aeon reit investment corporation€¦ · with familiar tenants such as “muji” attracting...

Asset Manager:

Securities Code: 3292https://www.aeon-jreit.co.jp/en/index.html

AEON MALL Kyoto Gojo（Kyoto）

空の色は調整予定

AEON REIT Investment Corporation

Presentation Material for Investor Meeting For the 11th Fiscal Period Ended July 31, 2018

September 18, 2018

2

I. Financial Highlights of the 11th Fiscal Period Ended July 31, 2018

1. Financial Highlights of the 11th Fiscal PeriodEnded July 31, 2018

----- P. 4

2. Overview of Financial Results for the 11th Fiscal Period Ended July 31, 2018

----- P. 5

Ⅱ. New Strategies of AEON REIT1. New Approach to an Aim to

Increase Investor Value①----- P. 7

2. New Approach to an Aim to Increase Investor Value②

----- P. 8

3. New Approach to an Aim to Increase Investor Value③

----- P. 9

4. Increase in Portfolio Profitability through a Series of Efforts

----- P. 10

Ⅲ. Operating Results

1. Strategic Cash Management ----- P. 12

2. Achievement of Continuous Internal Growth ----- P. 13

3. Results and Plans for Capital Investment ----- P. 14

4. Status of Interest-bearing Debts 1 ----- P. 15

5. Status of Interest-bearing Debts 2 ----- P. 16

Ⅳ. Financial Forecasts

1. Financial Forecasts for the 12th Fiscal PeriodEnding January 31, 2019

----- P. 18

2. Financial Forecasts for the 13th Fiscal PeriodEnding July 31, 2019

----- P. 19

Ⅴ. Retail Properties Owned by AEON REIT

1. Differences between Retail Environments in Japan and the US

----- P. 21

2. Consumption expenditure in Japan and AEON MALLthat can respond to changes in business environment

----- P. 22

3. Evolving as Infrastructure Assets of Local Communities

----- P. 23

4. Infrastructure Assets of Local Communities①-Aeon Mall Kofu Showa-

----- P. 24

5. Infrastructure Assets of Local Communities②-Aeon Mall Kurashiki & BCM Project of AEON Group-

----- P. 25

6. Lease Structure that Secures Stable Revenues ----- P. 26

7. Financial Performance of Shopping Centersin the Portfolio

----- P. 27

Ⅵ. Future Strategies

1. Activities to Achieve Sustainability ----- P. 29

2. Concept of Further Pursuit of Investor Value ----- P. 30

3. Roadmap for Growth ----- P. 31

Appendix 1 Characteristics of AEON REITAppendix 2 Supplement

Table of Contents

Ⅰ. Financial Highlights of the 11th Fiscal Period Ended July 31, 2018

Financial Highlights of the 11th Fiscal Period Ended July 31, 2018

Investing in revitalization of property to boost revenue and competitiveness

AEON MALL Nogata (construction to replace lighting with LED)

⇒ Increase in rent: 6.9 million yen/yearAEON MALL Hiezu (large-scale renewal)

⇒ Increase in rent: 6.1 million yen/year

LTV (incl. leasehold deposits) at the end of the 11th fiscal period: 44.7%

(down 0.2% from the end of the 10th fiscal period)

Available capacity to LTV (including deposit) 50％ approx. ¥37.0 bn.

11th Fiscal Period Ended July 31, 2018

Distributions

Achieved an increase in portfolio profitability through property replacement

Unrealized Gain up 21 billion yen

NOI (after deprecation) up 0.2 billion yen(disposition of AEON MALL Kumamoto and acquisition of AEON MALL Kyoto Gojo)

Distributions per unit: 2,956 yenUp 86 yen (3.0%) from 2,870 yen,

the initial forecast announced on Mar. 16, 2018

4

Internal

Growth

Financial

Strategy

External

Growth

January July

2018 2018

10th Fiscal Period Result

11th Fiscal Period result

vs. Previous Period

11th Fiscal Period Forecast vs.

