aeon reit investment corporation · large-scale retail properties in the united states and aeon...

イオンスタイル検見川浜イオン喜連瓜破ショッピングセンター

Asset Manager:Securities Code: 3292http://www.aeon-jreit.co.jp/en/

Presentation Material for Investor MeetingFor the 10th Fiscal Period Ended Jan. 31, 2018

March 22, 2018

AEON REIT Investment Corporation

AEON STYLE Kemigawahama

Table of Contents

Ⅰ. Steady Performance of AEON REIT ----- P. 3

1. Distributions per Unit and NAV per Unit ----- P. 4

2. Asset Size ----- P. 5

3. Unrealized Gains ----- P. 6

4. Strong Cash Flows ～Depreciation～ ----- P. 7

5. Strategic Cash Management ----- P. 8

Ⅱ. Stability of AEON REIT ----- P. 9

1. Some of Questions Received by AEON REIT ----- P. 10

2. Large-scale Retail Properties “AEON MALLs” Maintain Competitiveness in line with the Environment

----- P. 11

3. Image of Large-scale Retail Properties “AEON MALLs” ----- P. 12

4. Specific Examples of “Value” Unable to be Provided by E-Commerce

----- P. 13

5. Characteristics of Successful Large-scale Retail Properties

----- P. 14

6. Comparison of Large-Scale Retail Properties in the United States and AEON MALLs

----- P. 15

7. Some of Questions Received by AEON REIT ----- P. 16

8. Lease Structure that Secures Stability of Cash Flows ----- P. 17

9. Performance Trends of Stores in Portfolio ----- P. 18-P.20

Ⅲ. Overview of Operation and Highlights in the 10th Fiscal Period Ended January 31, 2018

----- P. 21

1. Summary of Financial Results for the 10th Fiscal Period ----- P. 22

2. Summary of Efforts in the 10th Fiscal Period ----- P. 23

3. Portfolio Highlights ----- P. 24

4. [External Growth] Assets Acquired in the 10th Fiscal Period

----- P. 25

2

5. [External Growth] Acquisition of Logistics Facilities to Support Retail and Related Properties of AEON Group

----- P. 26

6. [Internal Growth] Achievement of Internal Growth by Investments in Revitalization

----- P. 27-P28

7. [Financial Strategy] Building of Firm Financial Base

----- P. 29

8. [Financial Strategy] Disperse Repayment Dates and Reduction of Borrowing Cost

----- P. 30

9. [Sustainability] Major Efforts ----- P. 31

10. [Appeal of the Investment Corporation] Efforts for IR Activities

----- P. 32

11. Forecasts of Performances for the 11th Fiscal Period Ending July 31, 2018

----- P. 33

12. Forecasts of Performances for the 12th Fiscal Period Ending January 31, 2019

----- P. 34

13. Capital Investment Plan ----- P. 35

14. Achievement of Internal Growth by Investments in Revitalization

----- P. 36

Ⅳ. Future of AEON REIT ----- P. 371. Practice of Strategies to Grow with Retail and Related Properties of AEON Group

----- P. 38

2. Roadmap for Growth ----- P. 39

Appendix

イオンモール直方(夜)

Ⅰ. Steady Performance of AEON REIT

イオンレイクタウン

AEON LakeTown kaze Daiei-Ibaraki Process Center

4

Steady Performance of AEON REIT ～ Distributions per Unit and NAV per Unit ～

686

2,461 2,4732,724 2,790

1,450

3,019 2,926 3,029

2ND FISCAL PERIOD

（JAN 2014）

3RD FISCAL PERIOD

（JULY 2014）

4TH FISCAL PERIOD

（JAN 2015）

5TH FISCAL PERIOD

（JULY 2015）

6TH FISCAL PERIOD

（JAN 2016）

7TH FISCAL PERIOD

（JULY 2016）

8TH FISCAL PERIOD

（JAN 2017）

9TH FISCAL PERIOD

（JULY 2017）

10TH FISCAL PERIOD

（JAN 2018）

（yen）（ Distributions per Unit ）

The 2016

Kumamoto Earthquake

110,456112,635

115,939

122,057

126,169

123,547

127,912 127,358 128,301

2ND FISCAL PERIOD

（JAN 2014）

3RD FISCAL PERIOD

（JULY 2014）

4TH FISCAL PERIOD

（JAN 2015）

5TH FISCAL PERIOD

（JULY 2015）

6TH FISCAL PERIOD

（JAN 2016）

7TH FISCAL PERIOD

（JULY 2016）

8TH FISCAL PERIOD

（JAN 2017）

9TH FISCAL PERIOD

（JULY 2017）

10TH FISCAL PERIOD

（JAN 2018）

（ NAV per Unit ）

Achieved an increase in unitholder value since the listing

（yen）The 2016

Kumamoto Earthquake

5

158.3 158.9 158.9

194.3 194.3

249.2268.5

330.6355.1

2ND FISCAL PERIOD

（JAN 2014）

3RD FISCAL PERIOD

（JULY 2014）

4TH FISCAL PERIOD

（JAN 2015）

5TH FISCAL PERIOD

（JULY 2015）

6TH FISCAL PERIOD

（JAN 2016）

7TH FISCAL PERIOD

（JULY 2016）

8TH FISCAL PERIOD

（JAN 2017）

9TH FISCAL PERIOD

（JULY 2017）

10TH FISCAL PERIOD

（JAN 2018）

Steady Performance of AEON REIT ～ Asset Size ～

（ Asset Size ）

2nd Follow-On Offering1st Follow-On Offering 4th Follow-On Offering3rd Follow-On Offering

AEON MALL KYOTO

Major property

AEON MALLYamatokoriyama

AEON MALLItamikoya

Daiei-IbarakiProcess Center


AEON MALLKagoshima

Achieved steady growth in asset size since the listing

Daiei-kawasakiProcess Center

（billions of yen）

Acquisition of the first

logistics facility of

AEON REIT

One of the largest retail

properties in Kagoshima City

Third logistics facility

of AEON REIT

Retail property close

to a station

Retail property close

to a station

Medium-term target of

asset size

Achieved 300 billion yen

Major property Major property Major propertyPopulation in a

commercial area of 10km

500,000 people or more

Population in a

commercial area of 10km

500,000 people or more

6

Steady Performance of AEON REIT ～ Unrealized Gains ～

8.510.6

13.716.6

21.1 22.3

28.031.3

35.8

2ND FISCAL PERIOD

（JAN 2014）

3RD FISCAL PERIOD

（JULY 2014）

4TH FISCAL PERIOD

（JAN 2015）

5TH FISCAL PERIOD

（JULY 2015）

6TH FISCAL PERIOD

（JAN2016）

7TH FISCAL PERIOD

（JULY 2016）

8TH FISCAL PERIOD

（JAN 2017）

9TH FISCAL PERIOD

（JULY 2017）

10TH FISCAL PERIOD

（JAN 2018）

（ Unrealized Gains ）（billions of yen）

Increase in

unrealized gains

AEON MALL Mitouchihara

Unrealized gains have also been expanding steadily since the listing

AEON MALL NogataAEON LakeTown mori

7

イオンリートは

Strong Cash Flows ～Depreciation～

AEON REIT Investment Corporation is able to grow, using its strong cash flows.

1.1

2.2 2.2

2.6 2.6

3.13.3

4.14.3

2ND FISCAL PERIOD

（JAN 2014）

3RD FISCAL PERIOD

（JULY 2014）

4TH FISCAL PERIOD

（JAN 2015）

5TH FISCAL PERIOD

（JULY 2015）

6TH FISCAL PERIOD

（JAN2016）

7TH FISCAL PERIOD

（JULY 2016）

8TH FISCAL PERIOD

（JAN 2017）

9TH FISCAL PERIOD

（JULY 2017）

10TH FISCAL PERIOD

（JAN 2018）

External Growth

Investments in

Revitalization

Generation of

Cash Flow

Improvement

of Profitability

（billions of yen）

Strategic Cash Management

Track record of using cash created as an amount equivalent to depreciation.

Investing in revitalization of property to boost revenues and competitiveness

AEON MALL Yokkaichi-kita

AEON MaLL Nogata

Appropriation to the new properties (AEON MALL Seremban2) acquired funds

AEON MALL Hiezu

Appropriation to the new properties (AEON

MALL KYOTO, etc.) acquired funds

AEON MALL Morioka

3.3.3bn

AEON LakeTown kaze

Appropriation of funds to acquire new properties (Note)

10th Fiscal Period

5.67bn 8.63bn3.03bn6.0bn

AEON MALL Kurashiki

AEON MALL Suzuka

contin

uous v

alu

e c

reatio

n

contrib

utin

g to

both

investo

rs and o

pera

tors

incre

sein

in

vestm

ent e

fficie

ncy

AEON MALL Hiezu

0.05bn

AEON MALL Nogata

dealin

g w

ith

unpre

dic

table

facto

rs

Restoration of AEON MALL Kumamoto

Restoration of AEON MALL Kumamoto

(Note) The amount stated in “Appropriation to funds to acquire new properties” shows an amount appropriated to funds to acquire new properties from funds on hand, and it is calculated by subtracting the total amount of proceeds from public offering conducted during the fiscal period under review and borrowings with the acquisition of specified assets as the use from the acquisition price of properties acquired in each fiscal period (not including consumption taxes and expenses for acquisition).

