders and Financing

Methods (1)—--- P. 20

12．Financing policy—Diversification of Lenders and Financing

Methods (2)—--- P. 21

13． Risk Management --- P. 22

14． Strategic cash management—Cash Generation Skills— --- P. 23

15．Strategic cash management Utilization for the growth of

distribution--- P. 24

III. Forecasts of Performances and Future Objectives

１． Financial Forecasts(13th&14th) --- P. 26

２． Activities to Achieve Sustainability—AEON Group and AEON

REIT—--- P. 27

３． Future Growth Objectives --- P. 28

４． Messages from the Management Team --- P. 29

Appendix 1 Characteristics of AEON REIT --- P. 31-48

Appendix 2 Supplement --- P. 50-69

I. Overview of Financial Results for the 12th Fiscal Period Ended January 31, 2019

Financial Highlights of the 12th Fiscal Period Ended January 31, 2019

Improved quality of the portfolio through sustained and stable growth.

4

Distributions

External Growth

FinancialStrategy

InternalGrowth

12th Fiscal Period Ended January 31, 2019

Distributions per unit 3,066 yen

Up 56 yen (+1.9%) from 3,010 yen, the initial forecast

Investing in revitalization of property to boost revenue and competitiveness

Kurashiki (accessibility improvement work)

Increase in rent: up 3.10 million yen/year

Kagoshima and Yamagata Minami (disaster prevention work)Increase in rent: up 3.32 million yen/year

Acquired the extended building at Kofu Showa

Unrealized gain up 0.8 billion yen

Increase in rent (annualized) up 0.53 billion yen

Refinancing 27.0 billion yen (including 15.0 billion yen through issuance of retail bonds)

Average residual period 3.7 years → 4.6 years

Average financing cost 0.80% → 0.78%Overall situation of

interest-bearing debt

Topics for 12th Fiscal Period - External Growth/Internal Growth -

5

(Note) Unrealized gain: (Appraisal value at the end of the 11th fiscal period – Book value at the end of the 11th fiscal period) + Appraisal value at the time of acquisition of the extended building at Kofu Showa (existing and

extended buildings) – (Book value of the existing building + Acquisition value of the extended building + Expenses for investment in the revitalization of the existing building)

Strengthened profitability by utilizing sufficient cash on hand without depending on borrowings.

External

Growth

Improved accessibility by installing a new exit and entrance and implemented disaster prevention measures, preferentially.

Internal

Growth

増築棟取得前増築棟取得後

1 2 Increase in annual rentIncrease of 0.8 billion yen in

unrealized gain (note)3 Evolution to an overwhelmingly top-

rated local community mall

806

million yen

0.5

billion

yen

010,00020,00030,00040,00050,00060,00070,00080,000

（㎡）Store areas in the 10 km trading area

Rent of the

existing building

(before renewal)

Rent of the extended building

+ Rent after renewal of the

existing building

Existing building

(Acquired)

After acquisition of

extended building

(Existing and

extended buildings)

Location Nakakoma-gun, Yamanashi Pref.

Acquisition

price8.3 bilion yen 15.4 billion yen

Appraisal

price8.6 billion yen 17.3 billion yen

Site area 119,064.22㎡

Total floor

area66,417.84 ㎡ 99,680.71㎡

Overview of AEON MALL Kofu Showa

Effects of the acquisition of the extended building at Kofu Showa and renewal of the existing building

Rent

of the

existing building

Increased

of rent

Acquisition of an extended building of the existing AEON MALL building at Kofu Showa.

1.3

billion

yen

+0.8

billion

yen

AEON Group’s strength

in development capability

1,346

million yen

Property Detail Effect InvestmentIncrease in rent

(annualized)

AEON MALL KurashikiInstallation of a new exit and entrance on

the north side of the mall

Improvement in

accessibility44 million yen ＋3.1 million yen

AEON MALL KagoshimaAnti-smoke hanging walls made of

inflammable films

Disaster prevention

measures

72 million yen ＋2.1 million yen

AEON MALL Yamagata Minami 38 million yen ＋1.1 million yen

Before acquisition

of the extended

building

After acquisition

of the extended

building

Rent

of the

existing building

Before refinancing After refinancing

Total amount of refinancing 27 billion yen 27 billion yen

Initial procurement period 4.9 years 7.8 years

Average financing cost 0.78% 0.71%

Topics for 12th Fiscal Period -Financing Matters-

6

Implemented the refinancing of 27 billion yen, funds borrowed when an IPO

was made.

Retail bonds with

JREIT’s largest

issuance amount

and longest term

Issuance AEON REIT’s first retail bonds

Refinancing

Poster

announcing the

issuanceConditions of investment

corporation bonds

Effects of investment

corporation bonds

Overview of

refinancing

1

Allotted funds procured through the issuance of retail bonds to funds for the

refinancing.2

Raised new loans from The Yamaguchi Bank and The Gunma Bank, Ltd. in

efforts to diversify procurement sources.3

Results of refinancing

1

2

Extended the term and reduced procurement cost.

Increased the number of financial institutions

that provide loans to 23 (21 at the end of the

11th fiscal period).

Issuance amount

15 billion yen

Term 10 years

Interest rate 0.783%

Gift for purchasers

AEON gift certificate

Before refinancing After refinancing

Interest-bearing debts 150 billion yen 150 billion yen

Average residual period 3.7 years 4.6 years

Average financing cost 0.80% 0.78%

Comparison of procuring conditions (27 billion yen) Comparison of interest-bearing debts (150billion yen)

Successfully diversified our means of financing, extending our procurement period and reducing our

procurement cost.

Diversification of financing means

Enhancement of the investment

corporation’s popularity

(Acquisition of potential investors)

Overview of Financial Results for the 12th Fiscal Period Ended January 31, 2019Removed the impact of disasters and achieved distribution of 3,066 yen, a significantly larger amount than the initial announcement.

7

11th Fiscal Period Ended July 2018

12th Fiscal Period Ended January 2019

Result Result vs. Previous Period Initial Forecast vs. Forecast(A) (B) (B-A) (C) (B-C)

Operating Revenues (Millions of yen) 16,201 16,329 ① +127 16,283 ⑦ +45

Operating Expenses (Millions of yen) 10,019 9,993 ② ▲25 10,014 ⑧ ▲20

Operating Income (Millions of yen) 6,182 6,335 +153 6,269 +66

Ordinary Income (Millions of yen) 5,297 5,448 ③ +151 5,362 ⑨ +86

Extraordinary income (Millions of yen) - 152 ④ +152 - ⑩ +152

Extraordinary Loss (Millions of yen) 37 274 ⑤ +237 - ⑪ +274

Net Income (Millions of yen) 5,254 5,325 +71 5,357 ▲31 Reversal of dividend reserves

(Millions of yen) - 122 ⑥ +122 - ⑫ +122

Distributions per Unit (yen) 2,956 3,066 +110 3,010 +56

NOI (Millions of yen) 11,299 11,553 +254 11,529 +23 (Note) The number of investment units issued for each period is 1,777,347.

【Major factors of changes from the previous period】【Major factors of changes from the forecast】

No. Main items Amount (million yen) No. Main items Amount (million yen)

Newly acquired properties/

rent income from extended properties+586 Income from dividends paid by overseas SPCs +9

Rent income from properties sold

in the previous period▲407 Insurance income +27

Absence of gains from sale of properties

as posted in the previous fiscal period▲35 Expenses for the leasing business +5

Rent expenses for properties sold

in the previous fiscal period▲224 Fund costs ▲25

Depreciation for newly-acquired properties

and extended properties+211 Loan related costs ▲58

Loan related costs ▲37 Investment corporation bond related costs +39

Investment corporation bond related costs +39 ⑩ Insurance income +152

④ Insurance income +152 ⑪ Disaster related losses +274

⑤ Disaster related losses +237 ⑫ Reversal of dividend reserves(⑪－⑩) +122

⑥ Reversal of dividend reserves +122

①

⑦

⑧

②

⑨

③

Portfolio Indicators at the End of 12th Fiscal Period

Portfolio that features stable revenues, and sufficient borrowing capacities and unrealized gains.

8

Distributions per unit

362.4 billion yen(up 7.1 billion yen from

the end of the 11th period)

Asset size（Note 1）40 properties Unrealized gains（Note 2）

Up 45.0billion yen

(up 4.4 billion yen from


41.4％Loan to Value (LTV)

(excl. leasehold deposits)

Available capacity（Note 4）

Approx. 37.0 billion yen

Net asset value (NAV)per unit

Portfolio NOI yield

6.4%NOI yield after portfolio depreciation

3.9%

44.9％

Note 1: The total purchase price not including expenses (brokerage fees, taxes and dues, etc.) incurred for the purchase of the real estate, etc.

Note 2: The unrealized gain and loss as of the end of the 12th fiscal period (difference between appraisal value and book value at the end of each fiscal period)

Note 3: The difference from the distribution forecast of 3,010 yen for the 12th fiscal period announced on September 12, 2018

Note 4: The amount of interest-bearing debts that can be acquired until LTV (including leasehold deposits) reaches 50%

3,066 yen(up 1.9% from initial forecast)

(Note 3)

133,464 yen(up 2,507 yen from


(incl. leasehold deposits)

II. AEON REIT’s Strengths and Growth Strategy

第３期第１２期

資産規模の推移とアセットクラスの多様化

RSC 82.0%

SRSC 17.6%

SRSC 7.7%

RSC 78.1%

CSC 4.0%

Logistics 8.5%

Overseas 0.4% Overseas 1.6%


Net asset value (NAV) per unit

10

Trends in Results for Five-Year Period After Listing

Achieved expansion of asset size, diversification of investment targets, distribution growth and an increase in NAV

158.9 billion yen

362.4 billion yen



Increase of 124.6％

2,461 yen3,066yen

112,635 yen

133,464 yen

Increase of 118.5％

3rd Fiscal Period Ended July 2014






Asset size by 2.2 times

AEON Taman Universiti SC Daiei Kawasaki Process CenterAEON MALL Seremban 2

AEON Style Kemigawahama

AEON MALL Kyoto Gojo AEON MALL Kofu Showa

J-REIT’s first acquisition

of overseas properties

Scheme for the

acquisition of extended

buildings

Strategic property

replacement

Kumamoto⇔Kyoto Gojo

Acquisition of new

properties through the

Group’s collaborative

initiatives

Acquisition of properties

by utilizing the overseas

SPC scheme

Acquisition of logistics

properties to support

commercial distribution

systems

Initiatives leveraging AEON REIT’s strengths

12th Fiscal Period

12th Fiscal Period

12th Fiscal Period

3rd Fiscal Period

3rd Fiscal Period

3rd Fiscal Period

Change in the asset size and diversification of the asset class

AEON REIT’s Advantages

AEON REIT’s unique growth strategy built on AEON Group’s strengths.

11

External Growth

Promote the diversification of asset types including urban-based properties.

Investment in community

infrastructure２

(→ pages 14 & 15)

Take advantage of many pipelines in

acquiring properties through

negotiated transactions.

Strength due to many pipelines１

(→ pages 12 & 13)

Internal Growth

Achieve stable rent income through the conclusion of long-term and fixed master leasing agreements.

Robust master leasing scheme４

( → pages 17 & 18)

Increase property value by taking measures in line with changes in the business environment and local characteristics.

Effective building extensions and revitalization３

(→ page 16)

Strategic Cash Management

Generate free cash flow of approximately 7.0 billion yen per year.

Generation of free cash flow７

(→ page 23)

Create diverse and flexible choices in response

to a variety of settings.

Flexible utilization of cash on hand８

(→ page 24)

Financing Policy

Implement stable financing operations such as the issuance of retail bonds and increase in the number of loan providers.

Implementation of stable fund-raising５

(→ pages 20 & 21)

Enhance consistency through the coverage of earthquake insurance and effective utilization of reserves.

Consistent payment of

distributions６

(→ page 22)

Risk Management

External Growth Strategy -Pipeline Support-

Aim to increase the asset size by utilizing AEON Group’s many pipelines.

12

（Note 1) Some of these stores are operating as tenants at SCs managed by AEON Mall or AEON TOWN.

(Note 2) Excerpts from the supplements to the financial results of AEON CO., LTD for the fiscal period ended February 28, 2018 (excluding AEON Mall Co., Ltd. and AEON TOWN Co., Ltd.) and websites of respective companies.

(Note 3) Excerpts from the data (for the fiscal period ended February 28, 2018) provided by AEON GLOBAL SCM CO. LTD.

(Note 4) GMS, SM, DS, HC and SuC stand for General Merchandise Store, Supermarket, Discount Store, Home Center and Supercenter, respectively.

Properties managed by pipeline support companies

Japan

Overseas

AEON Mall Co., Ltd.

AEON TOWN Co., Ltd.

AEON Retail Co., Ltd.

AEON Hokkaido Co., Ltd.

AEON KYUSHU CO., LTD.

AEON RYUKYU CO., LTD.

The Daiei, Inc.

AEON Mall Co., Ltd. AEON Co. （M）BHD.AEON BIG Co. （M）SDN. BHD.

175 SC

140 SC

27 SC 56 stores

（ GMS/SM/DS only ）

913 stores

（GMS・SM・DS・HC・SuC）

Properties owned by


Japan

AEON GLOBAL SCM CO., LTD.

56 facilities

38

2


21properties

AEON Mall Co., Ltd.

11properties

AEON Hokkaido Co., Ltd.

2properties


1property

The Daiei, Inc.

2properties

AEON GLOBAL SCM CO., LTD.

1property

AEON Co.(M)BHD.

2properties

Acquisition

of properties

through

negotiated

transactions

Advantages of pipeline support

Offering of information from

within the AEON Group

Acquisition of preferential

negotiation rights Utilization of warehousing

functionality

（Note 1）

（Note2）（Note3）（Note 4）

properties

properties

Overseas

Top sales in Japan Top sales in Japan

Developer Business Supermarket BusinessHealth & Wellness

BusinessInternational Business

Net sales Approx. 335.0 billion yen Approx. 3.2 trillion yen Approx. 696.0 billion yen Approx. 418.0 billion yen

No. of stores Approx. 310 stores Approx. 2,180 stores Approx. 4,370 stores －

その他の主要企業

Pipeline

support

partners

13

External Growth Strategy -AEON Group’s Diverse Retail Businesses-

AEON Mall Co., Ltd.

AEON TOWN Co., LtdThe Daiei, Inc.

Many potential pipelines held by the AEON Group.

AEON Co. （M）BHD.AEON BIG Co. （M）SDN. BHD.

ChinaAEON（CHINA）CO., LTD.AEON Stores (Hong Kong) Co., Limited

ASEANAEON ASIA SDN.BHD.AEON（CAMBODIA）Co.,Ltd.AEON（Thailand）CO., LTD.AEON VIETNAM Co., LTDPT.AEON INDONESIA

（Note 1）Source:AEON REPORT 2018

（Note 1）

（Note 1）

External Growth Strategy -Investment Targets-

Investment targets

Investment in very stable community infrastructure assets based on past track records.

14

Percentage of commercial facilities owned by the REIT in which tenants of the

following respective categories operate

自治体との包括連携協定（防災・福祉・環境保全推進、商業・観光の振興）

• A community platform that covers all daily needs by offering varieties of tenants

that people visit repeatedly, with a grocery supermarket positioned as a core facility.1

• A facility that flexibly responds to changes in the needs for daily life and the

business environment by flexibly changing the composition of tenants, thereby

enabling continuous operation for a long period time down the road.

• A facility essential to communities that offers a place for community-based activities

in respective areas, secures lifelines when emergencies including natural disasters

occur, and functions as a disaster prevention center.

Community infrastructure assets defined by AEON REIT

２

３

These commercial facilities feature

many tenants that make people want tovisit compared to other facilities

(Frequency

of visits)Low High

Grocery

supermarket

Restaurants ClinicsAmusement

facilities

Gyms Hobby schools

100%

100% 97.1% 97.1%

48.6%94.3%

Comprehensive alliance agreements with local governments

Number of visitors to the commercial facilities (Note 1) owned

by the REIT (2017)

Cinemas51.4%

(Note 1) Based on calculations for 28 large commercial facilities of 35 commercial facilities owned by the

REIT, in which the number of visitors can be counted based on the same concept.