ForecastAnnounced on Mar. 16, 2018

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

Operating Revenues(Millions of

yen)15,780 16,201 + 421 16,143 + 58

Operating Expenses(Millions of

yen)9,503 10,019 + 516 10,148 ▲ 129

Operating Income(Millions of

yen)6,276 6,182 ▲ 94 5,995 + 187

Ordinary Income(Millions of

yen)5,389 5,297 ▲ 91 5,111 + 185

Unordinary Loss(Millions of

yen)- 37 + 37 - + 37

Net Income(Millions of

yen)5,383 5,254 ▲ 129 5,106 + 147

Distributions per Unit (yen) 3,029 2,956 ▲ 73 2,870 + 86

Number of Investment Units Issued

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

Summary of Financial Results for 11th Fiscal Period Ended July 31, 2018

5

Major Factors of Changes from the Previous Period(Millions of

yen)

Operating Revenues

Contribution of revenues from properties acquired in 10th period

+ 354

Impact on rent of property replacement in 11th period

▲ 12

Proceeds from disposition of AEON MALL Kumamoto

+ 35

Dividends from SPC, Insurance revenue, etc.

+ 44

Operating Expenses

Taxes and dues for properties acquired in 9th & 10th period

+ 420

Repairs and maintenance expenses + 97

Depreciation for properties acquired in 10th period

+ 60

Impact on depreciation of property replacement in 11th period

▲ 54

Other operating expenses ▲ 7

Unordinary Lossloss on disaster in earthquake occurred in Northern Osaka pref.

+ 37

Major Factors of Changes from the Forecast(vs. Forecast announced on Mar. 16, 2018）

(Millions of yen)

Operating Revenues

Impact on rent of property replacement in 11th period

▲ 12

Insurance revenue + 23

Proceeds from disposition of AEON MALL Kumamoto

+ 35

Dividends from SPC, etc. + 11

Operating Expenses

Taxes and dues for properties ▲ 43

Repairs and maintenance expenses ▲ 16

Impact on depreciation of property replacement in 11th period

▲ 57


Unordinary Lossloss on disaster in earthquake occurred in North of Osaka pref.

+ 37

Ⅱ. New Strategies of AEON REIT

The Characteristics of Aeon Mall Kyoto Gojo

Growth of post-depreciation profit that becomes dividend funds: Dispose property with NOI yield after depreciation of 2.5% and

acquire property with the yield of 4.1%.

Elimination of unrealized loss on Kumamoto property: Unrealized loss of 1.8 billion yen eliminated by disposing property for higher

price than appraised value.

Aeon Mall Kumamoto(Jun.29,2018)

Di spos i t i on P r i ce ¥14.5 billion

B o o k V a l u e ¥14.3 billion

A p p r a i s e d V a l u e ¥12.5 billion

N O I Y i e l d 5.7%

N O I y i e l d a f t e rd e p r e c i a t i o n 2.5%

Aeon Mall Kyoto Gojo(Jul.2,2018)

Acquis i t ion Pr ice ¥13.3 billion

Appra i sed Va lue ¥13.6 billion

Appraised NOI Yield 5.4%

N O I y i e l d a f t e rd e p r e c i a t i o n

4.1%

Improve earning

power

Eliminate unrealized

loss of ¥1.8 billion

New Approach to an Aim to Increase Investor Value①～property replacement～

Location Ukyo-ku, Kyoto

Site Area 46,973.92㎡

Total Floor Area 86,984.79㎡

Date of Completion Jan. 21, 2004

Car Parking CapacityBicycle Parking

Capacity

1,723units1,992units

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

Features that increase the convenience of neighboring shoppers particularly buying food and commodities with familiar tenants such as “Muji” attracting customers from mid to long distance trading area

7

Disposition Acquisition

Asset

replacement

Trading Area Population

3-km area Approx. 340,0005-km area Approx. 740,00010-km area Approx. 1,100,000

¥489 million

¥7,100 million

(3) After the acquisition of the extended building

（１）Existing building (2) Extended building

New Approach to an Aim to Increase Investor Value ②～The acquisition of the extended building～

More expansion of unrealized gain：The appraised value together with the existing building is 17.3 billion yen.