8

9th Fiscal Period

8th Fiscal Period

7th Fiscal Period

6th Fiscal Period

5th Fiscal Period

Appropriation to the new properties (AEON MALL Yamatokoriyama, etc.)

acquired funds

Appropriation to the new properties (AEON MALL

Shimotsuma, etc.) acquired funds

Ⅱ. Stability of AEON REIT

イオンモール直方(夜)

AEON MALL KYOTO

Some of the Questions Received by AEON REIT

10

The number of dead malls are increasing in the

United States because of the impact of e-commerce.

I wonder if malls in Japan will be able to maintain

their business.

Isn’t it difficult for large-scale retail properties to

maintain competitiveness in the future?

Other retail groups announced that they would be

closing stores, and specific cases have emerged in other

companies. Will such an incident occur at properties held

by AEON REIT?

We expect that changes in the external

environment will continue to be severe given

factors such as population decline and the

expansion of e-commerce. However, retail

and related properties that will maintain

competitiveness in this environment will be

top-class regional retail and related

properties in a solid commercial area that

will capture the needs of the commercial

area, regardless of their category of urban

type or suburban type and malls or other.

▷See pages 11-15.

Given that properties held by AEON

REIT are stores supported by solid

commercial areas, we think that the

risk that the sponsor group will

depart is extremely low.

Both the operation status of end

tenants and the revenue situation

of the master lease company are

solid, and they will continue to

maintain competitiveness through

revitalization, etc.

▷See pages 17-20.

Future

business

conditions

of

investment

targets

Continuity

of rent in

the current

master

lease I wonder if rent will be reduced even in the long-term

fixed master lease if the business conditions of the AEON

Group becomes severe.

The Thinking of AEON REIT

Large-scale Retail Properties “AEON MALLs” Maintain Competitiveness in line with the Environment

11

Aeon Mall Specialty store sales as a whole maintains 100% compared to the previous terms

AEON MALL specialty store sales change

（source） Prepared by the Asset Manager based on result briefing materials of AEON MALL Co., Ltd. FY2010-2016.（note） With respect to sales of specialty store sales (after day adjustment) at AEON Mall Co., Ltd. and sales of large specialty stores and specialty stores by industry, we set the existing store sales in fiscal 2010 as 100, It is indicated by the index calculated by multiplying the index of the fiscal year

specialty store sales (after day

adjustment)

large specialty

store

service

clothing

accessories

amusement

sundries

food

80%

85%

90%

95%

100%

105%

110%

115%

120%

Fiscal Year 2010 Fiscal Year 2011 Fiscal Year 2012 Fiscal Year 2013 Fiscal Year 2014 Fiscal Year 2015 Fiscal Year 2016

specialty store sales (after day adjustment) large specialty store

clothing accessories

sundries food

amusement service

Image of Large-Scale Retail Properties “AEON MALLs”

12

Mall zone for specialty stores

Securing solid customer demand in a local commercial area,

General merchandise store (GMS) centering on food,Delivery base of an online

supermarketCore tenants with an ability to

attract customers“Value-based consumption

tenants”“Large specialty stores”

More than 100 specialty stores which can be replaced in a flexible manner, making excellent use of the

leasing power of the AEON GroupOptimizing the ratio of product sales and services.

Parking lots

Huge parking lots with thousands of parking spaces

to draw in customers in a large commercial area

Core tenantsCore tenants

Food courtRestaurants, cafes

Holding of various events

Gathering space

Providing food in diverse forms. Prolongation of time that visitors stay at the mall

Able to change the composition of tenants in response to the consumption needs and preferences of customers

13

Specific Examples of “Value” Unable to be Provided by E-Commerce

MALL WALKING

Strengthening the deli


radio gymnastic exercises

Space where customers can bring food

(1) Competitive core tenants and the diverse tenant mix

(2) Continuous floor expansion and revitalization

Characteristics of Successful Large-scale Retail Properties

✓ AEON STYLE,Maruetsu,

TOYOTA MALL,UNIQLO,ZARA

MUJI Stores ,Nojima,AEON CINEMA

【Core Tenants】

【floor expansion and revitalization】

2008 AEON LakeTown kaze and AEON LakeTown mori opend

2011 OUTLET expanded

2015 Large scale renewal

（New store:193stores、Transfer:70stores、

Renewal:89stores）(Note1)(Note2)

(Note1)Total of AEON LakeTown kaze,AEON LakeTown mori and

OUTLET(Note2)

Large-scale retail properties with competitiveness that have satisfied the conditions to succeed will survive both

in Japan and the United States.

（Note2）The Investment Corporation has not decided to acquire the outlet building and does not guarantee its acquisition in the future.

14

15

Large-scale retail properties in the United States and AEON MALLs have different characteristics.

AEON MALLs The United States

Core tenants

GMS (food items make up about 60%)*1

Delivery base of an onlinesupermarket

Large specialty storesMovie theater

Department stores

Large specialty stores

Movie theater

Tenants Product sales: Approx. 65％、

Drinking and eating establishments and services: Approx. 35％*2

Product sales: Approx. 80％

(Centered on apparel)*3

Developer

(SC development

entity) Developed from the retail industryDeveloper whose main business is

real estate

Comparison of Large-Scale Retail Properties in the United States and AEON MALLs

At AEON MALLs, the food zone is the key to attracting

customers.

At AEON MALLs, the percentage of drinking and

eating establishments and services is high.

AEON MALLs are operated with the collective strength

of the AEON Group, and risk of core tenants vacating

is low.

＊1 Source: Presentation material of AEON MALL Co., Ltd. for the fiscal year ended February 28, 2017 (92nd term) ＊2 Calculated by the Asset Manager based on data of properties held by the Investment Corporation＊3 Source: ICSC Research

Some of the Questions Received by AEON REIT

16

The number of dead malls are increasing in the

United States because of the impact of e-commerce.

I wonder if malls in Japan will be able to maintain

their business.

Isn’t it difficult for large-scale retail properties to

maintain competitiveness in the future?

Other retail groups announced that they would be

closing stores, and specific cases have emerged in other

companies. Will such an incident occur at properties held

by AEON REIT?

We expect that changes in the external

environment will continue to be severe given

factors such as population decline and the

expansion of e-commerce. However, retail

and related properties that will maintain

competitiveness in this environment will be

top-class regional retail and related

properties in a solid commercial area that

will capture the needs of the commercial

area, regardless of their category of urban

type or suburban type and malls or other.

▷See pages 11-15.

Given that properties held by AEON

REIT are stores supported by solid

commercial areas, we think that the

risk that the sponsor group will

depart is extremely low.

Both the operation status of end

tenants and the revenue situation

of the master lease company are

solid, and they will continue to

maintain competitiveness through

revitalization, etc.

▷See pages 17-20.

Future

business

conditions

of

investment

targets

Continuity

of rent in

the current

master

lease I wonder if rent will be reduced even in the long-term

fixed master lease if the business conditions of the AEON

Group becomes severe.

The Thinking of AEON REIT

Lease Structure for Stable Cash Flows

17

AEON REIT

Master lease agreements

AEON Group Companies

Lease term（Basically 20 years for domestic propertiesand 10 years for overseas properties）

Fixed rents

Sublease agreements Sublease agreements

Tenants Tenants

Lease structure diagram

AEON MallCo., Ltd.

AEON RetailCo., Ltd.

AEON HokkaidoCorporation

AEON KYUSHU CO., LTD.

The Daiei., Inc.AEON. CO.(M)

BHD.AEON GLOBAL SCM CO.,LTD.

General terms and conditions of Master Lease Agreement

Rents:

Basically fixed rents

The amount equivalent to the fixed asset tax and city planning tax will be reviewed as variable rent.

Conditions of cancellations:

Basically non-cancellable during the period of master lease agreement

Apart from lease period, non-cancellable period is set in each properties, and lessee can terminate the lease agreement by paying penalty equivalent to 6-month rents only on the day after the end of the day of non-cancellable period (Cancellation date).

Stable cash flows are continuously secured through long-term-fixed-rents master lease agreement.

18

Performance of Properties in Portfolio (1)

YoY Sales Comparison (Note 1) of End Tenants in 34 Retail Domestic Properties Portfolio

Actual End-Tenant Occupancy Rate (Note 2) in 34 Retail Domestic Properties Portfolio

Sales of end tenants almost on the same level but high occupancy rate in actual end tenants.

(Notes)1. The total amount of sales of end tenants of the 34 retail properties portfolio for the four periods of March–May, June–August, September–November and December–February each year as a percentage of sales for the same periods of the previous year.2. The percentage of total leased area in the 34 domestic retail properties that is actually occupied by end tenants (including area in which end tenants have committed to opening stores).

As for Aeon Kireuriwari shopping center, occupancy rates results reflect from May 2016.3. Year-on-year sales comparisons and the actual occupancy rates shown above are data based on interviews of master lease companies. The percentage of properties with master lease contracts is 100%.4. Year-on-year sales comparisons and the actual occupancy rates shown above have been rounded to the nearest hundredth of a percent.5. AEON STYLE Kemigawahama ,AEON REIT acquired on November 30, 2017 , does not include.