25%

68%

7%1,000万人以上

500万人以上1,000万人未満

300万人以上500万人未満

Outside the

community

Within the

community

Average number of

visitors per facility

Approx. 9 million

10 million or more

3 million or more and less than 5 million

5million or more and less than 10 million

Conclusion of

agreements 100%

(38 properties in Japan)

External Growth Strategy –Our Stance on the Acquisition of Properties-

AEON REIT’s stance on acquisitions Advantages through negotiated transactions with the AEON Group

Top-class stores can be acquired through negotiated transactions in the respective communities.

15

Acquire the most competitive stores

in the respective communities

Acquire top-class stores that best respond to changes in the business environment.

Properties can be acquired in better condition through negotiated transactions with pipeline support companies

Future

initiatives

Acquisition of respective

communities’ top-class, large-

scale commercial facilitiesReplacement of properties

Acquisition of different types

of urban commercial facilities

Ratio of negotiated transactions

Third

parties

41%

Sponsors

59%

negotiated transactions

100%

Only negotiated transactions

Prime location

in city centersCities (Note 1) Regional areas

Investment

targets

50％（18 properties ）

50％（17 properties ）

Properties owned by

AEON REIT Investment Corporation (Note 2)

（Note 3）based on number of Properties Held

(Operating

results)

(Note 1) Cities refer to the three major metropolitan areas and ordinance-designated cities.

(Note 2) Calculated on an acquisition price basis for 38 domestic properties owned by AEON REIT

Good

Poor

Internal Growth- Investment for Expansion and Renewal -

Implementation of effective investments to enhance the value of properties in collaboration with the AEON Group.

16

Initiatives taken so far

Investment for expansion and renewalsMaintenance and

enhancement of the

competitiveness of

facilities

Measures to prevent the loss of interest

in facilities operating for many years.

Measures to stay prepared for entry of

new competitors

Policy for future expansion and renewals

Examples of major initiativesRent increases due to expansion and renewal

(annual amount)

Expected investment cycles

Efforts to

increase rents

Efforts to achieve an increase in

master lease-based rents

Will continue to make effective investments that

reflect the characteristics of targeted properties

in collaboration with the AEON Group.

2019 2020 2021 and beyond

Two properties are

expected to be included.

Properties included in the current plan (Note)

(Note) The expected numbers are subject to change in the future.

Large-scale renewals: Roughly every six years

Expansion: Roughly every 10 years

（Millions of yen）

（Note）As of January 2019

7th Fiscal PeriodExamples of major

initiatives in Morioka

Investment amount 790 million yen

Annual rent Up 57 million yen

12th Fiscal PeriodRenewal at Kofu

Showa

Investment amount 781 million yen

Annual rent Up 50 million yen

Two properties are

expected to be included.

12th Fiscal Period

ended January 2019

13th Fiscal Period

ended July 2019

10th Fiscal Period

ended January 2018

11th Fiscal Period

ended July 2018

8th Fiscal Period

ended January 2017

9th Fiscal Period

ended July 2017

Internal Growth- Robust Matter Lease Agreement with the AEON Group -

Efforts to secure stable rent income on a medium- to long-term basis by making the most

of AEON’s facility operation skills and master lease agreements.

17

Commercial facilities in the portfolio have been operating stably.

AEON Group’s facility operation skills

Lease structure

Occupancy rate of mater lease companies

100%

Efforts to generate stable cash flow from rent on a

medium- to long-term basis

Concluded long-term/fixed master lease agreements with Group companies.

(For details, refer to the next slide.)

Approx. 100% stable Approx. 100% stable Approx. 100% stable

Occupancy Rate of End TenantsOperating Revenue at Master Lease

CompaniesNet Sales of End Tenants

Sep-Nov 2017

Dec 2017-Feb 2018

Mar-May 2018

Jun-Aug 2018

Sep-Nov 2018 Nov 2017 Feb 2018 May 2018 Aug 2018 Nov 2018 Sep-Nov 2017

Dec 2017-Feb 2018

Mar-May 2018

Jun-Aug 2018

Sep-Nov 2018

Internal Growth—Lease Structure—

Concluded long-term/fixed master lease agreements with Group companies.

18

Sublease Agreement (each tenant)

AEON Group

・AEON MALL Co., Ltd.

・AEON RETAIL Co., Ltd.

・AEON Hokkaido Co., Ltd.

・AEON KYUSHU Co., Ltd.

・AEON CO. (M) BHD.Specialty store area in the mall

Major specialty store categories

・Apparel

Core tenant

General merchandise

store

Core tenant

Amusement facilities / large specialty stores

・Services

・Goods

・Gourmet eats/foods

Master Lease Agreement

Sublease rents Master lease rents

Master lease

companiesEnd tenant

Investment

corporation

Conceptual image of the lease structure.

Outline of the Master Agreement

Japan Overseas (Malaysia)

Rent Cancellation conditions Rent

Fixed rent, Lease term: 20 yearsIn principle, the contract is not cancellable

during the lease period.Fixed rent, Lease term: 10 years

The amount equivalent to the fixed asset tax

and city planning tax will be paid as additional

variable rent. (To be revised every year

according to changes in the taxed amount.)

However, the contract may be terminated

subject to payment of a penalty fee

equivalent to six months’ rent on the day

following the final day of the non-cancellable

term defined with respect to each property,

aside from the rent term.

The rent changes every three years

according to the consumer price index.

Introduction of Individual Property (AEON Mall Kurashiki)

1919

Maintenance of appeal through expansion and

revitalization

Cooperation with administrationConcluded a disaster prevention agreement with the Kurashiki City government

Community contribution/community development Holding of many events to draw local

Strong trading area that creates an overwhelming large number of visitors

Diverse functions offered in the form of community infrastructure assets

Environmental friendliness Received DBJ’s Green Building Certification 2018 ★★★★★

Accepted evacuees when the

Western Japan torrential rainfall

occurred in 2018

80

90

100

110

120

開業1999年増床2011年 2018年

Okayama Pref.

Kurashiki City

(Note 1) Number of visitors for March 2018 – February 2019

(Note 2) Indicated as indexes with population in 1999 treated as 100

150

200

250

70,000

80,000

90,000

開業1999年増床2011年 2018年

Number tenants increased by 1.26 times

(㎡)

Motivate people to visit the facility and contribute to the local community while continuing to change.

1999(OPEN)

2011(Expansion)

2018(Present)

(number of tenants)

Store area increased by 1.17 times.

1999(OPEN)

2011(Expansion)

2018(Present)

Number of visitors in 2018: 12 million

Population of Kurashiki City: 480 thousand (increasing from the year when the facility

commenced operation)

The Ogyatto, a fun childcare event for

parents and children

Established a permanent

administration service corner

Solar panels Planted 70,000 trees

Diversification of Lenders and Financing Methods (1)

20

Diversification of Maturity Dates (as of January 2019)

Key Financial Indicators (as of January 2019)

Note: Refinancing except bridge loans and debt financing for the purchase of new properties are included.

Rating

Breakdown of interest-bearing debts

Credit rating agency Rating target Rating Outlook

Japan Credit Rating

Agency

Long-term issuer

ratingAA- Stable

Ratio of long-term and

short-term DebtsFixed interest rate ratio

4.3%

95.7%

変動固定

0%

100%

短期長期

10th Period

ended January

2018

11th Period

ended July

2018

12th Period

ended January

2019New borrowing

amount (Note 1)¥5.7 billion ― ¥27.0 billion

Interest-bearing debt

balance ¥150.0 billion ¥150.0 billion ¥150.0 billion

Portion accounted for by

the balance of

investment corporation

bonds

¥6.0 billion ¥6.0 billion ¥21.0 billion

Avg. number of years

remaining4.2 years 3.7 years 4.6 years

Avg. cost of interest-

bearing debts0.80% 0.80% 0.78%

LTV (incl. leasehold

deposits)44.9% 44.7% 44.9%

Available capacity

(up to 50%)

Approx.

¥36.0 billion

Approx.

¥37.0 billion

Approx.

¥37.0 billion

Number of partners in the financial organization: 23 (Two banks, namely, The

Yamaguchi Bank and The Gunma Bank, Ltd., were included in the previous fiscal period.)

Financial Management

Establishment of a strong bank and diversification of financing to respond to future business changes

2.0 1.0 2.0

15.0

1.0

15.6

22.0

16.1 17.2 15.411.3 9.3

9.1

1.0

3.0 5.0

4.0

2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2036

New debt financing Existing borrowings

(billions of yen)

Long termShort term Floating rates Fixed rates

Megabanks,

41%

Loan and trust

company, 22%

a government-controlled

bank, 8%

leading bank, 6%

assurance

company, 2%

local bank, 7%

investment

corporation

bond

14%

Diversification of Lenders and Financing Methods (2)

21

Note : As of April 16, 2018, Mitsubishi UFJ Trust and Banking Corporation’s corporate lending

operations were transferred to The Bank of Tokyo-Mitsubishi UFJ, Ltd. through a company split. In

accordance with this, the loan claims held by Mitsubishi UFJ Trust and Banking Corporation were

succeeded to The Bank of Tokyo-Mitsubishi UFJ, Ltd. as of the same date.

LTV Trend List of Lenders(as of January 2019)

Interest-Bearing Debt Period remaining to maturity and our borrowing cost

Syndicate of lenders arranged by Mizuho Bank, Ltd., Sumitomo Mitsui

Banking Corporation and Sumitomo Mitsui Trust Bank, Limited

Further extension of an average period remaining to maturity and reduction in costs

42.8%

46.4% 46.7%

44.9% 44.7% 44.9%

38.9%42.7%

43.0%

41.4% 41.4% 41.4%

38.0%

42.0%

46.0%

50.0%

7th FiscalPeriod

(July 2016)

8th FiscalPeriod

(January 2017)

9th FiscalPeriod

(July 2017)

10th FiscalPeriod

(January 2018)

11th FiscalPeriod

(July 2018)

12th FiscalPeriod

(January 2019)

LTV (incl. leasehold deposits) LTV (excl. leasehold deposits)

6.1 years

6.6 years 6.4 years 6.6 years 6.6 years7.1 years

4.1 years 4.7 years 4.4 years 4.2 years3.7 years 4.6 years

0.85% 0.84%

0.79%0.80%

0.80% 0.78%

1.0 years

3.0 years

5.0 years

7.0 years

9.0 years

0.70%

0.75%

0.80%

0.85%

0.90%

7th FiscalPeriod

(July 2016)

8th FiscalPeriod

(January 2017)

9th FiscalPeriod

(July 2017)

10th FiscalPeriod

(January 2018)

11th FiscalPeriod

(July 2018)

12th FiscalPeriod

(January 2019)

Initial period remaining to maturity (on the right axis)Average period remaining to maturity (year)Average of procurement interest rate (％)

Numbers of Lenders 23 (+2 compared to previous period

Mizuho Bank 24,600 mil yen 19.1%

Sumitomo Mitsui Banking 20,900 mil yen 16.2%

Sumitomo Mitsui Trust Bank 19,300 mil yen 15.0%

Bank of Tokyo-Mitsubishi UFJ 16,600 mil yen 12.9%

Norinchukin Bank 8,100 mil yen 6.3%

Mizuho Trust ＆ Banking 6,700 mil yen 5.2%

Mitsubishi UFJ Trust and Banking (note

2)6,500 mil yen 5.0%

Resona Bank 3,500 mil yen 2.7%

AEON BANK 3,600 mil yen 2.8%

Development Bank of Japan 4,600 mil yen 3.6%

Hyakugo Bank 2,400 mil yen 1.9%

Hiroshima Bank 1,400 mil yen 1.1%

Mie Bank 3,800 mil yen 2.9%

77 Bank 1,000 mil yen 0.8%

Chiba Bank 300 mil yen 0.2%

Nippon Life Insurance 1,000 mil yen 0.8%

Meiji Yasuda Life Insurance 1,300 mil yen 1.0%

The Daisan Bank 500 mil yen 0.4%

Shinsei Bank 1,300 mil yen 1.0%

The Juroku Bank 300 mil yen 0.2%

Momiji Bank 300 mil yen 0.2%

The Gunma Bank, Ltd. New! 500 mil yen 0.4%

The Yamaguchi Bank, Ltd. New! 500 mil yen 0.4%

Total 129,000 mil yen 100.0%

Risk Management

Grew into a REIT resistant to unexpected disasters

22

3,010 yen

3,066 yen

当初予想実績

Extraordinary losses related to disasters:

275 million yen

Insurance money received (extraordinary profit):

153 million yen

Reversal of distribution reserves:122 million yen

Diversified investments to avoid concentration on particular

areas and properties

1 Diversified investments

Coverage by earthquake insurance for domestic properties

Insurance amount for earthquake insurance: 3.0 billion yen

(deductibles: 100 million yen)

Fire insurance covers storm and flood damages

2 Coverage by fire insurance and earthquake insurance

Reserved 520 million yen in the 9th fiscal period.

Measures can be taken if unpredictable events occur.

３ Accumulation of distribution reserves

Free cash flow of approximately 7.0 billion yen per year.

Measures can be taken if unpredictable events take

place.

4 Strong cash flow

Measures

Extraordinary

losses related to

disasters ▲155 yen

Insurance

money received

(extraordinary profit)

+86 yen

eversal of

distribution

reserves

+69 yen

Increase due

to improved

performance ＋56 yen

Removed the impact of distributions through a range of measures

Effects of distributions

in the 12th period

Investment area

(as of the end of the 12th fiscal period)

23 prefectures and Malaysia

(14 prefectures when listed)

ResultInitial forecast

Strategic cash management -Cash Generation Skills-

A free cash flow of approximately 7.0 billion yen per year to be used as funds for the implementation of a range of strategies.

23

Free cash flow for the respective fiscal periods (Note)

Main track records on the utilization of cashExternal

Growth

写真

Allocated partially to the acquisition of overseas properties

3,052 million yen

(Note) Free cash flow = Depreciation - Capital Expenditures

Jan 2019 Period

Measures taken in

relation to disasters

Acquisition of the extended building at Kofu Showa

7,155 million yen

Internal

Growth

Renewal in Ota

199 million yen

(Millions of yen)

Renewal in Suzuka

296 million yen

Distributions in excess of earnings for the fiscal period ended July 31, 2016

1,898 million yen

Jul 2018 PeriodJan 2018 Period Jul 2019 Period Jan 2020 Period

DepreciationCapital

ExpendituresFree cash flow

Financial Strategy- Implementation of Measures That Contribute to Growth in Distributions -

Seek to maximize unit-holder value by considering the efficient utilization of funds.

24

Acquisition of

properties

Investment for

revitalization

LTV control

Investment in newly acquired

properties

Boosting of revenues and

competitiveness of existing properties

owned

Contribution to the enhancement of

unit-holder value through continuous

value increasing efforts

Improvement

of

profitability

Stabilization

of financial

position

Capital

policy

Response to

unpredictable

events

Unit buy-backs

Distributions in

excess of

earnings

Reduction in the cost of debt

Enhancement in available capacity

Response to natural disasters and

unexpected events caused by

natural disasters and payment of

temporary expenses

Increased capital efficiency

Will consider implementation if

the P/NAV continues to be at a

level significantly below one and

sufficient excess funds are

available

Management of distributions

(i) If utilized for acquiring properties,(assuming the acquisition of a property whose NOI yield is 3.9%

after depreciation)

(ii) If interest-bearing debt is utilized for repayment,

(assuming the repayment of borrowings whose average interest

is 0.8% per year.)

(iii) If utilized for unit buy-backs and depreciation(assuming the implementation of unit buy-backs for the

investment unit price of 106,771 yen (Note) and cancellation)

(Note) An investment unit level that stands at 0.8 times per

133,464 yen, or NAV per unit at the end of the 12th fiscal period.

Increase of approx. 54 yen

per unit LTV remains

unchanged.


per unit LTV decreases 0.77%


per unit LTV increases 0.63%.

A simulation on the result of fund utilization based on

the assumption of using free cash of 5.0 billion yen

III. Forecasts of Performances and Future Objectives

【13th term: Major factors of changes from the previous period】【13th term: Major factors of changes from the forecast】【14th term: Major factors of changes from the previous period】

No. Main items Amount (million yen) No. Main items Amount (million yen) No. Main items Amount (million yen)

Rent income from extended properties

(Full-period contribution)+47

Rent increase due to investment

for revitalization+5 Repairs and maintenance expenses ▲14

Income from dividends of overseas SPC

(Exchange rate factors)▲12

Income from dividends of overseas SPC

(Exchange rate factors)▲2 Depreciation ▲23

Insurance revenue ▲27 Repairs and maintenance expenses +28 Fund costs +3

Taxes and dues for properties acquired +89 Depreciation ▲12

Repairs and maintenance expenses +59 Fund costs +15

Depreciation +17 Loan related costs ▲106

Fund costs +27 Investment corporation bond related costs +63

Loan related costs ▲65

Investment corporation bond related costs +23

Depreciation of investment unit issuance expenses ▲31

④ Difference from income revenue posted in the pervious period ▲152

⑤ Difference from disaster factors reflected in the previous period +274

⑥ Reversal of reserves posted in the previous period ▲122

⑤⑧

⑥

②

⑦

③

①

Financial Forecasts

Achieved the medium-term objective of distributing an ordinary dividend of approximately 3,000 yen.