Unrealized gain increased 0.8 billion yen as compared to the previous one to 1.3 billion yen.

1.6 times increase in rent compared to the exsisting rent：Increase of rent from 806 million yen to 1,346

million yen as a result of the acquisition of the extended building and works for the revitalization of the existing building

the Extended Building of AEON MALL Kofu Showa (September 3, 2018 Acquisition)

¥806 million

(ⅰ） movement of the unrealized gain （ⅱ）movement of the Annual Rent

8

Appraised value of

¥17.3 billionAppraised value of

¥8.6 billion

Unrealized gain ¥0.5 billion

Increase in

unrealized gain of

¥0.8 billion

Unrealized gain ¥1.3 billion

Existing building (already acquired)

After the acquisition of the extended building

Acquisition price ¥8.3 billion ¥15.4 billion

Appraised value ¥8.6 billion ¥17.3 billion

Site area 119,064.22㎡

Total floor area 66,417.84 ㎡ 99,680.71㎡

Date of completion March 11, 2011 November 20, 2017 （extended building)

Population of the trading area

3-km area approx. 62,000 5-km area approx. 176,000 10-km area approx. 444,000

* The above unrealized gains include the unrealized gain and loss as of the end of the 11th fiscal period (difference between appraisal value and book value at the end of each fiscal period) added to the difference between the appraisal value of the Kofu Showa extended building at the time of purchase and the total value of the purchase price of the extended building, the appraisal value of the existing building as of the end of the 11th fiscal period (July 31, 2018), and the expenses for investment in the revitalization of the existing building.

Action

Annual rent

Investment amount

¥50 million

¥781 million

Acquisition of the existing building

Large-scale renewal

¥1,346 million (1.6 times as compared to

the existing rent)

¥7,881 million

Acquisition of the extended building

8

Before the acquisition of the extended building (fiscal period ended July 2018)

After the acquisition of the extended building/the works for revitalization

Extended building

Extension

New Approach to an Aim to Increase Investor Value ③ ～Effect～

9

Forecasts of NAV per unitForecasts of dividend per unit

(fiscal period ending January 2019）LTV（Loan to Value）

(Unit: yen)

2,880

3,010

+90

+40

2,750

2,800

2,850

2,900

2,950

3,000

3,050

3,100

Asset replacement

Acquisition of

Extended building

128,301

+455

125,000

126,000

127,000

128,000

129,000

130,000

131,000

replacement+1,213

2,970

130,957131,412

（note1) Please refer to “Financial Report for the Fiscal Period Ended July 31, 2018 (February 1, 2018 – July 31, 2018)” ” dated Sept.12, 2018 for details of forecasts of dividend per unit after acquisition（note2) The NAV per unit after the acquisition of the extended building at Kofu Showa is the result of dividing the sum total of the total unitholders’ capital as of July 31, 2018, the total difference between the appraisal value and book value of the assets held as of the same date, and the difference between the appraisal value of the asset purchased at the time of purchase and the purchase price by the number of investment units issued.(Note3）The LTV after acquisition of Extend building has been calculated by dividing the amount of interest-bearing debt balance as of the date of this document added with security and guarantee deposits by the amount of total assets as of the end of the 11th fiscal period.

Avoided a rise in LTV due to borrowing and dilution due to capital increase and achieved the improvement of portfolio quality.