99.4% 99.5% 99.7%99.2%

99.4%99.0%

99.3% 99.3% 99.3%99.0% 99.2% 99.2% 99.2%

95%

96%

97%

98%

99%

100%

Nov 2014 Feb 2015 May 2015 Aug 2015 Nov 2015 Feb 2016 May 2016 Aug 2016 Nov 2016 Feb 2017 May 2017 Aug 2017 Nov 2017

103.6%

97.9% 99.1%96.8% 97.2%

100.1% 100.6% 101.3%

97.9% 96.8%99.5%

96.8%

100.4%101.6%

99.4%

80%

90%

100%

110%

Mar–May

2014

Jun–Aug

2014

Sep–Nov

2014

Dec 2014–

Feb 2015

Mar–May

2015

Jun–Aug

2015

Sep–Nov

2015

Dec 2015–

Feb 2016

Mar–May

2016

Jun–Aug

2016

Sep–Nov

2016

Dec 2016–

Feb 2017

Mar–May

2017

Jun–Aug

2017

Sep–Nov

2017

19

Rent Revenues at Master Lease Companies of 34 Retail Domestic Properties in Portfolio（Note1）


20.4 19.9 19.5 21.0 20.3 20.0 19.721.4

20.019.3

19.621.0

20.3 20.0 19.7

103.8%100.7% 101.7% 99.3% 99.7%

100.6% 101.0%101.7%98.3% 96.8% 99.5% 98.2%

101.4% 103.2%100.3%

0%

20%

40%

60%

80%

100%

120%

0

5

10

15

20

25

Mar–May2014

Jun–Aug2014

Sep–Nov2014

Dec 2014–Feb 2015

Mar–May2015

Jun–Aug2015

Sep–Nov2015

Dec 2015–Feb 2016

Mar–May2016

Jun–Aug2016

Sep–Nov2016

Dec 2016–Feb 2017

Mar–May2017

Jun–Aug2017

Sep–Nov2017

(Billions of yen) Rent revenue (billions of yen) Indexed YoY comparison

Mar. 2016–Feb. 2017

(12-month period) ¥79.9billion

(YoY) 98.2%

Mar. 2015–Feb. 2016


(YoY) 100.8%

Mar. 2014–Feb. 2015


(YoY) 101.3%

Notes: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.2. The rent revenue figures above are data based on interviews of master lease companies. 3. The indexed YoY comparison figures above have been rounded to the nearest hundredth of a percent.

Increase in Y-O-Y rent revenues of master lease company demonstrating an adequate rent payment capacity

January , 201844.7

YoY sales index Less than 90%90%

～95%95%

～100%100%

～105%105%

～110%More than 110%

% of total 0% 8.8% 52.9% 32.4% 0% 5.9%

03

18

11

02

Percentage of properties with

sales index of 100% or higher ：38.3%

The Percentage of properties with sales index of 100% or higher is increasing.

20


(Reference) Consumer Confidence Index (Households of two or more persons, seasonally adjusted series)

(Source) “Consumer Confidence Survey” by Department of Business Statistics, Economic and Social Research Institute, Cabinet Office of Japan(Note) Changed to the postal survey method starting with the survey for April 2013. Until the survey for March 2013, surveys were carried out by the direct-visit and self-completion questionnaires method

(with telephone surveys at certain times).

25.0

30.0

35.0

40.0

45.0

50.0

Jan

Mar

May

Jul

Sep

No

v

Jan

Mar

May

Jul

Sep

No

v

Jan

Mar

May

Jul

Sep

No

v

Jan

Mar

May

Jul

Sep

No

v

Jan

Mar

May

Jul

Sep

No

v

Jan

Mar

May

Jul

Sep

No

v

Jan

Mar

May

Jul

Sep

No

v

Jan

Mar

May

Jul

Sep

No

v

Jan

Mar

May

Jul

Sep

No

v

Jan

Mar

May

Jul

Sep

No

v

Jan

Mar

May

Jul

Sep

No

v

Jan

CY 2007 CY 2008 CY 2009 CY 2010 CY 2011 CY 2012 CY 2013 CY 2014 CY 2015 CY 2016 CY 2017 CY 2018

(Notes)1. Sales of each property for June 2017 – November 2017 are expressed as a percentage of sales for the same period a year earlier (June 2016 – November 2016 ).2. The year-on-year sales index above presents data based on interviews of master lease companies.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%.4. AEON STYLE Kemigawahama ,AEON REIT acquired on November 30, 2017 , does not include.

Sales Trends of individual Domestic Retail Properties

Ⅲ. Overview of Operation and Highlights in the 10th Fiscal Period Ended January 31, 2018

イオンレイクタウン

AEON MALL Shimotsuma

22

Summary of Financial Results for 10th Fiscal Period Ended January 31, 2018

Major Factors of Changes from the Previous Period(Millions of yen)

Operating Revenues

Full-period contribution of properties acquired in 9th period + 400

Contribution of revenues from properties acquired in 10th period + 634

Increase in rents from AEON MALL Kumamoto + 45

Period-end dividends from SPC + 42

Operating Expenses

Land rent paid for the properties acquired in 9th period, etc. + 61

Land rent paid for the properties acquired in 10th period, etc. + 52

Depreciation for properties acquired in 10th period + 169

Depreciation for other properties + 29

Asset management fees + 108

Non-Operating Expenses

Increase in interest of borrowing and bond + 34

Borrowing related expenses + 5

Major Factors of Changes from the Forecast(Millions of yen)

Operating Revenues

Increase in water utility fee income + 3

Increase in insurance revenue + 3

Operating Expenses

Increase in repairs and maintenance expenses + 25

Decrease in depreciation ▲ 39

July January

2017 2018

9th Fiscal Period Result

10th Fiscal Period result

vs. Previous Period

10th Fiscal Period Forecast vs.

ForecastAnnounced on Sep. 12, 2017

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

Operating Revenues (Millions of yen) 14,642 15,780 + 1,137 15,769 + 10

Operating Expenses (Millions of yen) 9,017 9,503 + 485 9,530 ▲ 27

Expenses Related to Rent Business

(Millions of yen) 8,253 8,599 + 345 8,615 ▲ 15

(Of Which, Depreciation)

(Millions of yen) 4,176 4,380 + 204 4,420 ▲ 39

Operating Income (Millions of yen) 5,624 6,276 + 652 6,239 + 37

Ordinary Income (Millions of yen) 4,773 5,389 + 615 5,343 + 45

Unordinary Income (Millions of yen) 537 - ▲ 537 - -

Net Income (Millions of yen) 5,306 5,383 + 76 5,338 + 44

Distributions per Unit (yen) 2,926 3,029 + 103 3,000 + 29

Number of Investment Units Issued

(unit) 1,635,912 1,777,347 + 141,435 1,777,347 -

Summary of Efforts in the 10th Fiscal Period

ExternalGrowth

InternalGrowth

FinancialStrategy

summary of the major initiatives undertaken during the 10th fiscal period

SustainabilityFavorable Evaluation

on Environmental Considerations

Obtained from Sumitomo Mitsui

Banking Corporation

DBJ Green Building Certification

Assessment :

2017★★★★★（highest rank）

Acquired four properties.

total cost ： 24.5 billion yen

Major cases of Investments in Revitalization

AEON MALL Morioka Installation of Wastewater Treatment Facility(Rent increase)

AEON MALL Kurashiki Large scale renewal(Rent increase)

AEON MALL Suzuka Large scale renewal(Rent increase)

LTV ：44.9%（Previous Period：46.7%)

lender formation：21（Previous Period：19)

Issuance of New Investment Units Issue price： ¥110,662 per unit

The number of newly-issued investment units (including third-party allotment)

： 141,435 units

AEON REIT

designated as highest rank "Green Star“For the second Consecutive year.

AEON KireuriwariShopping Center AEON MALL Shimotsuma Daiei-Ibaraki Process Center AEON STYLE Kemigawahama

Maintain and increase

the value of properties

LTV fell to 44.9%

diversify financing methods

10th Fiscal Period result

→Acquired three certifications

23

Issuance of Investment Corporation Bonds

Total issue amount ：¥2billionInterest rate ：0.680% per annum

Rating ：AA-(Japan Credit Rating Agency, Ltd.)

Assessment ：A11th Fiscal Period

→Acquired one certification

Portfolio Highlights (as of January 31, 2018)

Number of properties 40

Total acquisition price 355.1bn

Portfolio appraisal NOI yield before depreciation 6.4%

Portfolio appraisal NOI yield after depreciation 3.9%

Average remaining lease term 17.0years

Average building age 14.0years

Total leasable area 3,410,000m²

Occupancy rate 100%

Summary of Portfolio

Expansion of Asset Size and Diversification of property type , location and investment

24

Hokkaido･Tohoku

Kanto

Tokai･Hokuriku・

Chubu

Kinki

Chugoku･Shikoku

Kyushu・Okinawa

Malaysia

SRSC: Super regional

shopping center

RSC: Regional shopping

center

CSC: Community shopping

center

Logistics facility

Portfolio DataBy investment(top 10 properties)By locationBy property type

6.0%

6.0%

5.0%

4.7%

4.7%

4.1%

4.0%

3.8%

3.7%

3.4%

54.5%

8.9%

35.5%

10.8%

22.8%

9.7%

10.6%

1.7%

KYOTO

mori

KURASHIKI

ITAMIKOYA

MITOUCHIHARA

YAMATOKORIYAMA

KAWASAKI PC

KAGOSHIMA

KUMAMOTO

CHIBA-NEWTOWN

Others

[External Growth] Assets Acquired in the 10th Fiscal Period

AEON Kireuriwari Shopping Center

CSC-3 Acquired on September 19, 2017

Seller

GodoGaisha

Double O2

5.7%

Appraisal NOI yield

Acquired community-based shopping centers close to a station, mall-type retail properties with a large commercial area and logistics facilities to support them. Built a solid portfolio by promoting diversity in investment targets.