26


13th Fiscal Period Ended January 2019 14th Fiscal Period Ended July 2020

ResultForecast

Announced on Jan. 14, 2019vs. Previous Period

ForecastAnnounced on Sep. 12, 2018 vs. Forecast

ForecastAnnounced on Jan. 14, 2019

vs. Previous Period

(A) (B) (B-A) (C) (B-C) (D) (D-B)

Operating Revenues (Millions of yen) 16,329 16,334 ① +5 16,331 ⑤ +3 16,335 -

Operating Expenses (Millions of yen) 9,993 10,186 ② +192 10,149 ⑥ +36 10,154 ⑧ ▲31

Operating Income (Millions of yen) 6,335 6,148 ▲187 6,181 ▲33 6,180 +32

Ordinary Income (Millions of yen) 5,448 5,333 ③ ▲115 5,318 ⑦ +14 5,333 -

Extraordinary income (Millions of yen) 152 - ④ ▲152 - - - -

Extraordinary Loss (Millions of yen) 274 - ⑤ ▲274 - - - -

Net Income (Millions of yen) 5,325 5,332 +6 5,313 +19 5,332 -Reversal of dividend reserves

(Millions of yen) 122 - ⑥ ▲122 - - - -

Distributions per Unit (yen) 3,066 3,000 ▲66 2,985 +15 3,000 -

NOI (Millions of yen) 11,553 11,423 ▲130 11,451 ▲28 11,435 +12

(Note) The number of investment units issued for each period is 1,777,347.

Activities to Achieve Sustainability - AEON Group and AEON REIT -

Will seek to take proactive actions in collaboration with the AEON Group

27

AEON GROUP

Environment

Planted 11.66 million tress(Cumulative number of trees planted at the end of February 2018)

AEON Carbon-free Vision 2050Will reduce CO2 emissions 35% by 2030 from the level in 2010

and achieve zero emissions by 2050.

Reduction in food disposalsWill collaborate with stakeholders including customers and

create a resource-recycling society.

Society

AEON 1% Club FoundationPromote initiatives aimed to develop the next generation, promote friendships with foreign countries and sustain the development of local communities (succession of cultural heritage)

AEON Environmental Foundation Promote efforts to plant trees, preserve biodiversity and develop human resourcesin the environmental field.

Disaster prevention

Agreements on disaster preventionConcluded agreements with more than 850 localgovernments and private companies nationwide.

Collaboration with external partiesCollaboration with the Self Defense Force and Japan Airlines in case of an emergency.

AEON REIT

GRESB in 2018

Obtained the Green Star for the third straight year

Received DBJ’s certification for six properties

AEON Mall Itami Koya

AEON Mall Mito Uchihara

AEON Mall KYOTO

AEON Mall Kurashiki

AEON Mall Nogata

AEON Mall Morioka

Received CASBEE certification for two properties

AEON Mall Yamatokoriyama

AEON Mall Kagoshima

MSCI Japan ESG Select Leaders IndexIncluded from 2017

Indicator selected as an ESG indicator index for

GPIF’s passive investments

Corporate Governance CodeEstablished the code of an asset management company ahead of other companies in March 2016

As of the end of

the12th fiscal period 3,300 yen

3,000 yen

Future Growth Objectives

Will steadily implement growth strategies by leveraging strong,

free cash flows and aiming to achieve an ordinary dividend of 3,300 yen.

28

Summary of growth strategies

External Growth

Implement selected investments from many pipelines in the AEON Group via negotiated transactions

Acquire top-class stores in each area that are resistant to changes in the business environment

Internal Growth

Maintain and enhance the competitiveness of facilities through the Group’s collaborative implementation of effective investments

Achieve not only stable rents through matter lease agreements but rent increases through revitalization

Financing policy

Facilitate the diversification of financing methods to respond to changes in the business environment in the future

Further stabilize financial management through efforts to extend and fix the term of interest-bearing debt

Growth objectives

As of the end of

the12th fiscalperiod 500.0billion yen362.4 billion yen

(Note) The Asset Management Company does not guarantee the amounts presented as ordinary distributions and asset size, which are management targets set by the Company.

Asset sizeOrdinary distributions

Seek to expand the asset size steadily by making

selected investments in response to market

conditions.

Aim to meet the medium-term objective through a

range of measures by leveraging strong cash flows.

Messages from the Management Team

29

In charge of Investment

Management Department.

and Asset Management

Department.

In charge of Business

Administration Department.,

Accounting Department.

and Financial and Planning

Department.

Career in brief

Mr. Shiozaki joined Jusco Co., Ltd. (currently, AEON

Co., Ltd.) in 1977. He engaged in real estate-related

operations for approximately 25 years while

developing his career at AEON Kosan Co., Ltd.

(currently, AEON Mall Co., Ltd.) and Rock

Development Co., Ltd. (currently, AEON TOWN Co.,

Ltd.). He has extensive experience in sales and

brokerage services, in addition to his current

assignment that he has been engaged in since the

dawn of the securitization of domestic real estate at

the beginning of 2000. Mr. Shiozaki was appointed

President and Representative Director of the

Company in May 2016, after engaging in asset

management-related assignments as Director of the

Company, a position that he took on August in 2012.

Career in briefMr. Seki joined Juso Co., Ltd. (currently, AEON Co. Ltd.) in

1988. He was seconded to JAYA JUSCO STORES (currently,

AEON Malaysia) in 1995. Since 2000, Mr. Seki engaged in the

management of the Group’s overseas companies and

assignments related to Asian businesses and developer

business strategies. He became deeply involved in the

establishment of AEON Reit as an Auditor and a Director of the

Company in 2012 and 2013, respectively. After gaining his

career as an Executive Officer of AEON Retail Co., Ltd. while

concurrently serving as the General Manager of Developer

Department and General Manager of President’s Office, he was

appointed Director of the Company in 2018.

Career in briefMr. Arisaka joined The Dai-Ichi Kangyo Bank, Ltd. (currently,

Mizuho Bank, Ltd.) in 1983. He engaged in a range of

assignments including corporate financing, fund and exchange

transactions, foreign bond transactions, market planning and

asset management. After developing his career through services

at the bank’s Hong Kong and New York branches and as the

assistant general manager of the International currency

exchange division, general manager of the North America office

of Global Alternative Investment Management division, and

general manager of the risk control operation division, Mr.

Arisaka took on the position of Compliance Officer and the

general manager of Compliance Department at the Company in

2012. He was appointed Director of the Company in 2015.

Compliance Officer

General Manager of

Compliance Department.

Career in briefMr. Ogusu joined The Fuji Bank Limited (currently, Mizuho Bank,

Ltd.) in 1984. He engaged in a variety of assignments such as

financing for U.S. and domestic real estate properties, corporate

sales for large real estate companies and auditing of operations.

He took on the position of the manager of IR and planning

group of Finance and Planning Department at the Company in

2012. He played a leading role in the establishment of IR

operations even before the Company was listed. He assumed

the position of Compliance Officer and general manager of

Compliance Department, and became Director of the Company

in 2016.

Yasuo Shiozaki

President and Representative DirectorMessage from Representative Director.

Director

Nobuaki Seki

Director

Tetsuya Arisaka

Director

Yasushi Ogusu

Five years have passed since AEON REIT was listed in November 2013.

Thanks to your support, we recorded successful results for the 12th fiscal

period.

Despite many natural disasters such as earthquakes and typhoons during the

period, we achieved distribution of 3,066 yen per unit, which was 56 yen

higher than the 3,010 yen expected at the end of the previous period.

AEON REIT has been implementing various measures including earthquake

insurance to prepare for the risk of natural disasters. In addition, it succeeded

in enhancing revenues through the acquisition of the extended building at

Kofu Showa and reducing financing costs through the refinancing and

issuance of retail bonds. Going forward, the Company will continue to

manage its assets to achieve stable distributions on a medium- to long-term

basis.

Your continued support is greatly appreciated.

Appendix １ Characteristics of AEON REIT

AEON Group Profile

31

●General Financing

Business 4.5%

Operating Revenue

8.39 trillion yen

●GMS Business 34.4%

●SM Business 36.1%

●Drugstore/Pharmacy

Business7.8%

●Shopping Center

Development Business 3.7%

●Service/Specialty Store Business

8.6%

●International Business 4.7%

AEON’s Top salesbusiness

domains

● Sales from general merchandising stores: 3.1 trillion yen

● Sales from grocery supermarkets: 3.2 trillion yen

● Operating revenue from domestic shopping centers: 288.0 billion yen

Seven businesses promoted by the AEON Group to

support people’s daily lives (Note 1)

Continuous growth of the AEON

Group

AEON expanding into 14 countries globally (Note 2)

Aim to achieve 10 trillion yen and 340 billion yen in operating revenue and

operating income, respectively, by 2020.

10兆円

●GMS 584 stores ●SM 2,185 stores

●DS 568 stores ●HC 122 stores

●CVS 5,436 stores ●Specialty stores 4,324 stores

●Others 938 stores ●Mall-style SC 311 facilities

●NSC 162 facilities ●Financing 690 facilities

●Service 2,045 facilities ●Drugstores 4,376 stores

●Tasmania Ranch operated directly by AEON 1 facility

Total 21,742 stores/facilities

●GMS Business

●Shopping Center

Development Business

● General Financing Business

●Health & Wellness

Business

●SM Business

●Service/Specialty Store

Business● International

Business

(Note 1) Business compositions, sales and operating revenues are quoted from the AEON Report 2018.

(Note 2) The number of stores, operating revenues in the medium-term management plan and operating income targets are

quoted from the AEON Report 2018.

(Note 1)

Myanmar

Laos

Indonesia

Philippines

Korea

JapanAEON Group across

Asia and the world

Record high revenue for

8 consecutive fiscal periods8.39 trillion yen

8.70 trillion yen

10 trillion yen

Fiscal period

Medium-term management plan

(Note 2)

Australia

Singapore

India

Malaysia

Thailand

Vietnam

China

Cambodia

Company name Headquarters Sales

1 Walmart Stores USA 495,761

2 CVS Health USA 184,765

3 Amazon.com USA 177,866

4 Costco USA 126,171

5 Kroger USA 122,662

6 Walgreens Boots Alliance USA 118,214

7 Schwarz Gruppe Germany 116,312

8 The Home Depot USA 100,904

9 ALDI Germany 99,870

10 Carrefour France 94,714

11 Tesco UK 77,690

12 AEON Japan 77,458

13 Ahold Delaize The Netherlands 75,478

14 Target USA 71,879

15 Lowe’s USA 68,619

Company name Total operating earnings

1 AEON 8,390,012

2 Seven & i Holdings 6,037,815

3 Fast Retailing 1,861,917

4 Yamada Denki 1,573,873

5 Family Mart UNY Holdings 1,275,300

6 Isetan Mitsukoshi Holdings 1,268,865

7 Takashimaya 949,572

8 H20 Retailing 921,871

9 Don Quijote Holdings 828,798

10 Bic Camera 790,639

AEON Group’s Rankings

32

Retailer rankings by total domestic operating revenue in 2017 Top 15 retailers by global sales in 2017

(Note) Prepared by the Asset Management Company based on an article in the January

2019 issue of the Hanbai Kakushin, an industry magazine. Earnings are indicated

in millions of yen. Figures for Fast Retailing and Don Quijote Holdings show

earnings in FY2017/8 and FY2017/6, respectively. Figures for the other companies

show earnings in either FY2018/12 or FY2018/3.

(Note) Prepared by the Asset Management Company based on an article in the January 2019

issue of the Hanbai Kakushin, an industry magazine. Sales are indicated in millions of

dollars.

Realization of Growth Strategies through Collaboration with AEON Group

33

(Source) Prepared by the Asset Manager based on the information provided by AEON CO., LTD. and AEON Mall Co., Ltd. (as of Jan. 2019).Note: AEON REIT neither owns nor plans to acquire any of these properties as of now.

● Major Shopping Centers currently under development by AEON Group

● Major Shopping Centers developed by AEON Group

Tokai and Hokuriku● AEON MALL Takaoka Takaoka-shi, Toyama ● AEON MALL Tonami Tonami-shi, Toyama ● AEON MALL Shin-Komatsu Komatsu-shi, Ishikawa● AEON MALL Kakamigahara Kakamigahara-shi, Gifu

●(tentative name) AEON MALL Toki Toki-shi, Gifu● AEON MALL Hamamatsuichino Hamamatsu-shi, Shizuoka ● AEON MALL Odaka Nagoya-shi, Aichi ● AEON MALL Nagoya Chaya Nagoya-shi, Aichi ● AEON MALL Fuso Niwa-gun, Aichi ● AEON MALL Tokoname Tokoname-shi, Aichi● AEON MALL Nagakute Nagakute-shi, Aichi● AEON MALL Toin Inabe-gun, Mie ● AEON MALL Tsu minami Tsu-shi, Mie

Hokkaido and Tohoku● AEON MALL Around Asahikawa Station Asahikawa-shi, Hokkaido ● AEON MALL Shimoda Kamikita-gun, Aomori ● AEON MALL Moriokaminami Morioka-shi, Iwate ● AEON MALL Natori Natori-shi, Miyagi ●(tentative name) AEON MALL Rifu

(New Building) Rifu-cho,Miyagi● AEON MALL Akita Akita-shi, Akita ● AEON MALL Tendo Tendo-shi, Yamagata ● Shopping Mall Festa Koriyama-shi, Fukushima● AEON MALL Iwakionahama Iwaki-shi, Fukushima

Kanto and Koushinetsu● AEON MALL Tsukuba Tsukuba-shi, Ibaraki● AEON MALL Sanoshintoshi Sano-shi, Tochigi● AEON MALL Takasaki Takasaki-shi, Gunma● AEON MALL Urawamisono Saitama-shi, Saitama● AEON MALL Hanyu Hanyu-shi, Saitama● AEON MALL Kasukabe Kasukabe-shi, Saitama● AEON MALL Yono Saitama-shi, Saitama●(tentative name) AEON MALL Ageo Ageo-shi, Saitama● AEON MALL Makuhari New City Chiba-shi, Chiba● AEON MALL Kisarazu Kisarazu-shi, Chiba● AEON MALL Tamadairanomori Hino City-shi, Tokyo● AEON MALL Hinode Nishitama-gun, Tokyo● AEON Hadano Shopping Center Hadano-shi, Kanagawa●(tentative name) AEON MALL Hiratsuka Hiratsuka-shi, Kanagawa● AEON MALL Zama Zama-shi, Kanagawa● AEON MALL Nigataminami Nigata-shi, Nigata● AEON MALL Sakudaira Saku-shi, Nagano● AEON MALL Matsumoto Matsumoto-shi, Nagano

Chugoku and Shikoku●AEON MALL Tottorikita Tottori-shi, Tottori● AEON Matsue Shopping Center Matsue-shi, Shimane● AEON MALL Izumo Izumo-shi, Shimane● AEON MALL Okayama Okayama-shi, Okayama ● AEON MALL Hiroshima Fuchu Aki-gun, Hiroshima ● AEON MALL Hiroshima Gion Hiroshima-shi, Hiroshima● THE OUTLETS HIROSHIMA Hiroshima-shi, Hiroshima● AEON Town Houfu Hofu-shi, Yamaguchi ● AEON MALLTokushima Tokushima-shi, Tokushima● AEON MALL Takamatsu Takamatsu-shi, Kagawa● AEON MALL Niihama Niihama-shi, Ehime ● AEON MALL Imabarishintoshi Imabari-shi, Ehime● AEON MALL Kochi Kochi-shi, Kochi

Kyushu・Okinawa●(tentative name) The project Kitakyushu-shi, Fukuokaof Yahatahigashida

●AEON MALL Fukuokaito Fukuoka-shi, Fukuoka● AEON MALL Fukutsu Fukutsu-shi, Fukuoka● AEON MALL Yahatahigashi Kitakyushu-shi, Fukuoka● AEON MALL Sagayamato Saga-shi, Saga● AEON Daito Shopping Center Sasebo-shi, Nagasaki● AEON Yatsushiro Shopping Center Yatsushiro-shi, Kumamoto● AEON MALL Sankoh Nakatsu-shi, Oita● AEON MALL Miyazaki Miyazaki-shi, Miyazaki● AEON MALL Okinawa Rycom Nakagami-gun, Okinawa

AEON MALL Iwakionahama

THE OUTLETS HIROSHIMA

AEON MALL Tsu minami

● AEON MALL Osaka Dome City Osaka-shi, Osaka● AEON MALL Shijonawate Shijonawate-shi/Neyagawa-shi, Osaka● AEON MALL Sakaiteppoucho Sakai-shi, Osaka● AEON MALL Kobeminami Kobe-shi, Hyogo● AEON MALL Kashihara Kashihara-shi, Nara● AEON MALL Wakayama Wakayama-shi, Wakayama

Kinki● AEON MALL Kusatsu Kusatsu-shi, Shiga ● AEON MALL Kyotogojo Kyoto-shi,Kyoto● AEON MALL Kyoto Katsuragawa Kyoto-shi/Mukou-shi, Kyoto ● AEON MALL Rinkusennan Sennan-shi, Osaka● AEON MALL Dainichi Moriguchi

Investment Shift Program

Reforms Undertaken by the AEON Group

34

Asia Shift Program

Digital Shift ProgramRegional Shift Program

Spin off the food business to regional

companies.