+2,656

(Unit: yen)

Afteracquisition of

Extended building

Fiscal period ended

January 2018

Fiscal period ended

January 2018

Acquisition

of Extended building

Afteracquisition of

Extended building

Fiscal period ended

July 2018

46.7%

44.9%44.7%

44.8%

44.0%

44.5%

45.0%

45.5%

46.0%

46.5%

47.0%

Fiscal period

ended July 2017

(9th period)

Fiscal period

ended Jan. 2018

(10th period)

Fiscal period

ended July 2018

(11th period)

After acquisition

of Extended

building

362.4 billion yen(up 7.1 billion yen from the end

of the 11th period)

Asset size Unrealized gains

Up 41.3 billion yen(up 0.8 billion yen from the end of

the 11th period)

44.8％

Loan to Value (LTV) (incl. leasehold deposits)

Available capacity

Approx. 37 billion yen

(Note 1) (Note 2)

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 11th fiscal period (difference between appraisal value and book value at the end of each fiscal period) added to the

difference between the appraisal value of the Kofu Showa extended building at the time of purchase and the total value of the purchase price of the extended building,

the appraisal value of the existing building as of the end of the 11th fiscal period (July 31, 2018), and the expenses for investment in the revitalization of the existing

building

Note 3: The difference from the distribution forecast of 2,880 yen for the 12th fiscal period announced on March 16, 2018

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

131,412 yen(up 455 yen from the end of

the 11th period)

Expected net asset value (NAV) per unit

10

Increase in Portfolio Profitability through a Series of Efforts

Portfolio NOI yield

6.5%

(Note 4)

NOI yield after portfolio depreciation

4.0%

Indicators after the property replacement of Kumamoto and Kyoto Gojo (11th fiscal period) and the acquisition of the extended building at Kofu Showa (12th fiscal period)

3,010 yen(up 4.5% from initial forecast)

Distributions per unit

(forecast for the 12th period)

(Note 3)

Ⅲ. Operating Results

Investing in revitalization of property to boost revenues and competitiveness

Appropriation of funds to acquire new properties (Note)

incre

sein

in

vestm

ent e

fficie

ncy

AEON MALL Kofu Showa- Acquisition of the extended building（¥7.1bn）- Revitalization of the existing building（¥0.78bn）

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

¥3.16bn

12

Fiscal period ended

July 2016

Appropriation to the new properties (AEON

MALL Yamatokoriyama, etc.)

acquired funds

Strategic Cash Management

¥3.38bn ¥4.17bn ¥4.38bn ¥4.35bn


MALL Seremban2) acquired funds


MALL Shimotsuma, etc.) acquired funds

AEON MALL Morioka AEON MALL Hiezu AEON MALL Nogata

¥7.88bn

AEON MALL Kurashiki

AEON MALL Suzuka

contin

uous v

alu

e c

reatio

n c

ontrib

utin

g to

both

investo

rs and o

pera

tors

facto

rs unpre

dic

table

dealin

g w

ith

Restoration of AEON MALL Kumamoto (note)

（note） AEON MALL Kumamoto was sold as of June 29, 2018.

Provided distributions in excess of earnings in

response to the Kumamoto earthquakes

AEON MALL Hiezu

AEON MALL Kurashiki

dep

rec

iatio

n

External GrowthInvestments inRevitalization

Generation of Cash Flow

Improvementof Profitability

Fiscal period ended

January 2017

Fiscal period ended

July 2017

Fiscal period ended

January 2018

Fiscal period ended

July 2018

Fiscal period ended

January 2019

AEON MALLYokkaichi-kita

Restoration of AEON MALL Kumamoto (note)

13

じ Effect of revitalization

PropertyRent increase

(scheduled) monthRevitalization project

Project cost (millions of yen)

(Note 1)

Rent increase(millions of yen)

Rent increase as a percentage of project cost (%)

（per annum）（per annum）

AEON MALL Morioka October 2017 Installation of Wastewater Treatment Facility 99 7.5 7.6

AEON MALL Suzuka November 2017 Large scale renewal 296 22.8 7.7

AEON MALL Kurashiki December 2017 Large scale renewal 132 9.9 7.5

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

11th

Major cases of Investments in Revitalization with increase in rent after Aug. 2017

Achievement of Internal Growth by Investments in Revitalization

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

（Millions of yen）

（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.