CSC-2 Acquired on November 30, 2017

7.2%

Appraisal NOI yield

Daiei-Ibaraki Process Center

L-3 Acquired on October 2, 2017

6.0%

Appraisal NOI yield

AEON MALL Shimotsuma

RSC-30 Acquired on September 19, 2017

6.6%

Appraisal NOI yield

25

Seller

Aeon RetailCo., Ltd.

Seller

GodoGaisha

Double O2

Seller

Tokyo Century

Corporation

[External Growth] Acquisition of Logistics Facilities to Support Retail and Related Properties of AEON Group

AEON REIT acquired the third logistics facilities.

7th fiscal period ：5.7%

The ratio of logistics facilities to the portfolio (Acquisition price).

The ratio of logistics facilities to the portfolio as a whole has been increasing.

26

9th fiscal period ：7.3% 10th fiscal period ：8.7%

type merchandise function Kanto Region Kansai Region

Process Center(PC) 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（RDC）

High rotation products

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

Daiei-Kawasaki Process Center

AEON Minami-Osaka RDC

Daiei-IbarakiProcess Center

Logistic Properties Aeon Reit holdsAeon Reit holds

27

◇Project cost：132millions of yen◇Rent increase per annum：9.9millions of yen

◇Rent increase as a percentage of

project cost per annum ：7.5%

Before

Ａｆｔｅｒ

Refurbishment of Food court Refurbishment of children's space

Before

Ａｆｔｅｒ

[Internal Growth] Achievement of Internal Growth by Investments in Revitalization

Achievement of Rent increase by Investments in Revitalization(AEON MALL Kurashiki Large-scale renovation )

28

Major cases of Investments in Revitalization with increase in rent after Apr. 2016

[Internal Growth] Achievement of Internal Growth by Investments in Revitalization

Effect of revitalization

propertyConstruction

completion monthRevitalization project

Project cost(millions of yen)

(Note 1)

Rent increase per annum

(millions of yen)

Rent increase asa percentage of project cost per

annum (%)

AEON MALL Morioka April 2016 Revitalization 790 57 7.3

AEON MALL Ota July 2017 Construction of new Escalator 199 14 7.3

AEON MALL Yokkaichi-kita July 2017 Food court refurbishment 113 9 8.5

AEON MALL Kurashiki August 2017 Large scale renewal 132 9.9 7.5

AEON MALL Morioka September 2017Installation of

Wastewater Treatment Facility99 7.5 7.6

AEON MALL Suzuka November 2017 Large scale renewal 297 22 7.7

（Millions of yen）

0.013.9 18.8

50.6 54.7

115.1 118.0

154.2

200.6

0.0

50.0

100.0

150.0

200.0

250.0

2nd Fiscal Period（Jan

2014）

3rd Fiscal Period

（July 2014）4th Fiscal Period（Jan

2015）

5th Fiscal Period

（July 2015）6th Fiscal Period

（Jan2016）7th Fiscal Period


（Jan 2017）9th Fiscal Period


（Jan 2018）

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

10th

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

[Financial Strategy] Building of Firm Financial Base

29

Borrowing Amount

termFloating rate/

Fixed rate Spread

Borrowings ¥1.5bn 0.3yr Floating rate 0.22%

Borrowings ¥4.2bn 0.2yr Floating rate 0.22%

Borrowing Amount

termFloating rate/

Fixed rate Spread

Borrowings ¥3.4bn 5.8yr Effective fixed rate （Note3）

0.37%

Borrowings ¥0.3bn 5.8yr Fixed rate 0.30%

＋serial

numberTotal issue

amountterm Interest rate

Investment Corporation Bonds

Fourth ¥2.0bn 10.0yr 0.68%

Before

After

Diversification of Lenders Achieved

Rating

Credit Rating Agency Rating target Rating Outlook

Japan Credit Rating Agency

Long-term issuer rating

AA- Stable

Numbers of Lenders 21 （＋2 compared to previous period）

Mizuho Bank 26,700 mil yen 18.5%

Sumitomo Mitsui Banking 22,800 mil yen 15.8%

SUmitomo Mitsui Trust Bank

20,800 mil yen 14.4%

Bank of Tokyo-Mitsubishi UFJ

16,600 mil yen 11.5%

Norinchukin Bank 9,600 mil yen 6.7%

Mizuho Trust ＆ Banking 8,700 mil yen 6.0%

Mitsubishi UFJ Trust and Banking

9,500 mil yen 6.6%

Resona Bank 4,100 mil yen 2.8%

AEON BANK 4,700 mil yen 3.3%

Development Bank of Japan 4,600 mil yen 3.2%

Hyakugo Bank 3,500 mil yen 2.4%

Hiroshima Bank 2,000 mil yen 1.4%

Mie Bank 3,800 mil yen 2.6%

77 Bank 1,600 mil yen 1.1%

Chiba Bank 300 mil yen 0.2%

Nippon Life Insurance 1,000 mil yen 0.7%

Meiji Yasuda Life Insurance 1,300 mil yen 0.9%

The Daisan Bank 500 mil yen 0.3%

Shinsei Bank 1,300 mil yen 0.9%

newThe Juroku Bank 300 mil yen 0.2%

Momiji Bank 300 mil yen 0.2%

Solid Financial Base

（Note1） LTV＝(Total interest-bearing debt after new debt financing + Tenant leasehold and security deposits) ÷ Total assets at end of 10th period

（Note2） LTV is estimated at the end of 10th period.

Refinance in Dec. 2017

8th Fiscal Period

（January 2017）

9th Fiscal Period

（July 2017）

10th Fiscal Period

（January 2018)

LTV （Note1)(Note2)

(including tenants’ deposits)46.4% 46.7% 44.9%

Long-term debt ratio

98.7% 99.0% 100.0%

Fixed interest rate ratio

96.5% 92.9% 95.7%

Average remaining borrowed period

4.7 yr 4.4 yr 4.2 yr

Average interest rate on borrowings

0.84% 0.79% 0.80%

➢ Considering increase in interest rate, realized to shift to long-term loans and fix interest rate.

➢ Promoting diversification of financing sources with new two lenders invited.

（note3）Although it is borrowing by floating interest rate, in this context it is considered as substantially fixed interest rate, as we conduct interest rate swap transactions to avoid interest rate fluctuation risk.

[Financial Strategy] Disperse Repayment Dates and Reduction of Borrowing Cost

Period remaining to maturity and our borrowing cost

Diversification of maturity dates *at the end of Jan. 2018(10th fiscal period)

LTV Trend

Available capacity to LTV (including deposit) 50％ approx. ¥36.0 bn.

（Note）This indicates financeable debt amount up to LTV 50%.

30

（hundred of millions of yen ）

41.0% 40.8%

42.8%

46.4% 46.7%

44.9%

30.0%

34.0%

38.0%

42.0%

46.0%

50.0%

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）

4.3 year4.0 year 4.1 year

4.7 year4.4 year 4.2 year

0.94% 0.95%

0.85% 0.84%

0.79% 0.80%

2.0 year

3.0 year

4.0 year

5.0 year

6.0 year

7.0 year

0.60%

0.70%

0.80%

0.90%

1.00%

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）

Average period remaining to maturity (year)

Average of procurement interest rate (％)

20 10 20 10

270

156

220

161 172

117 113 9391

10

37

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2036

New debt financing Existing Borrowings investment corporation bonds

[Sustainability] Major Efforts

AEON REIT cares and considers over Environmental, Social and Governance - related issues (ESG) in all aspects of work jointly with AEON Group and cooperate with stakeholders to facilitate it.

Environmental Certification and Evaluation（10th Fiscal Period result）

Case examples(Environmenal)

Favorable Evaluation on Environmental ConsiderationsObtained from Sumitomo Mitsui Banking Corporation

Conversion of lighting to LEDs

（AEON MALL Nogata）

Property：AEONMALL KYOTO, AEON MALL Mitouchihara

Assessment ：2017★★★★★（highest rank）

DBJ Green Building Certification

Assessment ：A

Environmental Certification and Evaluation（11th Fiscal Period）

Property ：AEON MALL Kagishima

Assessment ：S （highest rank）

Assessment Certification in CASBEE

31

GRESB in 2017

AEON REIT designated as Highest Rank

"Green Star" for the second consecutive year.

32

[Appeal of the Investment Corporation] Efforts for IR Activities

Meetings for individual investors For institutional investors

Active in IR for investors

Holding of a property tour(AEON LakeTown)

Number of meetings held: SevenTotal number of participants: Approx. 650(August 2017 – January 2018)

33

Forecasts of Performances for the 11th Fiscal Period Ending July 31, 2018＊Based on the Assumptions for Forecasts of Performance of Financial Report for the Fiscal Period Ended January 31, 2018(page 5 to 6)

January July

2018 2018

10th Fiscal Period Result

11th Fiscal Period

Forecast

vs. Previous Period

11th Fiscal Period Forecast vs.