Promote small and urban-style stores.

Facilitate manufacturing and retailing of food products and respond to needs for ready-to-eat or semi-

cooked foods against the backdrop of an increase in the number of the elderly and working women.

GMS reform – Make operation more professional and locally-oriented through the

establishment of specialized companies

SM reform — Top-selling companies by area after the integration of the

AEON SM business

Build a Process Center and open stores mainly in that vicinity.

Establish specialized companies for clothing,

housing/leisure and HBC, respectively.

Process Center

Increase the percentage of online sales by 17 times (0.7%

in FY2016 to 12% in FY2020).

Receiving items purchased online

at brick and mortar stores.

Investment in BOXED

Provision of

information

ShoppingFinancing/Payment

Local parties who open

shops and sell products

in the marketplace

Marketplace

Utilize automated

distribution systems and

data management as well

as AI technologies for

online shopping.

Increase the percentage of operating income by 3.8 times

in Asia (6% in FY2016 → 23% in FY2020).

(i) Raise net sales through online supermarkets.

(ii) Increase the total monetary amount of items sold in the marketplace

business.

(iii) Facilitate sales through the transfer of customers from online stores

to brick and mortar stores or vice versa. (Increase sales at brick and mortar stores by making online promotional efforts and

featuring smartphone coupons)

Offer multiple options to target

customers by strengthening product and

service lineups.

Acquisition of customers in different

income groups.

Accelerate a local-oriented management style to better

address needs in respective countries.

Investments totaling 500 billion yen will be made in IT, digitalization and

logistics (200 billion yen have been invested over the past three years).

AEON Financial Service

AEON DELIGHT

Customize Japanese-style services to

suit local needs.

(Note) Prepared based on websites and explanatory materials of AEON Group companies.

Group company name Sales Area (after integration)

AEON Hokkaido 1,860Hokkaido area

MaxValu Hokkaido 1,240

MaxValu Tohoku 1,030Tohoku area

AEON Retail Tohoku 980

MaxValu Tokai 2,170Tokai & Chubu area

MaxValu Chubu 1,720

Daiei 2,800Kinki area

Kohyo 1,120

MaxValu Nishinihon 2,690Chugoku & Shikoku

areaMarunaka 1,780

Sanyo Marunaka 1,220

AEON Kyushu 2,140

Kyushu areaMaxValu Kyushu 1,750

AEON Store Kyushu 540

Area Priority measures

Vietnam

Concluded a memorandum with the Hanoi

municipal government.

Development of large-scale shopping

centers.

IndonesiaEfforts to further promote Halal-certified

products, among other products.

ChinaEfforts to increase the number of stores in

Guangzhou.

Expansion of Network of Support -Agreement Companies

Support agreement signed with 11 companies in the AEON Group in order to utilize the collective strengths of the Group

35

Sponsor

Pipeline support companies

AEON Co., LTD.

Shopping center management providers


AEON Mall Co., Ltd.

AEON Hokkaido Corporation


AEON RYUKYU CO., LTD.

AEON TOWN Co., Ltd.

Pipeline support company

Logistics facilities management support

company

Overseas support companies

AEON BIG (M) SDN.BHD.

AEON CO.(M) BHD.

Trademark license agreement

Sponsor support agreement

Shopping center management agreements

Logistics facilities management agreement

Pipeline support agreements Memorandum of understanding on

investments in properties in Malaysia

Major terms of such agreements

Stable portfolio growth over the medium-to-long term

AEON REIT Investment CorporationAEON Reit Management Co., Ltd.

Integrated AEON Group’s capabilities

⚫ Provision of information on properties owned

⚫ Grant of preferential negotiation rights on the retail properties operated by AEON Group

⚫ Provision of information on potential sales of properties owned by third parties

AEON GLOBAL SCM CO.,LTD.

The Daiei, Inc.

AEON REIT positions retail properties as the infrastructure assets of local communities and invests in those properties to support

the rich life of people living there.

AEON REIT aims to create a rich life for people and contribute to local communities through investment activities and implements

stable asset management on a medium- to long-term basis.

Basic Philosophy and Basic Policy

36

(Note) Refers to retail properties, logistics facilities and related facilities. Retail properties refer to facilities containing retail businesses and other merchandising businesses, entertainment and amusement

facilities and other facilities that attract customers (including parking lots and equipment and systems for logistics). Logistics facilities refer to warehouses and other storage facilities for the distribution and

transport of merchandise and other goods.

AEON REIT carries out a growth strategy based on the policy of maintaining a mutually beneficial relationship with the AEON

Group (Note), thereby aiming to maximize value for unitholders.

Basic Philosophy

Basic Policy

(Note) Refers to the group comprised of the holding company AEON CO., LTD. and its 291 consolidated subsidiaries and 31 equity-method associates (as of February 28, 2018).

(i) Acquire retail properties

from the AEON Group

(ii) Expand the asset size, make asset management

more stable and improve financing capabilities

(iii) Increase distribution and improve

unitholder value

(ii) Make growth investments by

leveraging funds obtained from

property sales

(iii) Increase revenues and

enhance corporate value

(i) Sell retail

properties to the REIT

Portfolio Policy

37

TypeInvestment ratio (Note 1)

Domestic85% or more

OverseasNo more than 15%

Large-scale retail

property

(i) Super regional shopping center (SRSC): More than one anchor tenant with over 200 specialty stores

80% or more(ii) Regional shopping center (RSC)

: A large GMS with over 50 specialty stores

(iii) Community shopping center (CSC): A GMS, discount store and large grocery store with 20 to 50 specialty stores

Other retail property(Small- and medium-scale)

Neighborhood shopping center (NSC): A grocery store with 10 – 30 specialty stores

No more than 20%Supermarket (SM): A grocery supermarket with a focus on the selling of high purchase frequency

commodities, such as food and household good

Logistics facility No more than 10%

(Note 1) Calculated based on acquisition prices.

(Note 2) Indicates Indonesia, Malaysia, Philippines, Singapore, Thailand, Brunei, Vietnam, Laos, Myanmar and Cambodia.

Anchor tenant

Anchor tenant

Mall area

(Specialty store area)

Overseas investment areas Overseas investment targets

Countries and regions with strong economic growth

prospects in the medium to long term, such as Malaysia in

the ASEAN region(Note 2)

and China

Retail properties leased to and managed and operated by

the AEON Group comprehensively, in principle, under

master lease contracts

AEON MALL Mitouchihara

(Super regional shopping center)

: Logistics facilities that support a supply chain, an integral part of the retail business

The AEON Group’s stable management of properties supports the stable payment of distributions.

38

Fixed and variable rents

Anchor tenants Other specialty stores

Fixed rent (Note)

Rental and operational expenses, etc.

End tenants: Sales

Master lessee: Rent income

AEON REIT: Operating revenue

Distributions

Lease Structure (Conceptual Image of Capital Flows)

(Note) The amount equivalent to the fixed asset tax

and city planning tax will be paid as additional

variable rent.

Strategic Cash Management and a Stable Financial Position

39

In the large-scale retail properties that we target for investment, the depreciation expense accounts for a large percentage of the property value.

The percentage of depreciation expenses in a real estate price tends to be higher than office buildings and distribution facilities due to a shorter period of depreciation in accounting.

By deploying internal reserves in an amount equal to the depreciation expense, we plan to increase capital efficiency and stabilize cash flow.

Measures aimed at stabilizing financial position

Investment contributing to an increase in income

Appropriation of funds to acquire new properties

Response to natural disasters and unexpected events caused by natural disasters, payment of temporary expenses, etc.

Capital strategies that protect unitholder interests

Investing in revitalization of property to boost revenues

and competitiveness

Reduction in the cost of our debt by repayment of

interest-bearing debt

Distributions in excess of earnings

Increased capital efficiency through unit buy-backs

Response to other unpredictable events

Growth

driven by

efficient

use of

capital

Trends in Results for Five-Year Period After Listing

Asset size has been growing steadily and distributions have been paid stably since the REIT was listed.

40

2nd Fiscal Period

3rd Fiscal Period

4th Fiscal Period

5th Fiscal Period

6th Fiscal Period

7th Fiscal Period

8th Fiscal Period

9th Fiscal Period

10th Fiscal Period

11th Fiscal Period

12th Fiscal Period


(yen)686 2,461 2,473 2,724 2,790 1,450 3,019 2,926 3,029 2,956 3,066

NAV per Unit(yen)

110,456 112,635 115,939 122,057 126,169 123,547 127,912 127,358 128,301 130,957 133,464

Net assetsper unit（yen)

102,108 103,883 103,896 109,536 109,603 107,959 109,528 111,457 111,445 111,372 111,413

Depreciation（billions of yen)

1.1 2.2 2.2 2.6 2.6 3.1 3.3 4.1 4.3 4.3 4.4

158.3 158.9 158.9

194.3 194.3

249.2268.5

330.6

355.1 355.3 362.4

0.0

100.0

200.0

300.0

400.0

2nd Fiscal

Period

3rd Fiscal

Period

4th Fiscal

Period

5th Fiscal

Period

6th Fiscal

Period

7th Fiscal

Period

8th Fiscal

Period

9th Fiscal

Period

10th Fiscal

Period

11th Fiscal

Period

12th Fiscal

Period

Asset sizeBillions of yen

Property name

AEON Taman Universiti Shopping Centre

AEON MALL Seremban 2

Acquisition price

20 million RM 215 million RM

Appraisal value

21.3 million RM 233 million RM

Date of completion

2002年 2005年

Appraised NOI yield

7.2% 6.8%

TopicsAchieved an increase in monthly rent

of 7.35% over current rent linked to

CPI

23.8%

69.7%

6.5%

0-14歳 15-64歳 65歳以上

Initiatives leveraging AEON REIT’s strengths①

Acquired properties from AEON Malaysia, which has been operating locally for more than 30 years.Rents are CPI-linked, reflecting Malaysia’s growth potential.

41

Fixed rent agreement

(10-year lease term)

CPI-linked rent revision

(every 3 years)

Net lease

* Only AOEN MALL Seremban 2

Changes in CPI in Malaysia and Japan

Total net sales of AEON Co. (M) BHD

Population 32,020,000

Area

Approx. 330,000 km2 (approx. 90% of the area of

Japan)

GDP per capita (nominal) $9,755

The GDP per capita increased approximately 2.3 times compared to the level in 2000 and is expected to continue growing sharply going forward.

The median age is 28.6 years. The young generation and working-age people account for more than 90% of the population.

Overview of Malaysia✓ Has been operating business in

Malaysia for more than 30 years,

has established a solid position as a

retailer, and has knowledge of laws,

taxation, accounting, etc. related to

real estate.

✓ Is therefore able to purchase

properties after verifying adequate

track records.

(Millions of RM)

Properties held by AEON REIT in Malaysia

Outline of Master Lease Agreement

Age composition

Source：SPEEDA

Source：Department of Statistics MalaysiaSource：IMF - World Economic Outlook Databases

0-14years old

15-64years old

65years old and over

75

85

95

105

115

125

135

145

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018E

2019E

2020E

2021E

2022E

2023E

CPI(Malaysia)

CPI(Japan)

2,500

3,000

3,500

4,000

4,500

FY2013 FY2014 FY2015 FY2016 FY2017

Overview of AEON Malaysia (AEON Co. (M) BHD)

Initiatives leveraging AEON REIT’s strengths② - Logistics facility -

Invested in logistics facilities, an integral part of commercial distribution. Currently owns three properties.Seeks to incorporate growth potential and profitability in the Group’s overall supply chain.

42

type merchandise function Kanto Region Kansai Region

Process Center Fresh food

Fresh food processing centerProduction and processing of fresh food that can not be processed in each store and supply raw materials for cooking at each store

Regional Distribution Center

High rotation products

Inventory storage baseMainly as a room temperature facility, responsible for temporary storage and supply of goods frequently replenished at each store

Customers

community

infrastructure assets

Stores Logistics facility

Daiei-Kawasaki Process Center

Daiei-IbarakiProcess Center

AEON Minami-Osaka RDC

Initiatives leveraging AEON REIT’s strengths③- property replacement and acquisition of the extended building -

Acquired the extended building at Kofu Showa Acquisition of AEON MALL Kyoto Gojo

Improved portfolio quality with the replacement of properties and acquisition of the extended building of a property owned by the REIT.

⚫ Acquisition of complete ownership of land in Kyoto,

where land is scarce

⚫ Located in a populated housing area in Kyoto City whose population of trading area is approx. 340,000 in the 3-kilometer area with a high market density

AEON MALL Kumamoto AEON MALL Kyoto Gojo

⚫ Converted the property into the area’s overwhelmingly Number One mall in terms of both floor area and the number of tenants.

⚫ Sales rose 1.6 times at specialty stores after the acquisition of the extended building.

22,582

32,044

46,222

0 25,000 50,000 75,000

商業施設B

商業施設A

甲府昭和

Before expansion

22,582

32,044

69,583

0 25,000 50,000 75,000

商業施設B

商業施設A

甲府昭和

After expansion

Extended building

43

Store areas in the 10 km trading areaNeighborhood-based Commercial Facilities

Parking lots for approx.2,000 bicyclesFor the large local population

Food sales area, Kyo-Deli, selling fresh foodProvided by local companies

Asset

replacement

Kofu showa

Commercialfacility A

Commercialfacility B

Kofu showa

Commercialfacility A

Commercialfacility B

（Source） Prepared by the Asset Manager based on the market report prepared by

BAC Urban Projects Co.,Ltd..