ForecastAnnounced on Sep. 12, 2017

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

Operating Revenues(Millions of

yen)15,780 16,143 + 363 16,132 + 11

Operating Expenses(Millions of

yen)9,503 10,148 + 645 10,151 ▲ 3


(Millions of yen)

8,599 9,207 + 608 9,212 ▲ 4


(Millions of yen)

4,380 4,416 + 35 4,470 ▲ 53

Operating Income(Millions of

yen)6,276 5,995 ▲ 281 5,980 + 15

Ordinary Income(Millions of

yen)5,389 5,111 ▲ 277 5,083 + 28

Net Income(Millions of

yen)5,383 5,106 ▲ 276 5,078 + 28

Distributions per Unit (yen) 3,029 2,870 ▲ 159 2,855 + 15


(unit) 1,777,347 1,777,347 - 1,777,347 -


Operating Revenues

Full-period contribution of properties acquired in 10th period

+ 353

Increase in rent of other properties

+ 16

Operating Expenses

Taxes and dues for properties acquired in 9th period

+ 320

Taxes and dues for properties acquired in 10th period

+ 111

Repairs and maintenance expenses of properties acquired in 10th period

+ 31

Repairs and maintenance expenses of other properties

+ 82

Land rent paid for the properties acquired in 10th period

+ 27

Depreciation for properties acquired in 10th period

+ 60

Depreciation for other properties ▲ 24

Non-OperatingExpenses

Decrease in interest of borrowing

▲ 7

Increase in interest of bond + 4

Decrease in amortization of investment unit issuance expenses

▲ 8

Major Factors of Changes from the Forecast(Millions of yen)

Operating Revenues

Increase in rent of revitalized properties

+ 5

Increase in dividends from Overseas SPC

+ 4

Operating Expenses

Increase of repairs and maintenance expenses

+ 54

Decrease in depreciation ▲ 53

Non-OperatingExpenses

Decrease in interest of borrowing

▲ 18

34

Forecasts of Performances for the 12th Fiscal Period Ending January 31, 2019＊Based on the Assumptions for Forecasts of Performance of Financial Report for the Fiscal Period Ended January 31, 2018(page 5 to 6)

July January

2018 2019

11th Fiscal Period Forecast

12th Fiscal Period Forecast

vs. Forecast

(A) (B) (B-A)

Operating Revenues (Millions of yen) 16,143 16,147 + 3

Operating Expenses (Millions of yen) 10,148 10,128 ▲ 19


(Millions of yen) 9,207 9,189 ▲ 18


(Millions of yen) 4,416 4,436 + 20

Operating Income (Millions of yen) 5,995 6,019 + 23

Ordinary Income (Millions of yen) 5,111 5,130 + 18

Net Income (Millions of yen) 5,106 5,125 + 18

Distributions per Unit (yen) 2,870 2,880 + 10


(unit) 1,777,347 1,777,347 -


Operating RevenuesIncrease in rent of revitalized properties + 4

Operating Expenses

Decrees in repairs and maintenance expenses ▲ 40

Increase in depreciation + 20

Increase in asset management fees + 10

Non-Operating ExpensesIncrease in interest of borrowing + 10

Decrease in borrowing related expenses ▲ 8

Conduct capital investment to maintain and enhance the value of the portfolio, while taking cost-effectiveness into consideration.

Capital Investment Plan

35

182 346 371

218 314 445 452

429

798

238

2,833

389

2,777

1,063 1,922

2,458

2,245

2,659 2,677

3,169

3,386

4,178 4,380 4,416 4,436

Jan 2015 Period

(4th Period)

Actual

July 2015 Period

(5th Period)

Actual

Jan 2016 Period

(6th Period)

Actual

July 2016 Period

(7th Period)

Actual

Jan 2017 Period

(8th Period)

Actual

Jan 2017 Period

(9th Period)

Actual

Jan 2018 Period

(10th Period)

Actual

July 2018 Period

(11th Period)

Scheduled

Jan 2019 Period

(12th Period)

Scheduled

1,426

1,222

（millions of yen）

Restoration WorkOf Aeon Mall Kumamoto(Capex)

Achievement of Internal Growth by Investments in Revitalization

Concluded a Development Agreement in October 2017 based on the discussion with AEON Mall Co., Ltd.

Major cases of floor-space expansion and investments for revitalization under way

36

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

Effect of revitalization（forecast）

Property Revitalization projectProject cost(millions of yen)(Note 1)

Rent revision date（forecast）

Rent increase perannum(millions of yen)

Rent increase as apercentage of projectcost per annum (%)

AEON MALL NogataConversion of lighting to

LEDs69 Feb.2018 6.9 10.0

AEON MAKK Hiezu Large scale renewal 64 May.2018 5.0 7.8

AEON MALL kurashiki Revitalization 82 Aug.2018 6.1 7.5

Major revitalization cases with increase in rent to be scheduled

AEON MALL Kumamoto

（Note）

Sub-Anchor Zone is framed in red line. The above image is an architectural

rendering and will not necessarily be identical with the building after it is

completed. For the building, AEON REIT has simply obtained preferential

negotiation rights and has not decided on its acquisition. AEON REIT does not

guarantee its acquisition in the future, either.

■Architectural rendering of Sub-Anchor Zone

Renovation with floor-space expansion of Sub Anchor Zone（Completion of the Building (scheduled):Summer 2018）

Anchor(AEON Kumamoto) East Mall West Mall Sub-

AnchorZone

■Floor plan of AEON MALL Kumamoto

http://www.lovela-bandai.com/aeon/

Ⅳ. Future of AEON REIT

イオンレイクタウン鹿児島

ARON MALL Kofu Showa

expanded floor space

(Note)For the building with expanded floor space, AEON REIT has not decided on its acquisition. AEON REIT does not guarantee its acquisition in the future, either.

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

AEON MALL Kofu Showa

Development

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.

Diversification of property

acquisition methods

Realizing mobile property acquisition by

obtainment of preferential negotiation rights.

Able to acquire property utilizing mobility

and available capacity by utilizing various

acquisition methods.

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.Acquisition of completed building

+ Internal growth


Implementation of Growth Strategies Through Collaboration with 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.

Expanding the portfolio to include logistics facilities supporting AEON Group

Establishing an efficient group supply chain intensification by

strategically locating and operating group logistics facilities.

Acquisition of full-scale overseas properties as J-

REIT’s first practice

Enhancing relations with Sponsor Group

Capitalizing on AEON Group’s overseas strategy

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).

AEON MALL Seremban2

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.

38

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

AEON MALL Kurashiki AEON MALL Suzuka

(Note)For the building with expanded floor space, AEON REIT has not decided on its acquisition. AEON REIT does not guarantee its acquisition in the future, either.

Enrolment in earthquake insurance

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)

By realizing a mutually beneficial relationship with our sponsor, we have achieved assets of ¥300 billion in approx. 3 years and continuously aim for ¥500 billion in medium term (Note).

Key Measures

● External growth using the AEON Group’s pipeline

● Strategic cash management using internal reserves

● Expansion of overseas investment and diversification of types and regions of properties

● Management of leverage with LTV in the 40–50% range

At time of listing

(Note) The figures above are targets made as of the date of these materials and there is a possibility that they may not be achieved due to future events or the market environment.

39

Aim for continued growth

Roadmap for Growth

Medium TermJan. 2018

At time of listing

158.3 billions of yen



Targets of asset size in the medium to long term

Appendix

AEON REIT invests primarily in retail and related properties(Note) that are an integral part of the communities in

which they are located. We believe that these properties and facilities form the backbone of the local

communities and their retail business infrastructure.

Our mission is to contribute to the betterment of individual lives and local communities through investment in

retail and related properties. In doing so, we seek to generate stable revenues and achieve the steady growth

of our asset portfolio over the medium to long term.

(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 distribution and transport of merchandise and other goods.

Basic Philosophy and Basic Policy

Basic Philosophy

Basic Policy

We will aim to maximize value for unitholders by building a mutually beneficial relationship between AEON REIT and the AEON Group.

A growth strategy based on a mutually beneficial relationship between AEON REIT and AEON Group(Note)

(Note) Refers to the group comprising the holding company AEON CO., LTD. and its 296 consolidated subsidiaries and 32 equity-method associates (as of February 28, 2017).

41

Portfolio Policy

42

Type

Investment ratio (Note1)

Domestic Overseas

85% or more No more than 15%

Reta

il pro

pert

ies,

etc

.

Large-scale

retail

property

SRSC (Super regional shopping center) (Note2)

80% or moreRSC (Regional shopping center) (Note3)

CSC (Community shopping center) (Note4)

Other retail

property

NSC (Neighborhood shopping center) (Note5)

No more than 20%SM (Supermarket) (Note6)

Logistics facility No more than 10%

Investment areas Investment targets

Countries and regions with good economic growth prospects in the

medium to long term, like Malaysia of ASEAN region(Note7) and

China

In principle, retail properties that are leased in their entirety under

master lease contracts to the AEON Group, which manages and

operates the properties

Investment Properties Centered on Large-Scale Retail Properties and Investment Ratios

(Notes)

1. Calculated based on acquisition price.

2. Larger commercial area than regional shopping centers. A super regional-type shopping center having a number of anchor tenants and a shopping mall forming a complex of over 200 specialty stores.

3. A regional-type shopping center having a general merchandise or other similar store as the anchor tenant and a complex of over 50 specialty stores.

4. A retail property having a general merchandise store, a discount store, a large grocery supermarket or another similar store as the anchor tenant, and a complex of approximately 20–50 specialty stores.