北海道・東北

関東

東海・北陸・中部

近畿

中国・四国

九州・沖縄

マレーシア

Portfolio Highlights (as of January 31, 2019)

44

Number of properties 40

Total acquisition price ¥362.4bn

Portfolio appraisal NOI yield before depreciation 6.4%

Portfolio appraisal NOI yield after depreciation 3.9%

Average remaining lease term 16.2 years

Average building age 14.7 years

Total leasable area 3,430,000m²

Occupancy rate 100%

By property type

Portfolio Data

By location

Summary of Portfolio

8.7%

34.8%

12.6%

26.1%

9.5%

6.8%

1.6%

■SRSC 7.7％(Super regional shopping cente)r

■RSC 79.7％（Regional shopping center）

■CSC 4.0％（Community shopping center）

■L 8.5％（Logistics facility）

Kanto

Hokkaido・Tohoku

Tokai・Hokuriku・Chubu

Kinki

Chugoku・Shikoku

Kyushu・Okinawa

Malaysia

Portfolio Map (as of January 31, 2019)

45

Malaysia

● M - 1

Hokkaido and Tohoku

Kanto

Kyushu and Okinawa

40properties(domestic38, overseas2）

Asset Size ¥362.4bn

SRSC: Super regional shopping center

RSC: Regional shopping center

CSC: Community shopping center

Logistics facility

16 17 16

1 2

1 2 17

2418 19

24

1

2

1819

3 4

5 22 1 1

25

21

4

3

5

22

11

25

13

13

Kinki, Chugoku and Shikoku

20

23

6 7

8

9 10 11

211512

10

1112

9 15

21

27

27

28

28

29

2

2

26

7

29

8

623

20

● M - 2

Tokai, Hokuriku and Chubu

26

30

30 2

23

3

3

331

31

M - 1 AEON Taman

Universiti Shopping Centre

M - 2 AEON MALL SEREMBAN 2

ASEAN region

AEON MALL Nogata

AEON MALL Kagoshima

AEON MALLKyoto Gojo

AEON MALL Ayagawa

AEON MALL Kasai-Hojo

AEON MALL Hiezu

AEON MALL KYOTO

AEON MALL Kurashiki

AEON MALL Yamatokoriyama

AEON MINAMI-OSAKA RDC

Daiei-Ibaraki Process Center

AEON MALL Ogaki

AEON MALL Suzuka

AEON MALL Meiwa


AEON MALL Itamikoya

AEON KireuriwariShopping Center

AEON MALL Yokkaichi-Kita

AEON MALL Kahoku

AEON MALL Morioka

AEON MALL Ishinomaki

AEON MALL Sapporo-Hiraoka

AEON MALL Kushiro-Showa

AEON MALL Rifu

AEON MALL Yamagata-Minami

AEON MALL Tomakomai

AEON Lake Town mori

AEON Lake Town kaze

AEON MALL Mitouchihara

AEON MALL Ota

AEON Sagamihara Shopping Center

AEON MALLChiba-New Town

（Mall, Cinema and Sports building)

AEON Chigasaki-Chuo

Shopping Center


AEON MALL Oyama AEON MALL Tsuchiura AEON MALL Shimotsuma AEON STYLE

Kemigawahama

Trend of Investment Unit Price

46

AEON REIT Investment Unit Price and Trading Volume

0

10,000

20,000

30,000

40,000

50,000

100,000

110,000

120,000

130,000

140,000

150,000

160,000

170,000

180,000

190,000

Nov 2

013

Feb 2

014

May 2

014

Aug 2

014

Nov 2

014

Feb 2

015

May 2

015

Aug 2

015

Nov 2

015

Feb 2

016

May 2

016

Aug 2

016

Nov 2

016

Feb 2

017

May 2

017

Aug 2

017

Nov 2

017

Feb 2

018

May 2

018

Aug 2

018

Nov 2

018

(Units)(Yen)Trading Volume (Right axis) AEON REIT Investment Unit Price (Left axis)

Framework for Maximizing Unitholder Value

47

Management Fee Structure Calculation Method

Management

fee

Manage-

ment fee I Total assets × 0.3% (maximum rate)× {No. of operating days / 365}

Manage-

ment fee IIDPU(Note1) before deducting Management fee II × NOI(Note2) × 0.001%

(maximum rate)

Acquisition fee Acquisition price × 0.5% (maximum rate)

[Related party transactions: Acquisition price × 0.25%(maximum rate) ]

Disposition fee Disposition price × 0.5% (maximum rate)

[Related party transactions: no disposition fee paid]

• Ownership of investment units by AEON Group

• Co-ownership of properties with AEON Group

Ownership interest 19.8％ (as of January 31, 2019)

Co-owned properties 3 (as of January 31, 2019)

Drafting of proposal

by the responsible

department

Approval by the

Compliance Officer

Report to the Asset

Manager’s board of

directors

* An outside expert must attend the meeting and agree in

order for the resolution to pass.

Transparent Decision-Making Process

Further Aligning the Interests of Unitholders and the AEON GroupIntroduction of an Asset Management Fee Structure Linked to

Distributions per Unit

Introduction of Cumulative Investment Unit Purchase Program

Deliberation and

resolution by the

Compliance

Committee*

Deliberation and

resolution by the

Investment

Committee*

Approval by

Investment

Corporation

(Note 1) Total assets are calculated by subtracting the amount of capital contributions, etc. related to the overseas real estate

holding corporation from net assets recorded on the balance sheet for the fiscal period directly preceding the relevant

operating period and then adding the total assets of the overseas real estate corporation to the balance.

(Note 2) NOI refers to total real estate leasing revenues for the relevant fiscal period less real estate leasing expenses (excluding

depreciation and loss on retirement of non-current assets)

Disapproved

ReturnedDropped or instructions

given to modify content

Dropped or instructions

given to modify content

• We introduced a program on May 1, 2014, that enables the acquisition of AEON

REIT’s investment units, using the cumulative investment unit purchase program

through securities firms, for directors and employees of AEON REIT and the Asset

Manager.

• The program will help to further raise awareness towards enhancing the value of

AEON REIT’s investment unit price and improving business performance, and

provide greater financial motivation in line with the interests of the unitholders.

48

Portfolio formation mainly led by large-scale retail properties Implementation of new redevelopment strategy cooperating with Sponsor Group

Expecting to realize internal growth by establishing WIN-WIN relations

Development

Approach to disaster

◼ Following the Kumamoto Earthquake, AEON REIT obtained

earthquake insurance for its portfolio to ensure stable management

and distribution in the future. The insurance covers the 38

properties in Japan (it does not cover the 2 properties overseas).

◼ Insurance amount:¥3.0 billion(exemption from responsibility:

¥100 million)

◼ Removed impact on distribution through coverage by earthquake

insurance and the reversal of distribution reserves to deal with

unexpected disasters, such as typhoon and earthquake, that

occurred during the respective fiscal periods.

Diversification of property

acquisition methods

Acquisition of completed building+ Internal growth

Expanding the portfolio to include logistics facilities supporting AEON Group

Enhancing relations with Sponsor Group

Capitalizing on AEON Group’s overseas strategy

Major stores of AEON Group in Malaysia

Store renovation by investment revitalization and Enhancement of internal growth

◼ Enhancing internal growth by rent increase, continuing

investment in revitalization contributing to improve values

of retail properties and making efforts to maintain and

improve competitiveness.

AEON MALL Kumamoto

Practice of Strategies to Grow with Retail and Related Properties of AEON Group

AEON REIT will aim to achieve steady portfolio growth over the medium-to-long term by fully utilizing AEON

group’s comprehensive strengths - Developing, leasing, operating and managing AEON group’s various types of

retail properties etc.

Large-scale

retail properties

Entertainment

facilities

Community

facilities

Numerous

specialty stores

GMS, Dept. stores

(Core tenants)

◼ AEON Group’s large-scale retail properties

– top-class regional retail properties with

competitive advantage.

◼ Large-scale retail properties can deal with

changes by lifestyle and needs of

customers and secure position as top-class

regional retail related properties with

competitive advantage.

◼ Internal growth utilizing Sponsor’s know-how (abilities of retail properties development

& operation).

◼ Contributing to NOI increase without taking risk to attract tenants in re-development.

◼ Implementing drastic renovation for existing building as well, with development for

expanded building by AEON Mall Co., Ltd.

◼ AEON Mall Co., Ltd. can also enhance expansion strategy for excellent stores without

considering land acquisition cost.


Implementation of Growth Strategies Through Collaboration with AEON Group

◼ Establishing an efficient group supply chain intensification by

strategically locating and operating group logistics facilities.

Daiei-Ibaraki Process Center


AEON MINAMI-OSAKA RDC

◼ Realizing mobile property acquisition by

obtainment of preferential negotiation rights.

◼ Able to acquire property utilizing mobility

and available capacity by utilizing various

acquisition methods.

AEON MALL Kyoto Gojo

Increase in “Portfolio Quality”

◼ Acquisition of full-scale overseas properties as J-REIT’s first

practice

◼ In Malaysia where AEON Group has more than thirty-year track

records, planning to acquire AEON MALL Seremban2, full-scale-

mall-type RSC (approx. ¥5.2 billion).

Acquisition of full-scale overseas properties as J-

REIT’s first practiceAEON MALL Seremban2

Appendix２Supplement

Balance Sheet for the 12th Fiscal Period (as of January 31, 2019)

50

11th PeriodAs of July 31, 2018

12th PeriodAs of January 31, 2019



Amount(thousands of

yen)

Percentage(%)

Amount(thousands of

yen)

Percentage(%)

Amount(thousands of

yen)

Percentage(%)

Amount(thousands of

yen)

Percentage(%)

Assets Liabilities

Current assets 22,947,646 6.3% 18,386,990 5.1% Current liabilities 29,474,267 8.1% 17,294,840 4.8%

Cash and deposits 15,392,040 4.2% 9,504,798 2.6% Operating accounts payable 665,785 0.2% 950,743 0.3%

Cash and deposits in trust 7,093,497 2.0% 7,821,463 2.2% Current portion of long-term loans payable 27,000,000 7.4% 15,600,000 4.3%

Prepaid expenses 444,990 0.1% 592,920 0.2% Accounts payable - other 348,633 0.1% 365,061 0.1%

Income taxes receivable 12 0.0% 15 0.0% Accrued expenses 52,192 0.0% 63,109 0.0%

Consumption taxes receivable - 0.0% 459,376 0.1% Income taxes payable 605 0.0% 605 0.0%

Other 17,105 0.0% 8,417 0.0% Accrued consumption taxes 1,184,456 0.3%-

0.0%

Non-current assets 339,583,837 93.6% 343,656,762 94.9% Provision for loss on disaster 32,558 0.0% 126,859 0.0%

Property and equipment 283,281,269 78.1% 287,395,064 79.3% Other 190,036 0.1% 188,462 0.1%

Land 108,463 0.0% 108,463 0.0% Non-current liabilities 135,330,949 37.3% 146,981,777 40.6%

Buildings in trust, net 161,832,860 44.6% 165,989,732 45.8% Investment corporation bond 6,000,000 1.7% 21,000,000 5.8%

Structures in trust, net 446,948 0.1% 403,486 0.1% Long-term loans payable 117,000,000 32.3% 113,400,000 31.3%

Tools, furniture and fixtures in trust, net

7,571 0.0% 6,766 0.0% Tenant leasehold and security deposits 2,628 0.0% 2,628 0.0%

Land in trust 120,885,426 33.3% 120,885,426 33.4%Tenant leasehold and security deposits in trust

12,328,321 3.4% 12,579,149 3.5%

Construction in progress in trust - -1,188

0.0% Total liabilities 164,805,216 45.4% 164,276,617 45.3%

Intangible assets 49,235,482 13.6% 49,235,482 13.6% Net assets

Leasehold rights in trust 49,235,482 13.6% 49,235,482 13.6% Unitholders’ equity 197,947,907 54.6% 198,019,906 54.7%

Investments and other assets 7,067,085 1.9% 7,026,215 1.9% Unitholders’ capital, net 192,172,327 53.0% 192,172,327 53.0%

Shares of subsidiaries and associates 6,078,453 1.7% 6,078,453 1.7% Unitholders’ capital 195,698,024 53.9% 195,698,024 54.0%

Long-term prepaid expenses 978,170 0.3% 937,301 0.3%Other deduction from unitholders’ capital

△ 3,525,697 △1.0% △ 3,525,697 △1.0%

Lease and guarantee deposits 10,460 0.0% 10,460 0.0% Surplus 5,775,580 1.6% 5,847,579 1.6%

Deferred assets 221,639 0.1% 252,771 0.1% Distribution reserve 520,000 0.1% 520,000 0.1%

Investment unit issuance expenses 152,102 0.0% 83,417 0.0%Unappropriated retained earnings(undisposed loss)

5,255,580 1.4% 5,327,579 1.5%

Investment corporation bond issuance costs

69,537 0.0% 169,353 0.0% Total net assets 197,947,907 54.6% 198,019,906 54.7%

Total assets 362,753,124 100.0% 362,296,524 100.0% Total liabilities and net assets 362,753,124 100.0% 362,296,524 100.0%

Statement of Income for the 12th Fiscal Period (as of January 31, 2019)

51

（Breakdown of revenues and expenses related to real estate leasing business）

（Statements of Income）



Amount(thousands of yen)

Percentage(%)

Amount(thousands of yen)

Percentage(%)

Operating revenue 16,201,842 100.0% 16,329,586 100.0%

Rent revenue - real estate 16,025,515 98.9% 16,197,957 99.2%

Gain on sale of real estate 35,691 0.2% - -

Dividends received 140,636 0.9% 131,628 0.8%

Operating expenses 10,019,439 61.8% 9,993,899 61.2%

Expenses related to rent business 9,081,776 56.1% 9,068,931 55.5%

（Depreciation） (4,355,394) (26.9%) (4,424,597) (27.1%)

Asset management fee 734,982 4.5% 752,486 4.6%

Asset custody fee 18,728 0.1% 18,915 0.1%

Administrative service fees 56,438 0.3% 56,176 0.3%

Directors’ compensation 3,600 0.0% 3,600 0.0%

Taxes and dues 19,003 0.1% 6,617 0.0%

Other operating expenses 104,909 0.6% 87,172 0.5%

Operating income 6,182,403 38.2% 6,335,687 38.8%

Non-operating income 1,315 0.0% 1,478 0.0%

Interest income 84 0.0% 100 0.0%

Refund of unpaid distributions 1,134 0.0% 1,377 0.0%

Other 96 0.0% - -

Non-operating expenses 886,561 5.5% 888,637 5.4%

Interest expenses 570,881 3.5% 549,357 3.4%

Interest expenses on investment corporation bonds 24,619 0.2% 42,915 0.3%

Amortization of investment unit issuance expenses 68,684 0.4% 68,684 0.4%

Amortization of investment corporation bond issuance costs

3,621 0.0% 5,375 0.0%

Investment corporation bond issuance costs - - 19,714 0.1%

Borrowing related expenses 218,626 1.3% 202,275 1.2%

Other 127 0.0% 315 0.0%

Ordinary income 5,297,156 32.7% 5,448,528 33.4%

Extraordinary income - - 152,758 0.9%

Insurance income - - 152,758 0.0%

Extraordinary losses 37,459 0.2% 274,845 1.7%

Loss on disaster 4,900 0.0% 147,986 0.9%

Provision for loss on disaster 32,558 0.2% 126,859 0.8%

Income (loss) before income taxes 5,259,697 32.5% 5,326,441 32.6%

Income taxes - current 5,349 0.0% 605 0.0%

Total income taxes 5,349 0.0% 605 0.0%

Net income (loss) 5,254,348 32.4% 5,325,836 32.6%

Retained earnings brought forward 1,231 0.0% 1,742 0.0%

Unappropriated retained earnings (undisposed loss) 5,255,580 32.4% 5,327,579 32.6%



Amount(thousands of

yen)

Percentage(%)

Amount(thousands of

yen)

Percentage

(%)

Rent revenue–real estate16,025,515

100.0%16,197,957

100.0%

Rent15,951,087

99.5%16,117,260

99.5%

Other rent revenue–real estate74,427

0.5%80,697

0.5%

Expenses related to real estate leasing business9,081,776

56.7%9,068,931

56.0%

Property and facility management fees 43,192

0.3%42,846

0.3%

Repairs and maintenance expenses550,088

3.4%532,102

3.3%

Insurance expenses149,235

0.9%155,278

1.0%

Trust fees20,702

0.1%20,708

0.1%

Land rent paid2,048,376

12.8%2,020,929

12.5%

Taxes and dues1,862,128

11.6%1,818,691

11.2%

Depreciation4,355,394

27.2%4,424,597

27.3%

Water charges49,238

0.3%51,835

0.3%

Other expenses related to rent business 3,419

0.0%1,941

0.0%

ＮＯＩ11,299,133

-11,553,623

-

Rent revenue–real estate（＋）16,025,515

-16,197,957

-

Expenses related to real estate leasing business（▲）

▲ 9,081,776 - ▲ 9,068,931 -

Depreciation （＋）4,355,394

-4,424,597

-

Portfolio①

52

No. Region Property Name Location Acquisition DateTotal Leasable

Area（㎡）

Acquisition Price（millions of yen）

Book Value at the end of period（millions of yen）

Appraisal value(Note1)

（millions of yen）

Unrealized Profit&Loss(Note2)


PML value(Note3)

（％）

1Hokkaido/

TohokuAEON MALL Sapporo-Hiraoka Sapporo City, Hokkaido February, 2015 78,360.81 5,900 5,397 6,340 942 3.5%

2Hokkaido/

TohokuAEON MALL Kushiro-Showa Kushiro City, Hokkaido February, 2015 51,763.05 1,780 1,751 1,930 178 7.0%

3Hokkaido/

TohokuAEON MALL Tomakomai Tomakomai City, Hokkaido September, 2016 71,308.33 7,840 7,598 8,220 621 2.9%