5. A small-scale retail property serving a small commercial area, having a grocery supermarket or another similar store as the anchor tenant and a complex of approximately 10–30 specialty stores generally selling household goods.

6. A grocery supermarket mainly selling high purchase frequency commodities such as food and household goods.

7. Indicates Indonesia, Malaysia, Philippines, Singapore, Thailand, Brunei, Vietnam, Laos, Myanmar and Cambodia.

43

Propertynumber

Property name Appraisal agencyAcquisition price(Millions of yen)

Appraisal value (Millions of yen)Capitalization Rate based on

direct capitalization method (%)

9th Period(July 31, 2017)

10th Period(January 31, 2018)

Difference9th Period

(July 31, 2017)10th Period

(January 31, 2018)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-3 AEON MALL Mitouchihara Japan Real Estate Institute 16,460 18,000 18,000 0 6.0 6.0 0.0

AEON MALL Mitouchihara (Land) Japan Real Estate Institute 105 112 113 1 5.2 5.2 0.0

RSC-4 AEON MALL Ota Japan Real Estate Institute 6,860 8,190 8,190 0 6.4 6.4 0.0

RSC-5 AEON Sagamihara Shopping Center Japan Real Estate Institute 10,220 10,900 10,900 0 5.2 5.2 0.0

RSC-6 AEON MALL Ogaki Japan Real Estate Institute 4,950 5,110 5,110 0 6.9 6.9 0.0

RSC-7 AEON MALL Suzuka Japan Real Estate Institute 9,660 10,200 10,600 400 6.4 6.2 ▲ 0.2

RSC-8 AEON MALL Meiwa The Tanizawa Sōgō Appraisal Co., Ltd. 3,290 3,700 3,700 0 6.5 6.5 0.0

RSC-9 AEON MALL Kasai-Hojo Japan Real Estate Institute 7,230 7,690 7,690 0 6.8 6.8 0.0

RSC-10 AEON MALL Hiezu Japan Real Estate Institute 7,780 8,440 8,440 0 6.8 6.8 0.0

RSC-11 AEON MALL Kurashiki Japan Real Estate Institute 17,890 19,300 19,400 100 6.0 6.0 0.0

RSC-12 AEON MALL Ayagawa Japan Real Estate Institute 8,740 9,260 9,270 10 6.4 6.4 0.0

RSC-13 AEON MALL Nogata Japan Real Estate Institute 11,246 13,000 13,000 0 6.4 6.4 0.0

RSC-14 AEON MALL Kumamoto Japan Real Estate Institute 13,148 12,500 12,500 0 6.0 6.0 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 2,610 2,610 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 Japan Real Estate Institute 8,389 8,600 8,610 10 5.8 5.8 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 6,430 0 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 - 9,810 - - 6.4 -

CSC-1 AEON Chigasaki-Chuo Shopping Center Japan Real Estate Institute 6,410 6,560 6,550 ▲ 10 5.0 5.0 0.0

CSC-2 AEON STYLE Kemigawahama Japan Real Estate Institute 3,748 - 3,850 - - 6.2 -

CSC-3 AEON KireuriwariShopping Center The Tanizawa Sōgō Appraisal Co., Ltd. 4,394 - 4,620 - - 5.2 -

L-1 Daiei-Kawasaki Process Center Japan Real Estate Institute 14,280 15,000 15,000 0 4.9 4.9 0.0

L-2 AEON Minami-Osaka RDC Japan Real Estate Institute 9,870 10,300 10,300 0 4.9 4.9 0.0

L-3 Daiei-Ibaraki Process Center Japan Real Estate Institute 6,810 - 7,100 - - 5.1 -

M-1 AEON Taman Universiti Shopping Centre(Note2)(Note3)

Japan Real Estate Institute658

(20milRM)554

(21.5milRM)600

(21.5milRM)- - - -

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

(215milRM)6,011

(233milRM)6,505

(233milRM)- - - -

Total 355,192 352,878 379,307 - - - -

(Note1)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).

(Note2)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.

(Note3)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, 2017; 1RM = ¥25.80, January 31, 2018; 1 RM = ¥27.92; rounded down to the nearest 100th).

Appraisal Value for the 40 Properties held in 10th fiscal period

Asset Size 355.1bn yen

40properties(domestic38, overseas2）

44

Malaysia

● M-1

Hokkaido and Tohoku

Kanto

Kyushu and Okinawa

16 17 16

1 2

1 2 17

2418 19

24

1

2

18193 4

5 22 1 1

25

21

4 3

5

22

11

25

14

13

13

14

Kinki, Chugoku and Shikoku

20

23

6 7

8

9 10 11

211512

10

11

12

915

21

27

27

28

28

29

2

2

26

7

29

8

6 23

20

● M-2

Tokai, Hokuriku and Chubu

26

30

30 AEON MALL Shimotsuma AEON STYLE Kemigawahama2

2

3

3

3

3

AEON Kireuriwari

Shopping Center

Daiei-Ibaraki

Process Center

Portfolio Map (as of January 31, 2018)

SRSC: Super regional shopping center

RSC: Regional shopping center

CSC: Community shopping center

Logistics facility

Existing properties acquiredby 9th period

Acquired since 10th period

ASEAN region

AEON MALL

Nogata

AEON MALL

Kagoshima

AEON MALL

Kumamoto

M - 1AEON Taman

UniversitiShopping Centre

M - 2AEON MALL

SEREMBAN 2

AEON MALL

Ogaki

AEON MALL

Suzuka

AEON MALL

MeiwaAEON MALL Yokkaichi

AEON MALL

Kofu Showa

AEON MALL

Kahoku

AEON MALL

Morioka

AEON MALL

IshinomakiAEON MALL

Sapporo-Hiraoka

AEON MALL

Kushiro-Showa

AEON MALL

Rifu

AEON MALL

Yamagata-Minami

AEON MALL

Tomakomai

AEON MALL Hiezu AEON MALL

Kurashiki

AEON MALL

Kasai-Hojo

AEON MALL

Itamikoya

AEON MALL

Ayagawa

AEON MALL

KYOTO

AEON MALL

Yamatokoriyama

AEON

MINAMI-OSAKA RDC

AEON Lake Town

mori

AEON MALL

Mitouchihara

AEON Lake Town

k a z e

AEON MALL

Ota

AEON Chigasaki-Chuo

Shopping Center

Daiei-Kawasaki

Process Center

AEON Sagamihara Shopping Center

AEON MALLChiba-New Town

（Mall, Cinema andSports building)

AEON MALL Oyama AEON MALL Tsuchiura

45

Amount

(thousands of yen)

Percentage

(%)

Amount

(thousands of yen)

Percentage

(%)

Amount

(thousands of yen)

Percentage

(%)

Amount

(thousands of yen)

Percentage

(%)

21,798,587 6.3% 18,237,512 5.0% 5,908,878 1.7% 28,705,412 7.9%

Cash and deposits 12,002,593 3.5% 9,538,680 2.6% Operating accounts payable 1,177,198 0.3% 851,409 0.2%

Cash and deposits in trust 6,850,168 2.0% 8,041,075 2.2% Current portion of long-term loans payable 4,200,000 1.2% 27,000,000 7.4%

Prepaid expenses 512,960 0.1% 647,245 0.2% Accounts payable - other 334,632 0.1% 350,377 0.1%

Income taxes receivable 9 0.0% 14 0.0% Accrued expenses 48,121 0.0% 44,192 0.0%

Consumption taxes receivable 2,421,369 0.7% －－ Income taxes payable 605 0.0% 605 0.0%

Other 11,486 0.0% 10,497 0.0% Accrued consumption taxes －－ 268,141 0.1%

322,915,145 93.6% 344,166,940 94.9% Other 148,320 0.0% 190,685 0.1%

Property, plant and equipment 268,759,693 77.9% 286,760,656 79.1% 156,774,477 45.4% 135,915,844 37.5%

Land 108,463 0.0% 108,463 0.0% Investment corporation bond 4,000,000 1.2% 6,000,000 1.7%

Buildings in trust 163,353,883 47.3% 169,553,403 46.7% Long-term loans payable 140,300,000 40.7% 117,000,000 32.3%

Structures in trust 577,328 0.2% 579,303 0.2% Tenant leasehold and security deposits 2,628 0.0% 2,628 0.0%

Furniture and fixtures in trust 2,636 0.0% 7,917 0.0% Tenant leasehold and security deposits in trust 12,471,849 3.6% 12,913,216 3.6%

Land in trust 104,717,380 30.4% 116,511,568 32.1% 162,683,355 47.2% 164,621,256 45.4%

Intangible assets 46,785,787 13.6% 50,178,762 13.8%

Leasehold rights in trust 46,785,787 13.6% 50,178,762 13.8% 182,334,301 52.8% 198,077,143 54.6%

Investments and other assets 7,369,664 2.1% 7,227,521 2.0% Unitholders' capital（net） 177,026,618 51.3% 192,172,327 53.0%

Shares of subsidiaries and associates 6,078,453 1.8% 6,078,453 1.7% Unitholders' capital 180,552,316 52.3% 195,698,024 54.0%

Long-term prepaid expenses 1,280,749 0.4% 1,138,607 0.3% Deduction from unitholders' capital △ 3,525,697 △1.0% △ 3,525,697 △ 0.0%

Lease and guarantee deposits 10,460 0.0% 10,460 0.0% Surplus 5,307,682 1.5% 5,904,815 1.6%