4Hokkaido/

TohokuAEON MALL Morioka Morioka City, Iwate Pref. November, 2013 98,968.59 5,340 5,456 6,720 1,263 11.1%

5Hokkaido/

TohokuAEON MALL Ishinomaki Ishinomaki City,Miyagi Pref. November, 2013 60,682.20 6,680 6,085 7,080 994 3.9%

6Hokkaido/

TohokuAEON MALL Rifu Miyagi County, Miyagi Pref. February, 2015 66,478.91 2,560 2,326 2,770 443 6.9%

7Hokkaido/

TohokuAEON MALL Yamagata-Minami Yamagata City, Yamagata Pref. February, 2015 53,502.94 1,350 1,324 1,470 145 6.2%

8 Kanto AEON MALL Mitouchihara(Note 4) Mito City, Ibaraki Pref. November, 2013 159,997.49 16,565 14,527 17,413 2,885 0.7%

9 Kanto AEON MALL Tsuchiura Tsuchiura City, Ibaraki Pref. February, 2016 86,848.51 12,030 11,541 12,400 858 1.0%

10 Kanto AEON MALL Shimotsuma Shimotsuma City, Ibaraki Pref. September, 2017 58,402.66 9,552 9,300 9,820 519 2.7%

11 Kanto AEON MALL Oyama Oyama City, Tochigi Pref. August, 2016 47,872.33 6,280 5,936 6,450 513 4.5%

12 Kanto AEON MALL Ota Ota City, Gunma Pref. November, 2013 93,165.27 6,860 5,991 8,060 2,068 4.8%

13 Kanto AEON LakeTown mori(Note 5) Koshigaya City, Saitama Pref. November, 2013 205,711.70 21,190 19,185 23,800 4,614 2.0%

14 Kanto AEON LakeTown kaze(Note 5) Koshigaya City, Saitama Pref. November, 2013 127,183.81 6,730 6,055 7,880 1,824 1.7%

15 Kanto AEON MALL Chiba-Newtown Inzai City, Chiba Pref. March, 2016 107,425.97 12,190 11,794 12,400 605 2.7%

16 Kanto AEON STYLE Kemigawahama Chiba City, Chiba Pref November, 2017 29,947.62 3,748 3,636 3,860 223 2.6%

17 Kanto AEON Sagamihara Shopping Center Sagamihara City, Kanagawa Pref. November, 2013 75,056.62 10,220 9,804 11,000 1,195 13.4%

18 Kanto AEON Chigasaki-Chuo Shopping CenterChigasaki City, Kanagawa Pref. May, 2016 63,158.24 6,410 6,381 6,590 208 14.8%

19 Kanto Daiei-Kawasaki Process Center Kawasaki City, Kanagawa Pref. February, 2016 59,265.77 14,280 13,932 15,100 1,167 3.7%

20Tokai/Hokuri

ku/Chubu

AEON MALL Kahoku Kahoku City, Ishikawa Pref. February, 2016 70,948.14 9,940 9,314 10,600 1,285 11.4%

21Tokai/Hokuri

ku/Chubu

AEON MALL Kofu Showa(Note 6) Nakakoma County, Yamanashi Pref. February, 2016 99,772.38 15,489 15,743 17,300 1,556 2.5%、3.1%

22Tokai/Hokuri

ku/Chubu

AEON MALL Ogaki Ogaki City, Gifu Pref. November, 2013 64,246.26 4,950 3,845 4,960 1,114 9.2%

23Tokai/Hokuri

ku/Chubu

AEON MALL Suzuka Suzuka City, Mie Pref. November, 2013 125,253.74 9,660 9,321 10,100 778 7.5%

24Tokai/Hokuri

ku/Chubu

AEON MALL Meiwa Taki County, Mie Pref. November, 2013 44,193.80 3,290 3,181 3,650 468 4.6%

25Tokai/Hokuri

ku/Chubu

AEON MALL Yokkaichi-Kita Yokkaichi City, Mie Pref. February, 2015 41,447.33 2,210 2,209 2,630 420 6.0%

26Tokai/Hokuri

ku/Chubu

AEON MALL KYOTO Kyoto City, Kyoto Pref. February, 2015 136,468.45 21,470 20,276 22,500 2,223 13.5%

27Tokai/Hokuri

ku/Chubu

AEON Mall Kyoto Gojo Kyoto City, Kyoto Pref. July, 2018 86,984.79 13,333 13,369 13,600 230 11.6%

Portfolio②

53

No. Region Property Name Location Acquisition DateTotal Leasable

Area（㎡）

Acquisition Price（millions of yen）

Book Value at the end of period（millions of yen）

Appraisal value(Note1)


Unrealized Profit&Loss(Note2)


PML value(Note3)

（％）

28Tokai/Hokuriku/

ChubuAEON Minami-Osaka RDC Sakai City, Osaka Pref. February, 2017 50,197.06 9,870 9,716 10,600 883 12.5%

29Tokai/Hokuriku/

ChubuAEON Kireuriwari Shopping Center

Osaka City, Osaka Pref. September, 2017 27,603.46 4,394 4,434 4,640 205 9.3%

30Tokai/Hokuriku/

ChubuDaiei-Ibaraki Process Center Ibaraki City, Osaka Pref. October, 2017 50,783.58 6,810 6,854 7,290 435 12.6%

31Tokai/Hokuriku/

ChubuAEON MALL Kasai-Hojo Kasai City, Hyogo Pref. November, 2013 48,229.25 7,230 6,235 7,610 1,374 10.7%

32Tokai/Hokuriku/

ChubuAEON MALL Itamikoya Itami City, Hyogo Pref. February, 2016 122,944.71 16,860 16,364 17,600 1,235 1.8%

33Tokai/Hokuriku/

ChubuAEON MALL Yamatokoriyama Yamatokoriyama City, Nara Pref. February, 2016 105,230.88 14,500 13,631 14,800 1,168 12.0%

34Tokai/Hokuriku/

ChubuAEON MALL Hiezu Saihaku County, Tottori Pref. November, 2013 102,045.24 7,780 7,024 8,310 1,285 8.0%

35Tokai/Hokuriku/

ChubuAEON MALL Kurashiki Kurashiki City, Okayama Pref. November, 2013 157,274.78 17,890 16,553 19,700 3,146 0.5%

36Tokai/Hokuriku/

ChubuAEON MALL Ayagawa Ayauta County, Kagawa Pref. November, 2013 113,149.07 8,740 7,016 8,710 1,693 0.6%

37 Kyushu/Okinawa AEON MALL Nogata(Note7) Nogata City, Fukuoka Pref. November, 2013 151,969.51 11,246 9,888 13,300 3,411 0.1%

38 Kyushu/Okinawa AEON MALL Kagoshima Kagoshima City, Kagoshima Pref. February, 2016 132,341.35 13,400 12,975 13,900 924 6.1%

39 Overseas AEON Taman Universiti(Note8) Johor, Malaysia June, 2014 22,870.00658

(20millions of RM)645

(19millions of RM)567

（21mililions of RM）△77

(1miliions of RM）0.8%

40 Overseas AEON MALL SEREMBAN 2 Negeri Sembilan, Malaysia September, 2016 81,135.005,252

（215millions of RM）-

6,211（233millions of RM）

- 4.0%

Grand total (as of January 31, 2019 with 40 properties)

3,430,189.60 362,478 - 387,882 45,039 1.5%

(Note 1) The valuation date of the Appraisal value is January 31, 2019. (Note 2) Unrealized profit (loss) = Appraisal value − Book value at end of period(Note 3) Each property undergoes a seismic risk analysis to forecast the loss rate related to damage from the recurrence of an earthquake during a 475 year period. The number for Domestic Subtotal is not an average, but rather the PML value for the whole

domestic portfolio. (Note 4) Acquisition price, Book value at end of period, Appraisal value and Unrealized profit (loss) include a real estate portion (adjacent land portion that was additionally acquired on April 28, 2015).(Note 5) Acquisition price, Book value at end of period, Appraisal value and Unrealized profit (loss) describe AEON REIT’s pro-rata portion of the quasi-co-ownership interest (jun kyōyū-mochibun) in the trust beneficiary rights (40% for each property).(Note 6) Acquisition price, Book value at end of period, Appraisal value and Unrealized profit (loss) include a real estate portion (The Extended Building that was additionally acquired on September 3, 2018).

PML of the existing building and the extended building of AEON MALL Kofu Showa is 2.5%, 3.1%, respectively.(Note 7) Acquisition price of AEON MALL Nogata has decreased because of transfer of land.(Note 8) Acquisition price, Book value at end of period, Appraisal value and Unrealized profit (loss) describe AEON REIT’s portion of the amount equivalent to the rights (18.18%) similar to the co-ownership interest (kyōyū-mochibun) of the trust property for

which the rights were transferred from AEON CO. (M) BHD., which holds the whole property.

Appraisal Value for the 40 Properties held in 12th fiscal period

54

Propertynumber

Property name Appraisal agencyAcquisition price(Millions of yen)

Appraisal value (Millions of yen)Capitalization Rate based on direct capitalization

method (%)11th Period

(July 31, 2018)12th Period

(Jun 31, 2019)Difference

11th Period(July 31, 2018)

12th Period(Jun 31, 2019)

Difference

SRSC-1 AEON LakeTown mori (Note1) The Tanizawa Sōgō Appraisal Co., Ltd. 21,190 23,800 23,800 0 4.8 4.8 0.0

SRSC-2 AEON LakeTown kaze (Note1) The Tanizawa Sōgō Appraisal Co., Ltd. 6,730 7,880 7,880 0 5.2 5.2 0.0

RSC-1 AEON MALL Morioka Japan Real Estate Institute 5,340 6,720 6,720 0 6.6 6.6 0.0

RSC-2 AEON MALL Ishinomaki Japan Real Estate Institute 6,680 7,080 7,080 0 6.2 6.2 0.0

RSC-3AEON MALL Mitouchihara Japan Real Estate Institute 16,460 17,300 17,300 0 6.0 6.0 0.0

AEON MALL Mitouchihara (Land) Japan Real Estate Institute 105 113 113 0 - - -

RSC-4 AEON MALL Ota Japan Real Estate Institute 6,860 8,060 8,060 0 6.4 6.4 0.0

RSC-5 AEON Sagamihara Shopping Center Japan Real Estate Institute 10,220 11,000 11,000 0 5.2 5.2 0.0

RSC-6 AEON MALL Ogaki Japan Real Estate Institute 4,950 4,960 4,960 0 7.0 7.0 0.0

RSC-7 AEON MALL Suzuka Japan Real Estate Institute 9,660 10,600 10,100 ▲ 500 6.2 6.2 0.0

RSC-8 AEON MALL Meiwa The Tanizawa Sōgō Appraisal Co., Ltd. 3,290 3,660 3,650 ▲ 10 6.5 6.5 0.0

RSC-9 AEON MALL Kasai-Hojo Japan Real Estate Institute 7,230 7,690 7,610 ▲ 80 6.8 6.8 0.0

RSC-10 AEON MALL Hiezu Japan Real Estate Institute 7,780 8,500 8,310 ▲ 190 6.8 6.8 0.0

RSC-11 AEON MALL Kurashiki Japan Real Estate Institute 17,890 19,700 19,700 0 6.0 6.0 0.0

RSC-12 AEON MALL Ayagawa Japan Real Estate Institute 8,740 8,720 8,710 ▲ 10 6.5 6.5 0.0

RSC-13 AEON MALL Nogata Japan Real Estate Institute 11,246 13,200 13,300 100 6.4 6.4 0.0

RSC-15 AEON MALL KYOTO Japan Real Estate Institute 21,470 22,500 22,500 0 4.8 4.8 0.0

RSC-16 AEON MALL Sapporo-Hiraoka The Tanizawa Sōgō Appraisal Co., Ltd. 5,900 6,340 6,340 0 6.2 6.2 0.0

RSC-17 AEON MALL Kushiro-Showa The Tanizawa Sōgō Appraisal Co., Ltd. 1,780 1,930 1,930 0 6.8 6.8 0.0

RSC-18 AEON MALL Rifu The Tanizawa Sōgō Appraisal Co., Ltd. 2,560 2,770 2,770 0 6.4 6.4 0.0

RSC-19 AEON MALL Yamagata-Minami The Tanizawa Sōgō Appraisal Co., Ltd. 1,350 1,470 1,470 0 6.6 6.6 0.0

RSC-20 AEON MALL Yokkaichi-Kita The Tanizawa Sōgō Appraisal Co., Ltd. 2,210 2,630 2,630 0 6.2 6.2 0.0

RSC-21 AEON MALL Yamatokoriyama Japan Real Estate Institute 14,500 14,800 14,800 0 5.6 5.6 0.0

RSC-22 AEON MALL Chiba-Newtown Japan Real Estate Institute 12,190 12,400 12,400 0 4.9 4.9 0.0

RSC-23 AEON MALL Kofu Showa(note2) Japan Real Estate Institute 15,489 17,300 17,300 0 5.7 5.7 0.0

RSC-24 AEON MALL Tomakomai The Tanizawa Sōgō Appraisal Co., Ltd. 7,840 8,220 8,220 0 5.9 5.9 0.0

RSC-25 AEON MALL Oyama Japan Real Estate Institute 6,280 6,430 6,450 20 6.7 6.7 0.0

RSC-26 AEON MALL Itamikoya Japan Real Estate Institute 16,860 17,600 17,600 0 5.6 5.6 0.0

RSC-27 AEON MALL Kagoshima The Tanizawa Sōgō Appraisal Co., Ltd. 13,400 13,900 13,900 0 6.0 6.0 0.0

RSC-28 AEON MALL Tsuchiura Japan Real Estate Institute 12,030 12,400 12,400 0 6.3 6.3 0.0

RSC-29 AEON MALL Kahoku Japan Real Estate Institute 9,940 10,600 10,600 0 6.9 6.9 0.0

RSC-30 AEON MALL Shimotsuma Japan Real Estate Institute 9,552 9,820 9,820 0 6.4 6.4 0.0

RSC-31 AEON MALL Kyoto Gojo The Tanizawa Sōgō Appraisal Co., Ltd. 13,333 13,600 13,600 0 4.9 4.9 -

CSC-1 AEON Chigasaki-Chuo Shopping Center Japan Real Estate Institute 6,410 6,570 6,590 20 5.0 5.0 0.0

CSC-2 AEON STYLE Kemigawahama Japan Real Estate Institute 3,748 3,860 3,860 0 6.2 6.2 0.0

CSC-3 AEON KireuriwariShopping Center The Tanizawa Sōgō Appraisal Co., Ltd. 4,394 4,640 4,640 0 5.2 5.2 0.0

L-1 Daiei-Kawasaki Process Center Japan Real Estate Institute 14,280 15,000 15,100 100 4.9 4.9 0.0

L-2 AEON Minami-Osaka RDC Japan Real Estate Institute 9,870 10,300 10,600 300 4.9 4.8 ▲ 0.1

L-3 Daiei-Ibaraki Process Center Japan Real Estate Institute 6,810 7,140 7,290 150 5.1 5.0 ▲ 0.1

M-1 AEON Taman Universiti Shopping Centre (Note2) Japan Real Estate Institute658

(20百万RM)588

(21.5百万RM)567

(21.3百万RM)- - - -

M-2 AEON MALL Seremban2 (Note3) Japan Real Estate Institute5,252

(215百万RM)6,374

(233百万RM)6,211

(233百万RM)- - - -

TOTAL 362,478 388,166 387,882 - - - -

(Note 1) For AEON LakeTown mori and AEON LakeTown kaze, their appraisal values, price based on direct capitalization method, price based on DCF method, and NOI describe the Investment Corporation’s pro-rata portion of the quasi-co-ownership interest (jun kyōyū-mochibun) in the beneficiary rights of real estate in trust (40% for each property).

(Note 2) The appraisal value of AEON MALL Kofu Showa at the end of 11th period is based on the total appraisal value of the existing building and the extended building of AEON MALL Kofu as of August 1, 2018.(Note 3) Pursuant to the local appraisal methodology, we entrusted the evaluation of the appraisal value of the property to Japan Real Estate Institute. Appraisal value represents the amount equivalent to the Investment Corporation’s pro-rata portion of the

rights (18.18%) similar to the co-ownership right (kyōyū-mochibun) of the trust property pertaining to the trust of the beneficiary rights of real estate in trust. In addition, the amount in Malaysian Ringgit was converted to Japanese yen based on the exchange rate as of the end of the fiscal period (July 31, 2018; 1 RM = ¥27.36, January 31, 2019; 1RM = ¥26.66; rounded down to the nearest 100th).

(Note 4) The amount in Malaysian Ringgit was converted to Japanese yen based on the exchange rate as of the end of the fiscal period (July 31, 2018; 1 RM = ¥27.36,January 31, 2019; 1RM = ¥26.66 ; rounded down to the nearest 100th).

4.00

4.50

5.00

5.50

6.00

6.50

7.00

3rd Fiscal Period

（July 2014）

4th Fiscal Period

（January 2015）

5th Fiscal Period

（July 2015）

6th Fiscal Period

（January 2016）

7th Fiscal Period

（July 2016）

8th Fiscal Period

（January 2017）

9th Fiscal Period

（July 2017）

10th Fiscal Period

（January 2018）

11th Fiscal Period

（July 2018）

12th Fiscal Period

（Junuary 2019）

500 thousand or more less than 500 thousand

55

Average cap rate of portfolio(Note)

（%）

（%）

Average cap rate of portfolio of in area-wise(Note)

（%）

Average cap rate of portfolio for Trade-Area Population within 10km(Note)

Average cap rate of Portfolio

(Note) ・Average cap rate is calculated excluding Malaysian properties whose return yield by direct capitalization method is not calculated.・“The three largest cities” indicates the Metropolitan, Chubu and Kinki areas, i.e. Metropolitan area covers Tokyo, Kanagawa, Saitama and Chiba pref., Chubu area covers Aichi, Gifu and Mie pref. and Kinki covers Osaka, Kyoto, Hyogo, Nara and Shiga pref. in each.・“Trade-Area Population within 10km” is calculated excluding Daiei-Kawasaki PC , AEON Minami-Osaka RDC and Daiei-Ibaraki PC.

4.00

4.50

5.00

5.50

6.00

6.50

7.00

3rd Fiscal Period

（July 2014）

4th Fiscal

Period（January

2015）

5th Fiscal Period

（July 2015）

6th Fiscal

Period（January

2016）

7th Fiscal Period

（July 2016）

8th Fiscal Period

（January 2017）

9th Fiscal Period

（July 2017）

10th Fiscal Period

（January 2018）

11th Fiscal Period

（July 2018）

12th Fiscal Period

（January 2019）

three largest cities others

5.5

5.6

5.7

5.8

5.9

6.0

6.1

6.2

6.3

3rd Fiscal Period

（July 2014）

4th Fiscal Period

（January 2015）

5th Fiscal Period

（July 2015）

6th Fiscal Period

（January 2016）

7th Fiscal Period

（July 2016）

8th Fiscal Period

（January 2017）

9th Fiscal Period

（July 2017）

10th Fiscal Period

（January 2018）

11th Fiscal Period

（July 2018）

12th Fiscal Period

（January 2019）

KYOTO

レイクタウンmori

倉敷

伊丹昆陽

水戸内原

甲府昭和

大和郡山

川崎PC

鹿児島

京都五条

その他

Portfolio PML and Earthquake Insurance

56

⚫ Promote portfolio diversification (size per property and property locations)

⚫ Consider purchasing earthquake insurance for individual properties whose PML(Note) exceeds 15%. Manage the portfolio to prevent its PML from exceeding 10%.

⚫ Ensure available financing capacity and funds in hand for contingencies through conservative LTV management and cash flow generated by depreciation expenses.

PML（％）

Probable Maximum Loss

Domestic portfolio PML 38 properties 1.5 ％ Approx. ¥5.0 billion

*1. Earthquake risk assessment report (Tokio Marine & Nichido Risk Consulting Co., Ltd.)*2. The expected maximum amount of loss calculated by multiplying the sum total of replacement costs of the properties (the amount required for constructing new equivalent buildings) by the portfolio PML

（Note）The probable maximum loss (PML) indicates a loss from a very rare, massive earthquake that strikes once in 475 years as a percentage of a building’s price.

⚫ AEON examines the effect on distributions and cost effectiveness of the insurance premiums based on the maximum loss estimated from the domestic portfolio PML and acquires earthquake insurance coverage.

Diversification of property locations (23 prefectures in Japan)

Investment ratio (top 10 properties) 5.9%

5.8%

4.9%

4.7%

4.6%

4.3%

4.0%

3.9%

3.7%

3.7%

54.5%

10.5%

9.6%

8.5%

7.7%

6.6%

5.8%

4.9%

4.4%

4.3%

4.2%

33.3%

Conventional policy against earthquake risk

Status of earthquake risk in the current portfolio

Use of earthquake insurance茨城県

京都府

神奈川県

埼玉県

兵庫県

大阪府

岡山県

千葉県

北海道

山梨県

その他

Properties insured Properties held in Japan

38 properties

Maximum payment (deductible: ¥100 million)

¥3.0 billion

Premiums (annual) ¥150 million

KYOTO

Lake Town mori

Kurashiki

Itamikoya

Mitouchihara

Kofu Showa

Yamatokoriyama

Kawasaki PC

Kagoshima

Kyoto Gojo

Other

Ibaraki

Kyoto

Kanagawa

Saitama

Hyogo

Osaka

Okayama

Chiba

Hokkaido

Yamanashi

Other

13 15 47 50

110 113 149

196 217

291 298

3rd Period 4th Period 5th Period 6th Period 7th Period 8th Period 9th Period 10th Period 11th Period 12th Period 13th Period

(Forecast)

Result of Internal Growth

Achieved increases in medium- and long-term rents by making investments for revitalization.

57

（Millions of yen）

（Note 3）The scope is limited to the properties which Aeon Reit owned at the end of July 2018.

Major cases of Investments in Revitalization with increase in rent after Feb. 2018

Cumulative amount of annualized rent increase as a result of investments in revitalization projects (note3)

PropertyRent increase (scheduled)

monthRevitalization project

Project cost (millions of yen)

(Note 1)

Effect of revitalization（per annum）

Rent increase(millions of yen)

Rent increase as a percentage of project cost (%)

AEON MALL Nogata(Note2) February 2018 Conversion of lighting to LEDs 69 6.9 10.0

AEON MALL Hiezu July 2018 Large scale renewal 73 6.1 8.4

AEON MALL Nogata(Note2) August 2018 Conversion of lighting to LEDs 71 7.1 10.0

AEON MALL Kurashiki August 2018 Renewal of food sales area 82 6.1 7.5

AEON MALL Kofu showa September 2018 the revitalization of the existing building 781 50.7 6.5

AEON MALL Kurashiki December 2018Installation of a new exit and entrance

on the north side of the mall44 3.1 7.0

AEON MALL Suzuka March 2019 Connection to public sewerage 88 6.4 7.3

（Note1） “Projected cost of investments in revitalization” indicates construction cost in order to improve the value of the properties operated.

（Note2） Rent has been increased for 10 years.

20.1 19.6 19.621.0 20.1 19.8 19.5

21.320.3 20.1 19.7

0.0

5.0

10.0

15.0

20.0

25.0

Mar–May

2016

Jun–Aug

2016

Sep–Nov

2016

Dec 2016–

Feb 2017

Mar–May

2017

Jun–Aug

2017

Sep–Nov

2017

Dec 2017–

Feb 2018

Mar–May

2018

Jun–Aug

2018

Sep–Nov

2018

Performance of Properties in Portfolio

58

Sales Trends of individual Properties for June 2018 - November 2018

Rent Revenues at Master Lease Companies of 34 Retail Domestic Properties in Portfolio

Mar. 2016–Feb. 2017

(12-month period) ¥80.4billion

Mar. 2017–Feb. 2018

(12-month period) ¥80.7billion

0 0

22

92 1

YoY sales index Less than 90%90%

～95%95%

～100%100%

～105%105%

～110%More than 110%

% of total 0% 0% 64.7% 26.5% 5.9% 2.9%

Notes)1. Sales of each property for June 2018 – November 2018 are expressed as a percentage of sales for the same period a year earlier (June 2017 – November 2017 ).2. The year-on-year sales index above presents data based on interviews of master lease companies. AEON STYLE Kemigawahama ,AEON REIT acquired on November 30, 2017 , does not include.3. The figures in the year-on-year sales index above have been rounded to the nearest hundredh of a percent. As a result, the total amount may not always total 100.0%.

(Note 1)Revenue such as rent income and income incidental thereto received by the master lease company from end tenant. And, AEON STYLE Kemigawahama ,AEON REIT acquired on November 30, 2017 , does not include.(Note 2)The rent revenue figures above are data based on interviews of master lease companies.

(Billions of yen)

7th period 8th period 9th period 10th period 11th period 12th period

（July 31, 2017）（January 31, 2017）（July 31, 2017）（January 31, 2018）（July 31, 2018）（January 31, 2019）

Short-term loans payable ¥0million ¥1,500million ¥1,500million ¥0million ¥0million ¥0million

Long-term loans payable ¥98,900million ¥113,300million ¥143,000million ¥144,000million ¥144,000million ¥129,000million

Investment Corporation bonds ¥2,000million ¥4,000million ¥4,000million ¥6,000million ¥6,000million ¥21,000million

Tenant leasehold and security deposits

¥10,169million ¥10,449million ¥12,474million ¥12,916million ¥12,330million ¥12,581million

Total debt ¥111,069million ¥134,904million ¥162,683million ¥164,621million ¥164,805million ¥164,276million

LTV (including leasehold deposits)

42.8% 46.4% 46.7% 44.9% 44.7% 44.9%

LTV (excluding leasehold deposits)

38.9% 42.7% 43.0% 41.4% 41.4% 41.4%

Long-term debt ratio 100.0% 98.7% 99.0% 100.0% 100.0% 100.0%

Fixed interest rate ratio 88.4% 96.5% 92.9% 95.7% 95.7% 95.7%

Average remaining borrowed period

4.1 year 4.7 year 4.4 year 4.2 year 3.7 year 4.6 year

Average interest rate on borrowings

0.85% 0.84% 0.79% 0.80% 0.80% 0.78%

Financial Management

59

Debt Snapshot

60

(Note 1) Refers to the Japanese yen TIBOR released by the Japanese Bankers Association; provided, however, that if there is no corresponding time period, it refers to the interest rate reasonably set by the agent by the straight-line method.(Note 2) While funds are borrowed at floating rates, the interest rates are fixed in effect by entering into interest rate swap agreements to hedge interest rate fluctuation risk. The figures are the interest rates calculated after taking into consideration the effect of interest rate swaps.

２． Investment Corporation BondsDate of

Determining Conditions

Serial Number

Interest Rate Amount Issued Maturity Date Term DescriptionRating

Pricing Standard Lead ManagerJCR

October 6, 2015 1 0.961 % ¥2.0 billion October 10, 2025 10 years Without collateral or guarantee AA- Spread from JGBDaiwa Securities Co., Ltd.SMBC Nikko Securities Inc.

October 13, 2016 ２ 0.470 % ¥1.0 billion October 20, 2026 10 years Without collateral or guarantee AA- Interest rate

SMBC Nikko Securities Inc.Mizuho Securities Co., Ltd.

Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.

October 13, 2016 ３ 1.200 % ¥1.0 billion October 20, 2036 10 years Without collateral or guarantee AA- Interest rate

SMBC Nikko Securities Inc.Mizuho Securities Co., Ltd.

Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.

November 28, 2017 ４ 0.680 % ¥2.0 billion December 8, 2027 10 years Without collateral or guarantee AA- Interest rateSMBC Nikko Securities Inc.Mizuho Securities Co., Ltd.Daiwa Securities Co., Ltd.

November 16, 2018 ５ 0.783% ¥15.0 billion December 7, 2028 10 years Without collateral or guarantee AA- Spread from JGBSMBC Nikko Securities Inc.Mizuho Securities Co., Ltd.Daiwa Securities Co., Ltd.

１. Borrowings

Borrowing Date TermBorrowing Amount

MaturityFloating rate/

Fixed rate Interest rate

Breakup

Existing Borrowings

November 25, 2013 Long-term ¥27.0bn¥22.0bn October 20, 2020 Effective fixed rate (Note 2) 1.17250%

¥5.0bn October 20, 2023 Effective fixed rate (Note 2) 1.76375%

February 27, 2015 Long-term ¥9.7bn




February 29, 2016

Long-term ¥23.5bn


March 29, 2016¥6.0bn October 20, 2021 Effective fixed rate (Note 2) 0.35125%


May 31, 2016 ¥6.6bn October 20, 2025 Effective fixed rate (Note 2) 0.99100%

February 29, 2016 ¥1.0bn October 20, 2027 Effective fixed rate (Note 2) 1.40730%

October 20, 2016 Long-term ¥23.4bn



¥1.2bn October 20, 2022 Fixed rate 0.55000%




March 28, 2017 Long-term ¥29.7bn

¥6.4bn October 21, 2019 Floating base rate(Note 1) +0.22%






December 27, 2017 Long-term ¥3.7bn¥3.4bn October 20, 2023 Effective fixed rate (Note 2) 0.52270%


NewBorrowings

November 22, 2018 Long-term ¥12.0bn





Many Choices of Financing Methods According to Investment Unit Prices

Financing efforts in a way that contributes to an increase in distribution per unit and total market value.

Follow-on

offerings

Policy for financing means

With the goal of achieving continuous growth in distributions and market value, AEON REIT will adopt optimal financing means at each point in time, factoring in assets to be acquired and market conditions.

Hybrid financing

Loan-based

financing

Investment

corporation bonds

Investment unit price levels

Profitability of properties to be acquired in future

DPU growth

Consider implementation as a new financing method

Utilize cash generating skills

Balance between LTV and DPU

Points to be factored inMethod

Interest conditions

LTV levels

Balance between long-term fixed loans and financing cost

Utilize derivatives (interest swaps)

Investment corporation bonds for the wholesale market

Investment corporation bonds for individual investors

Follow-on

offerings

Hybrid(Subordinated

bonds/loans)

Debt

financing

Consider implementation by leveraging borrowings and funds on hand with priority given to the improvement of profitability through property acquisition.

Consider implementing unit buy-backs if sufficient capital surpluses are available and the measure is considered very effective.

Consider financing by combining follow-on offerings and borrowings while at the same time taking the dilution of distributions per unit into consideration, from the perspective of the profitability of properties to be acquired.

Consider financing mainly through public offerings whose possibility of a successful premium capital increase is strong.

A level at which urban-type and recently built properties, among other properties, whose cap rates are relatively low, can be considered as acquisition targets.

61

0

5

10

15

20

25

30

35

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

E

20

19

E

20

20

E

20

21

E

20

22

E

20

23

E

Summary of Malaysian Economy

62

（Millions of people）

Changes in GDP growth rate in Japan & Malaysia

Population growth in Malaysia (estimated figures for FY2018 onwards) Monthly trends of RM ／ Yen

（yen）

FTSE Bursa Malaysia KLCI Index trends

20

25

30

35

40

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

6.8% 5.3%

5.6%

6.3%4.8%

-1.5%

7.4%

5.3%5.5%

4.7%6.0%

5.0%

4.2%

5.9%

2.8%0.4%

0.1%

1.5%

2.2%

1.7%

1.4%

1.7%

-1.1%

-5.4%

4.2%-0.1% 1.5%

1.7%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

real GDP growth rate

(Malaysia)

real GDP growth rate

(Japan)

(Source） THE WORLD BANK DataBank

(Source） International Monetary Fund, World Economic Outlook Database (Source） Bloomberg

(Source） Bloomberg

0

500

1,000

1,500

2,000

0

100

200

300

400

500

600

700

800

900

trading volume closing priceTrading volume（mil RM）

Closing price

Scheme for acquisition of overseas property

63

Overseas SPC Scheme (acquired in September 2016)

Holding a 100% stake

JAMBATAN MANSEIBASHI (M) Sdn Bhd

Capital stock, etc.

approx.239million RM*

(¥ 5,838 billion)Other assetsapprox.24

millionRM*

(¥ 586 million)

Real estate (exclusive of

taxes)215 million

RM*(¥5,252 billion)


M-2 AEON MALL SEREMBAN 2

AEON CO. (M) BHD.(master lessee）

Master Lease

Agreement

Declaration-of-Trust Scheme (acquired in June 2014)

全体の18.18%

（6.58億円）

M-1 AEON Taman Universiti

Shopping Centre

Malaysia

Japan

AEON CO. (M) BHD.（beneficiary and master lessee））

AEON REIT Investment Corporation(beneficiary)

Trust beneficiary interests of trust formed by declaration of trust

18.18% of total（¥658 million）Rights to hold in common

Master Lease

Agreement

Declaration-of-trust scheme was utilized to acquire overseas real estate as J-REIT’s first practice in June 2014.