303,924 0.1% 293,946 0.1% General reserve －－ 520,000 0.1%

Investment unit issuance expenses 251,602 0.1% 220,787 0.1%Unappropriated retained earnings

(undisposed loss)5,307,682 1.5% 5,384,815 1.5%

52,322 0.0% 73,159 0.0% 182,334,301 52.8% 198,077,143 54.6%

345,017,657 100.0% 362,698,399 100.0% 345,017,657 100.0% 362,698,399 100.0%

Ⅲ Deferred assets

Investment corporation bonds issuance

costs

Total assets

Assets Liabilities

Ⅰ Current assets Ⅰ Current liabilities

Ⅱ Non-current assets

Ⅱ Non-current liabilities

Total net assets

Total liabilities and net assets

Total liabilities

Net Assets

Ⅰ Unitholders’ equity

10th Period

As of January 31, 2018

9th Period

As of July 31, 2017

10th PeriodAs of January 31, 2018

9th Period

As of July 31, 2017

Balance Sheet for the 10th Fiscal Period (as of January 31, 2018)

46

Amount

(thousands of yen)

Percentage

(%)

Amount

(thousands of yen)

Percentage

(%)

14,642,554 100.0% 15,780,299 100.0%

Rent revenue - real estate 14,561,163 99.4% 15,656,508 99.2%

Dividend income 81,390 0.6% 123,790 0.8%

9,017,702 61.6% 9,503,310 60.2%

Expenses related to rent business 8,253,947 56.4% 8,599,621 54.5%

Asset management fee 613,960 4.2% 722,381 4.6%

Asset custody fee 17,380 0.1% 18,478 0.1%

Administrative service fees 50,702 0.3% 58,076 0.4%

Directors’ compensations 3,600 0.0% 3,600 0.0%

Taxes and dues 2,814 0.0% 1,684 0.0%

Other operating expenses 75,297 0.5% 99,467 0.6%

5,624,851 38.4% 6,276,989 39.8%

2,724 0.0% 7,433 0.0%

Interest income 62 0.0% 91 0.0%

Refund of unpaid distributions 2,662 0.0% 3,382 0.0%

Interest on refund －－ 3,249 0.0%

Other －－ 709 0.0%

853,875 5.8% 895,417 5.7%

Interest expenses 546,237 3.7% 578,222 3.7%

Interest expenses on investment corporation bonds 17,907 0.1% 20,061 0.1%

Amortization of investment unit issuance expenses 70,587 0.5% 77,002 0.5%

Investment unit issuance expenses 4,413 0.0% 30 0.0%

Amortization of investment corporation bonds issuance costs 2,438 0.0% 2,832 0.0%

Other offering costs associated with issuance of investment units 334 0.0% 4 0.0%

Borrowing related expenses 211,943 1.4% 217,262 1.4%

Other 13 0.0% －－

4,773,701 32.6% 5,389,004 34.2%

537,819 3.7% －－

Gain on reversal of provision for loss on disaster 500,263 3.4% －－

Refund of fixed asset tax 37,555 0.3% －－

5,311,520 36.3% 5,389,004 34.2%

Income taxes - current 4,621 0.0% 5,193 0.0%

Income taxes - deferred －－－－

Total Income taxes 4,621 0.0% 5,193 0.0%

5,306,899 36.2% 5,383,811 34.1%

Retained earnings (deficit) brought forward 783 0.0% 1,004 0.0%

5,307,682 36.2% 5,384,815 34.1% Ⅵ Unappropriated retained earnings

Non-operating income

Non-operating expenses

Ⅱ Ordinary income

Ⅲ Extraordinary income

Ⅳ Profit before income taxes

Ⅴ Profit

Ⅰ Operating income

9th Period

From February 28, 2017 to

July 31, 2017

10th Period

From August 1, 2017 to

January 31, 2018

Operating revenue

Operating expenses

Statement of Income for the 10th Fiscal Period (as of January 31, 2018)

（%）

（%）

47

（%）

Average cap rate of Portfolio

(Note) ・Average cap rate is calculated excluding Malaysian properties whose return yield by

direct capitalization method is not calculated.・7th and 8th fiscal period is calculated excluding AEON MALL Kumamoto.・“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.

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)

5.5

5.6

5.7

5.8

5.9

6.0

6.1

6.2

6.3

2nd Fiscal Period

（January 2014）

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）

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

（July 2018）

three largest cities others

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）

500 thousand or more less than 500 thousand

48

5th period 6th period 7th period 8th period 9th period 10th period

（July 31, 2015）（January 31, 2016）（July 31, 2016）（January 31, 2017）（July 31, 2017）（January 31, 2018）

Short-term loans payable

¥2,000million - ¥-million ¥1,500million ¥1,500million -

Long-termloans payable

¥73,400million ¥73,400million ¥98,900million ¥113,300million ¥143,000million ¥144,000million

Investment Corporation bonds

- ¥2,000million ¥2,000million ¥4,000million ¥4,000million ¥6,000million

Tenant leasehold and security deposits

¥8,111million ¥8,111million ¥10,169million ¥10,449million ¥12,474million ¥12,916million

Total debt ¥83,512million ¥83,512million ¥111,069million ¥134,904million ¥162,683million ¥164,621million

LTV (including leasehold deposits)

41.0% 40.8% 42.8% 46.4% 46.7% 44.9%

LTV (excluding leasehold deposits)

37.0% 36.9% 38.9% 42.7% 43.0% 41.4%

Long-term debt ratio 97.3% 100.0% 100.0% 98.7% 99.0% 100.0%

Fixed interest rate ratio

84.5% 87.1% 88.4% 96.5% 92.9% 95.7%

Average remaining borrowed period

4.3 year 4.0 year 4.1 year 4.7 year 4.4 year 4.2year

Average interest rate on borrowings

0.94% 0.95% 0.85% 0.84% 0.79% 0.80%

Financial Management

49

Borrowing Date TermBorrowing Amount

MaturityFloating rate/

Fixed rate Interest rate

Breakup

Existing Borrowings

November 25, 2013 Long-term ¥54.0bn

¥27.0bn October 22, 2018 Effective fixed rate (Note 2) 0.78125%



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 21, 2027 Effective fixed rate (Note 2) 1.40730%

October 20, 2016Long-term ¥23.4bn



¥1.2bn October 20, 2022 Fixed rate 0.55000%




March 28, 2017Long-term ¥29.7bn

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






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

¥0.3bn October 20, 2023 Fixed rate 0.60000%

Debt Snapshot (after new debt financing)

Syndicate of lenders arranged by Mizuho Bank, Ltd., Sumitomo Mitsui Banking Corporation and Sumitomo Mitsui Trust Bank, Limited

(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.

50

Sponsor

Pipeline support companies

AEON Co., LTD.

Shopping center management providers

AEON Mall Co., Ltd.

AEON Retail Co., Ltd.

AEON Hokkaido Corporation

AEON KYUSHU CO., LTD.

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

Expansion of Network of Support-Agreement Companies

AEON GLOBAL SCM CO.,LTD.

Expanding sponsor support companies to fully utilize sponsors’ comprehensive strength for achieving asset size of ¥500 billion in the long term and maintaining and improving the value of our portfolio

The Daiei, Inc.

Realization of Growth Strategies through Collaboration with AEON Group

51

●Major Shopping Centers currently under development by AEON Group

●Major Shopping Centers developed by AEON Group

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●(tentative name) 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

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

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●(Tentative) 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 and Okinawa●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

(Source) Prepared by the Asset Manager based on the information provided by AEON CO., LTD. and AEON Mall Co., Ltd. (as of Jan. 2018).Note: AEON REIT neither owns nor plans to acquire any of these properties as of now.

AEON MALL Tokushima

AEON MALL Kobe Minami

●●

●

●●

●

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 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 ●(tentative name) AEON MALL Tsu minami Tsu-shi, Mie

AEON MALL ShinKomatsu

AEON MALL Matsumoto

Scheme for acquisition of overseas property

52

Overseas SPC Scheme (acquired in September 2016)

Malaysia

JapanHolding a 100% stake

JAMBATAN MANSEIBASHI (M)

Sdn Bhd

Capital stock, etc.

approx.239million RM*

(¥ 5,838million)Other assetsapprox.24

millionRM*

(¥ 586 million)

Real estate (exclusive of

taxes)215 million

RM*(¥5,252million)

AEON REIT Investment Corporation

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

Declaration-of-trust scheme was utilized to acquire overseas real estate as J-REIT’s first practice in June 2013.

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

Master Lease

Agreement

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

Holding a

property

Store operationStore operation

Holding a

property

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

53

Outline of Master Lease Agreement with AEON Co. (M) BHD.

Property name AEON Taman Universiti AEON MALL Seremban 2

Acquisition price 20 million RM 215 million RM

Appraisal value 21.5 million RM 230 million RM

Date of

completion2002 2005

In Malaysia, which is expected to experience economic growth, the sponsor

group aims to achieve internal growth in the future through CPI-linked

rent adjustment.

It will reduce risk through net lease which requires the tenant to pay

expenses related to rent business.

（Source） IMF World Economic Outlook Database, October 2017

Changes in CPI in Malaysia and Japan

Properties held by AEON REIT in Malaysia

The sponsor group will invest in Malaysia, where it has a track record of over 30 years.It aims to achieve internal growth in the future through CPI-linked rent agreements.

Outline of Master Lease AgreementOutline of AEON Co. (M) BHD

Mall-type SCs operated in Malaysia

The sponsor group has a track record of over 30

years in Malaysia, and possesses know-how about

laws, taxation and accounting, etc. on real estate.

Like in Japan, the AEON Group has established a solid

position as a retailer in Malaysia.

It can acquire properties based on confirmation of its

adequate track record.

Total net sales of AEON Co. (M) BHD

Company name

AEON Co. (M) BHD.

Major shareholder and shareholding ratio

AEON CO., LTD 51.0%

No. of employees

8,642（as of December 31,

2016/Consolidated basis)

JAYA JUSCO Dayabumi

AEON MALL Kota Bharu

2,500

3,000

3,500

4,000

4,500

2012/12期 2013/12期 2014/12期 2015/12期 2016/12期

(Million RM)

Forecast

Fixed rent agreement

（10-year lease period）

CPI-linked rent revision（every

3 years）

Net lease(Tenant bears expenses

related to lease business)

*Only AOEN MALL Seremban 2

Sep. 1984 JAYA JUSCO STORES BHD established.

Jun. 1985 First store JAYA JUSCO Dayabumi opened.

Dec. 1996JAYA JUSCO STORES BHD listed on the Malaysia Exchange

Mar. 2005Corporate name changed from JAYA JUSCO STORES BHD to AEON CO. (M) BHD.

Apr. 2016 36th SC, AEON Kota Bharu, opened.

History of AEON Co. (M) BHD Achieved an increase in rent by 7.35% over current rent linked to CPI(AEON Taman Universiti）

（Source)：SPEEEDA

Acquisition of full-scale overseas properties as J-

REIT’s first practice

AEON MALL Seremban2

FY2013 FY2014 FY2015 FY2016

75

85

95

105

115

125

135

145

CPI(マレーシア) CPI(日本)CPI(Japan)CPI(Malaysia)

FY2012

http://www.aeonretail.com.my/corporate/

54

Overview of Malaysia

Outline of Malaysia

Capital Kuala Lumpur

Population31.19 million

（2015）

AreaApprox. 330,000㎢

（Around 0.9 times

the size of Japan）

Official language Malay

Form of government/Head of state

Constitutional monarchy(Parliamentary

democracy)Per capital GDP（nominal)

$9,360

（2016）

Date History

Early 15th century Kingdom of Malacca was founded.

16th to 17th century Malacca was controlled by the Portuguese and the Dutch East India Company.

1824The Malay Peninsular and Northern Borneo were placed under British influence through the Anglo-Dutch Treaty. Malacca became a British Colony.

1942 to 1945 Malaya was occupied by the Japanese Army.

1948 Federation of Malaya was established under British protection.

1957 Federation of Malaya gained independence.

1963 Malaysia was established（merger with Singapore, Sabah and Sarawak)

1965 Singapore separated from Malaysia and became independent.

（Source）Embassy of Japan in Malaysia

Appointed in April 2009, Prime Minister Najib Razak is steadily implementing the New Economic

Model, Government Transformation Programme and Economic Transformation Programme under the

slogan “1 (One) Malaysia (People First, Performance Now), and is working to achieve harmony

among Malaysians, government transformation and improvement of people’s welfare.

In 2015, the Government announced the Eleventh Malaysia Plan (Five-year plan from 2016 to 2020).

Malaysia aims to become a developed country by 2020. It is promoting deregulation and liberalization

to strengthen international competitiveness and maintaining stable growth supported by domestic

investment and domestic consumption.

Overview of the Malaysian Economy

History of Malaysia

0-14

24%

15-64

70%

65+

6%

94% of Malaysia’s population is aged less than 65 years.

In particular, the working-age population aged 15 to 64 accounts for 70% of the total population and exceeds 22 million.

Breakdown of population of Malaysia by age

Age group

Population（in

thousands)

Aged 0-14 7,733

Aged 15-64 22,314

Aged 65 and over 2,002

Changes in Malaysia’s real GDP per capita

（Source）Department of statistics Malaysia

（Source）International Monetary Fund, World Economic Outlook Database (October 2017)*Index of GDP per capita (1995 = 100). USD terms

Penang

Cambodia

Vietnam

Kuala Lumpur

Kota Kinabalu

Johor Bahru

Indonesia

Thailand

90

110

130

150

170

190

210

230

19

95

19

96

19

97

19

98

19

99

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

20

19

20

20

20

21

20

22

Malaysia U.S. Japan Germany

（Millions of people）

(Source） International Monetary Fund, World Economic Outlook Database (October 2017)

(Source） THE WORLD BANK DataBank, August 2017

(Source）Bloomberg

（Yen）

Trading volume（RM）

Closing price

(Source） Bloomberg

0

10

20

30

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017E

2018E

2019E

2020E

2021E

2022E

20

25

30

35

40

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

55

Monthly trends of RM ／ Yen

Summary of Malaysian Economy

FTSE Bursa Malaysia KLCI Index trends

Population growth in Malaysia (estimated figures for FY2017 onwards)

Changes in GDP growth rate in Japan & Malaysia

6.8% 5.3%

5.6%

9.4%

3.3%-2.5%

7.0%

5.3%5.5%

4.7%6.0%

5.0%4.2%

2.2%

1.7%

1.4%

1.7%

-1.1%

-5.4%

4.2%

-0.1%1.5% 2.0% 0.3%

1.2%1.0%

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

real GDP growth rate

(Malaysia)

real GDP growth rate

(Japan)

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

0

100,000,000

200,000,000

300,000,000

400,000,000

500,000,000

600,000,000

700,000,000

800,000,000

900,000,000

trading

volume

closing price

Management Fee

StructureCalculation Method

Manage-

ment fee

Manage-

ment fee I

Total assets × 0.3% (maximum rate)× {No. of operating days

/ 365}

Manage-

ment fee II

DPU before deducting Management fee II × NOI1× 0.001%

(maximum rate)

Acquisition fee

Acquisition price × 0.5% (maximum rate)

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

Disposition feeDisposition 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, 2018)

Co-owned properties 3 (as of January 31, 2018)

Drafting of

proposal by the

responsible

department

Approval by the

Compliance Officer

Deliberation and

resolution by the

Compliance

Committee*

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.

Returned

Dropped or instructions

given to modify content

Dropped or instructions

given to modify content

Transparent Decision-Making Process

Further Aligning the Interests of Unitholders

and the AEON Group

Introduction of an Asset Management Fee Structure

Linked to Distributions per Unit

Introduction of Cumulative Investment Unit Purchase Program

• 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.

Framework for Maximizing Unitholder Value

Disapproved

Deliberation and

resolution by the

Investment

Committee*

Approval by

Investment

Corporation

56

(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)

(Note 3) The table shows the management fee structure in accordance with the Articles of Incorporation

after amendment by the General Meeting of Unitholders held on October 2017. The amendment took

effect on February 1, 2018.

57

2nd Fiscal Period

（January 2014）

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）

Net assetsper unit（Yen)

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

Trend of Investment Unit Price

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

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

58

Unitholder NameNumber

of Units

% of

Total

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

2 Japan Trustee Services Bank, Ltd. (trust account) 261,997 14.7%

3 The Master Trust Bank of Japan, Ltd. (trust account) 214,722 12.1%

4Trust & Custody Services Bank, Ltd. (securities investment trust account)）

77,241 4.3%

5The Nomura Trust & Banking Co., Ltd. (trust account)

62,496 3.5%

6 NORTHERN TRUST CO. (AVFC) RE HSD00 28,202 1.6%

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

8 STATE STREET BANK AND TRUST COMPANY 505012 26,210 1.5%

9 STATE STREET BANK AND TRUST COMPANY 505223 23,786 1.3%

10 NORTHERN TRUST CO. (AVFC) RE HCR00 23,307 1.3%

Total 1,097,462 61.7%

10.2%

9.5%

9.9%

9.3%

9.9%

48.6%

51.3%

56.3%

51.1%

56.3%

23.6%

23.3%

23.9%

24.0%

24.8%

17.6%

15.9%

9.9%

15.6%

9.0%

Jan. 2018 Period(10th Period)

July 2017 Period(9th Period)


July 2016 Period(7th Period)


Individualsand others

Financial institutions(including financial instruments firms)

Other domestic corporations Foreigncorporations

Investment Unit Ownership Ratio by Unitholder Type Major Unitholders (As of January 31, 2018)

Unitholder Information

Number of Units Number of Units

9th Period

(July 31, 2017)

10th Period

(January 31, 2018)

9th Period

(July 31, 2017)

10th Period

(January 31, 2018)

Number of

Investment Units% of total

Number of

Investment Units% of total

Number of

Unitholders% of total

Number of

Unitholders% of total

Individuals and others 155,477 9.5% 181,080 10.2% 21,159 96.7% 24,053 96.9%

Financial institutions (including financial

instruments firms)839,345 51.3% 864,549 48.6% 159 0.7% 161 0.6%

Other domestic corporations 380,900 23.3% 419,236 23.6% 351 1.6% 381 1.5%

Foreign corporations 260,190 15.9% 312,482 17.6% 203 0.9% 220 0.9%

Total 1,635,912 100.0% 1,777,347 100.0% 21,872 100.0% 24,815 100.0%

Number of Unitholders and Number of Investment Units by Unitholder Type

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

Disclaimer

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