Overseas SPC scheme is utilized to acquire the second overseas real estate as J-REIT’s first practice.

Holding a property

Store operation

Malaysia

Japan

Holding a

property

Store operation

*1RM=24.43JPY (as of September 2016)

http://www.iras.gov.sg/irasHome/uploadedFiles/Quick_Links/newsingaporemalaysiadta13feb2006.pdf

http://www.iras.gov.sg/irasHome/uploadedFiles/Quick_Links/Singapore-Japan DTA (Ratified) (14 July 2010).pdf

http://www.iras.gov.sg/irasHome/uploadedFiles/Quick_Links/newsingaporemalaysiadta13feb2006.pdf

http://www.iras.gov.sg/irasHome/uploadedFiles/Quick_Links/Singapore-Japan DTA (Ratified) (14 July 2010).pdf

Relationship between the Fiscal Year of the Overseas SPC and the Settlement of Accounts of the Investment Corporation (Conceptual Diagram)

64

Overseas real estate acquired by an overseas SPC starts contributing to the full-year revenues of AEON REIT in the settlement for the following fiscal period (X+ 1 period). Although the overseas SPC has full-year accounting terms under the local laws, it is expected to pay interim dividends.

X-1 Period X Period X + 1 Period

Income from beginning of

X+1th

Period to end of X+1th period.

X + 2 Period


Overseas SPC

Income from the

acquisition of

property to end of

Xth period

Acquisition of shares in the overseas SPC

Conclusion of the sales

agreement

Establishment of the overseas

SPC

Acquisition of property

Fiscal year-end (SPC)

Announcement of results for

the X-1th fiscal period

Completedacquisition of shares in the overseas SPC

Announcement of results for the Xth fiscal

period

Receipt of interim dividends of the overseas SPC

Marking-to-market of properties

owned by the overseas SPC on

end of Xthperiod

Implementation of interim audit on

SPC

Payment of interim

dividends after the numbers

are fixed by audit

Announcement of results for

the X+1th fiscal period

Receipt of dividends of the overseas

SPC

Marking-to-market of properties owned

by the overseas SPC on

end of X+1th period

Implementation of audit on SPC

Payment of dividends after the numbers

are fixed by audit

Fiscal year-end (SPC)

Currency Hedging Policy for Investment Capital(Overseas SPC Shares) and Dividends

65

Overseas SPC

Overseas SPC

Day A Day B

Currency hedging period

Currency hedging policy for investment capital(when acquiring the Overseas SPC shares)

⚫ Plan to hedge the investment capital (the Overseas SPC shares) by concluding an exchange contract upon acquiring the shares.✓ Conduct currency hedging for acquiring the shares at the exchange rate of

the date when the acquisition is announced, so that there will be no difference between the yen-denominated acquisition price announced upon acquisition and the actual yen-denominated acquisition price

✓ When the acquisition is conducted in the fiscal period following the fiscal period in which the announcement is made, currency hedging shall be arranged by the end of the fiscal period in which the announcement is made, not extended into the following fiscal period, as a rule.

⚫ For the investment capital (the Overseas SPC shares), fix the acquisition price at the exchange rate of the day when the agreement is concluded

End of Xth fiscal period

Acquisition of shares issued by overseas real

estate holding corporation

Receipt of rental income for the Xth fiscal period as

dividends denominated in yen

Conduct audits of the Overseas SPC

for the Xthfiscal period

Currency hedging policy for dividends received from the Overseas SPC

⚫ For dividends received from the Overseas SPC, plan to conduct hedging by concluding an exchange contract as of the end of the fiscal period in order to fix the dividend amount denominated in yen

✓ For share dividends paid by the Overseas SPC, conduct hedging by concluding an exchange contract for the period from the finalization of the dividend amount denominated in ringgit by the Overseas SPC to the receipt of the dividends by AEON REIT

Fixing of dividends for the Xth fiscal

period

Payment of dividends for

the Xthfiscal period

Currency hedging period

Assume conservative exchange rates at the time of drawing up budgets in consideration of exchange rate trends. The exchange rate assumed for forecasts for the 13th period (ending July 31, 2019) and the 14th period (ending January 31, 2020) is ¥24.0(on January 31,

2019: ¥26.66).

Exchange rate assumed for budgeting

Conclusion of purchase agreement on shares

issued by overseas real estate holding corporation

Property acquisition

Payment based on capital increase underwriting

agreement

Receipt of dividends from the Overseas

SPC for the Xth fiscal period

http://www.suginami-s.net/travelrep/world_asia/japan.html

http://www.suginami-s.net/travelrep/world_asia/malaysia.html

http://www.suginami-s.net/travelrep/world_asia/japan.html

http://www.suginami-s.net/travelrep/world_asia/malaysia.html

Comparisons between Retail Environments in Japan and the US

66

Japan US

Population(Note 1)

Approx.120 million

Approx.320 million

2.5 times （compared

to Japan）

Number ofLarge Malls

(Note 2)

Approx.3,000

Approx.46,000


to Japan）

Population per one Large Mall

Approx.39,000

Approx.6,000


to US）

Oversupply of retail facilities in the United States compared with the level in Japan The ratio of online stores in Japan is lower than in the United States,

hovering at a 5% level in recent years.

Comparison of the number of retail facilities Comparison of the EC ratio

(Note) Japan’s EC ratio: Graph prepared by the Asset Management Company based on the FY2017 Survey of Infrastructure

Development Status for Data-driven Society in Japan (E-Commerce Market Survey) by the Ministry of Economy, Trade and Industry.

The United States’ EC ratio: Graph prepared by the Asset Management Company based on data issued by the United States Census Bureau.

commercial facilities owned by AEON REIT

US

Core TenantsＧＭＳ（food items sales 60%)Large specialty stores / Movie

theater

Department stores/Large specialty stores / Movie

theater

TenantsComposition

Product sales: Approx. 65％、Drinking and eating & services: Approx. 35％

Product sales: Approx. 80％

Location and

means for store

visits

A range of means for store visits

due to shopping areas located

nearby

Store visits mainly by car due to

facilities located in the suburbs

Comparison of retail facility characteristics

（Note）Prepared by the Asset Manager based on Supplementary of 92th Financial Results for FY2017 of AEON Co., Ltd..（Note）Prepared by the Asset Manager based on data of the properties owned by AEON REIT.（Note）Source: ICSC、Office J.K

Image figure

(i) Food product area used by

visitors repeatedly.

(ii) Tenant composition including

time-consuming type facilities such

as a cinema and large food court.

Retail facilities whose frequency of use by local people is high because all of the retail facilities owned sell food products

(iii) Store visits by a range of means such as by public

transportation, car, bicycle or on foot.

（Note1）Population in Japan is as of Septenber 1, 2018(Homepage of Ministry of Internal Affairs and Communications). Population in the US is as of May 2018.(Homepage of US Federal Bureau)

（Note2）Number of Large Malls in Japanis based on Japan Shopping Center Association SC White Paper 2017.Number of Large Malls in the US is based on CoStar, ICSC, Office J.K.

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

2010 2011 2012 2013 2014 2015 2016 2017

Comparison of the EC ratio between Japan and the United States

US Japan

8.9%

5.8%

AEON REIT received GRESB Real Estate Assessment

• AEON REIT achieved the “Green Star” in three consecutive years AEON MALL ItamikoyaAEONMALL KYOTO AEON MALL Mitouchihara

AEON MALL Kurashiki AEON MALL Morioka AEON MALL Nogata

Activities to Achieve Sustainability ～ Initiatives by AEON REIT～

67

DBJ Green Building Certification

AEON MALL

Yamatokoriyama

Inclusion in the MSCI Japan ESG Select Leaders Index

• Inclusion in the MSCI Japan ESG Select Leaders Index on July 3, 2017

• There are currently six J-REITs included in this index as of Dec.2018.

• In July 2017, the Government Pension Investment Fund (GPIF) selected this index as one of the ESG indices used for passive investment.

Actively implementing construction for environmental protection such as the replacement of air-conditioners and lighting with LED

AEON MALL Nogata

Expects to obtain more than 10 environmental certifications, going forward, and continue to make environmental and social contributions.

Activities to Safety

Investment in the installation of anti-smoke hanging

walls made of inflammable film and construction work

that contributes to reducing damages from

earthquakes

AEON MALL Kagoshima

• Transparent Decision-Making Process • The Corporate Governance Code was established by

the Asset Management Company in March 2016 ahead

of other companies.

• The Sustainability Policy was established in January

2016.

• Companywide initiatives are promoted under the

leadership of the Sustainability Promotion

Subcommittee (Chairman: President & Representative Director).

Certification for CASBEE for Real Estate

PropertyInvestment amount

（millions of yen)

AEON MALL Yamagata-Minami 30

AEON MALL Kagoshima 58

AEON MALL Yokkaichi-Kita 34

PropertyInvestment amount

（millions of yen)

AEON MALL Nogata 220(LED)

AEON MALL Hiezu 37(air-conditioners)

AEON MALL Morioka 30(air-conditioners)

AEON MALLKagoshima

Activities to Environment

✓ A scheme is established to reflect the opinions of

third parties that have no interest in the Group

with respect to stakeholder transactions.

✓ Decisions to be made at meetings of the

Investment Committee and Compliance

Committee require attendance and agreement by

outside experts who shall be third parties.

Asset Manager’s activities

Activities to Achieve Sustainability (AEON Group)

68

Governance

Social

Environment

Establishment of Aeon Sustainability Principles

Inclusion in a range of trackers

AEON’s tree-planting projects

• In FY1991, AEON started tree-planting with

customers in numerous locations around the

world.

• The total number of trees planted so far

reached 11,66mil (as of February 28, 2018).

AEON Carbon-free Vision 2050 Reduction of food waste

Reduce CO2 emissions by 35%

from the level in 2010 by 2030

and achieve zero emissions by

2050 at each store.

AEON's "zero waste” concept

• Dispose of and combust waste through the 3R

approach of “reduce,” “reuse” and “recycle” to

eliminate reclamation.

• Contribute to building a resource-recycling

system in cooperation with AEON’s customers

and other stakeholders.

Activities led by public interest

incorporated foundations

AEON as a regional disaster

control base

Collaboration with local communities

Wellness & Diversity Management

AEON 1% Club Foundation

Established in 1989. Activities that have been conducted for

approximately 30 years.

✓ Its main objectives are the development of the next generation,

the promotion of friendships with foreign countries and the

sustained development of local communities.

✓Major AEON Group companies donate 1% of their pre-tax

profits.

AEON Environmental Foundation

Established in 1990. Activities that have been conducted

for approximately 30 years.

• Exclusive local WAON

cards

• Aeon Happy Yellow Receipt Campaign」

Aiming to raise the AEON Group’s female

manager ratio to 50% by FY2020

AEON CO., LTD.

■ MSCI Japan ESG Select Leaders Index

■ MSCI Japan Empowering Women Index (Select)

■ The Nadeshiko Brand 2018 stocks

AEON Mall Co., Ltd.

■MSCI Japan ESG Select Leaders Index

■MSCI Japan Empowering Women Index (WIN)

■Nadeshiko Brand 2018 stocks

(Only company selected in the real estate industry for the

second consecutive year.)

Unitholder Information

69

Number of Unitholders and Number of Investment Units by Unitholder Type

9.9%

9.5%

10.2%

9.9%

8.8%

56.3%

51.3%

48.6%

47.8%

51.2%

23.9%

23.3%

23.6%

23.7%

23.4%

9.9%

15.9%

17.6%

18.5%

16.6%

2017/1期

（第8期）

2017/7期

（第9期）

2018/1期

（第10期）

2018/7期

（第11期）

2019/1期

（第12期）

個人・その他金融機関（金融商品取引業者含む）

その他国内法人外国法人等

Investment Unit Ownership Ratio by Unitholder Type Major Unitholders (As of January 31, 2019)

Unitholder NameNumber of

Units% of Total

1 AEON Co., Ltd. 352,351 19.8%

2 The Master Trust Bank of Japan, Ltd. (trust account) 261,872 14.7%

3 Japan Trustee Services Bank, Ltd. (trust account) 237,125 13.3%

4 The Nomura Trust & Banking Co., Ltd. (trust account) 68,171 3.8%

5Trust & Custody Services Bank, Ltd. (securities investment trust

account)54,687 3.1%

6 Sumitomo Mitsui Trust Bank, Limited 27,150 1.5%

7 Mizuho Bank, Ltd. 20,000 1.1%

7 Tokyo Century Corporation 20,000 1.1%

9 STATE STREET BANK WEST CLIENT - TREATY 505234 19,774 1.1%

10 STATE STREET BANK AND TRUST COMPANY 505001 18,802 1.1%

Total 1,079,932 60.8%

Number of Units Number of Unitholders


12th Period(January 31, 2019)


12th Period(January 31, 2019)

Number of Investment Units

% of totalNumber of

Investment Units% of total

Number of Unitholders

% of totalNumber of

Investment Units% of total

Individuals and others 176,343 9.9% 155,952 8.8% 23,612 96.8% 22,058 96.7%

Financial institutions (including financial

instruments firms)849,993 47.8% 910,435 51.2% 167 0.7% 151 0.7%

Other domestic corporations 421,726 23.7% 415,151 23.4% 374 1.5% 362 1.6%

Foreign corporations 329,285 18.5% 295,809 16.6% 237 1.0% 248 1.1%

Total 1,777,347 100.0% 1,777,347 100.0% 24,390 100.0% 22,819 100.0%

8th Prriod(Jan.2017)

9th Prriod(Jul.2017)


11th Prriod(Jul.2018)


Individuals and Others

Financial institutions

Other domestics Corporations

Foreign Corporations

Disclaimer

Disclaimer

― These materials contain forward-looking statements with respect to the future business results, plans, and management targets and strategies of AEON REIT

Investment Corporation (AEON REIT). These forward-looking statements are based on assumptions made at the present time about future events and the operating

environment. There is no guarantee that these assumptions are correct. Various factors could cause actual future results to differ materially from those expressed or

implied by the forward-looking statements contained herein.

― While all reasonable measures have been taken to ensure that the information presented herein is correct, AEON REIT makes no assurance or guarantee as to the

accuracy or completeness of that information. The contents of the information may be changed or eliminated without notice.

― These materials include analyses, judgments and other views based on information currently available to AEON REIT and AEON Reit Management Co., Ltd. As such,

actual operating results may differ from these views. Furthermore, there are other views that differ from these, and AEON REIT and AEON Reit Management Co., Ltd.

may change these views in the future.

― These materials are provided for the sole purpose of presenting general information and explaining the management strategies of AEON REIT, and are not intended

as a solicitation to purchase AEON REIT’s investment units, nor to enter into any other financial instruments transaction agreement. When making investments,

investors are advised to use their own judgment and discretion.

Disclaimer for Dutch Investors

― The units of AEON REIT Investment Corporation (“AEON REIT”) are being marketed in the Netherlands under Section 1:13b of the Dutch Financial Supervision Act

(Wet op het financieel toezicht, or the “Wft”). In accordance with this provision, AEON Reit Management Co., Ltd. (the “AIFM”) has notified the Dutch Authority for the

Financial Markets of its intention to offer these units in the Netherlands. The units of AEON REIT will not, directly or indirectly, be offered, sold, transferred or delivered

in the Netherlands, except to or by individuals or entities that are qualified investors (gekwalificeerde beleggers) within the meaning of Article 1:1 of the Wft, and as a

consequence neither the AIFM nor AEON REIT is subject to the license requirement pursuant to the Wft. Consequently, neither the AIFM nor AEON REIT is subject

to supervision of the Dutch Central Bank (De Nederlandsche Bank) or the Netherlands Authority for Financial Markets (Autoriteit Financiële Markten). The AIFM is

therefore solely subject to limited ongoing regulatory requirements as referred to in Article 42 of the European Alternative Investment Fund Managers Directive

(European Directive 2011/61/EU) (the “AIFMD”).

Please visit AEON REIT’s home page (www.aeon-jreit.co.jp/en) to access its latest annual report referred to in Article 22(1) of the AIFMD or information provided

under Article 23 of the AIFMD.

Asset Manager: AEON Reit Management Co., Ltd.

(Registration of financial instruments business: Kanto Local Finance Bureau, Director-General (Financial Instruments), No. 2668)

Contact Information

Please contact us if any questions:

AEON Reit Management Co., Ltd.

Finance and Planning Department

TEL: 03-5283-6361

70

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