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

AEON MALL Hiezu(Entrance newly constructed)

BeforeAfter

111 114 150

196 218

286

0

50

100

150

200

250

300

7TH FISCAL PERIOD

（JULY 2016）

8TH FISCAL PERIOD

（JAN 2017）

9TH FISCAL PERIOD

（JULY 2017）

10TH FISCAL PERIOD

（JAN 2018）

11TH FISCAL PERIOD

（JULY 2018）

12TH FISCAL PERIOD

（JAN 2019）

Increase and maintain the competitiveness of assets held using strong cash flow corresponding to depreciation expenses

Capital Investment Actions and Plan

14

346 371 218 314 445 452 550

798

238

2,833

389

2,777

1,063 8482,140

1,594

2,659 2,677

3,169 3,386

4,176 4,380 4,355 4,431 4,453

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

July 2015

Period

(5th Period)

Actual

Jan 2016 Period

(6th Period)

Actual

July 2016

Period

(7th Period)

Actual

Jan 2017 Period

(8th Period)

Actual

July 2017

Period

(9th Period)

Actual

Jan 2018 Period

(10th Period)

Actual

July 2018

Period

(11th Period)

Actual

Jan 2019 Period

(12th Period)

Scheduled

July 2019

Period

(13th Period)

Scheduled

(Millions of yen)

Repairs and Maintenance Expenses Capital Expenditures

Capital Investment Plan Depreciation

1,426

1,222

781

Restoration WorkOf Aeon Mall Kumamoto(Capex)

the revitalization of the existing building of Kofu Showa

15

Financial Management

Status of Interest-Bearing Debt 1

2.0 1.0 2.0 1.0

27.0

15.6

22.0

16.1 17.2 15.4 11.3 9.3 9.1

1.0

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2036

New debt financing Existing borrowings

Diversification of Maturity Dates (as of July 31, 2018)

Key Financial Indicators (as of July 31, 2018)

9th period (Jul. 31, 2017)

10th period（Jan. 31, 2018）

11th period（Jul. 31, 2018）

New borrowing amount (note)

¥29.7 billion ¥5.7 billion ー

Avg. number of years remaining

4.4 years 4.2 years 3.7 years

Avg. cost of interest-bearing

debts0.79% 0.80% 0.80%

LTV (incl. leasehold deposits)

46.7% 44.9% 44.8%

Available capacity (up to 50%)

Approx. ¥23.0 billion

Approx. ¥36.0 billion

Approx. 37.0 billion

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

15

Rating

Breakdown of interest-bearing debts (as of July 31, 2018)

Megabanks, 44%

loan and trust

company, 26%

a government-controlled bank, 9%

leading bank, 7%

assurance company, 2%

local bank, 8%

investment corporation bonds, 4%

Credit Rating Agency

Rating Target Rating Outlook

Japan Credit Rating Agency

Long-term issuer rating

AA- Stable

Ratio of long-term and short-term debts

Fixed interest rate ratio

4.3%

95.7%

Floating rates Fixed rates

0%

100%

Short term Long term

(billions of yen)

Note 2: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（11th Fiscal Period（Jul. 2018））

（Note 1）This indicates financeable debt amount up to LTV 50%.

Period remaining to maturity and our borrowing cost

Status of Interest-Bearing Debt 2

4.0 year

4.1 year

4.7 year

4.4 year4.2 year

3.7 year0.95%

0.85%0.84%

0.79% 0.80%0.80%

1.0 year

1.5 year

2.0 year

2.5 year

3.0 year

3.5 year

4.0 year

4.5 year

5.0 year

0.70%

0.75%

0.80%

0.85%

0.90%

0.95%

1.00%

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）

10th Fiscal Period

（January 2018）

Average period remaining to maturity (year) Average of procurement interest rate (％)

40.8%

42.8%

46.4% 46.7%

44.9% 44.7%

38.0%

42.0%

46.0%

50.0%

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）

Available capacity to LTV (including deposit) 50％ approx. ¥37.0 bn. (note 1)

Numbers of Lenders 21 （±0 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（note2） 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%

The Juroku Bank 300 mil yen 0.2%

Momiji Bank 300 mil yen 0.2%

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

Banking Corporation and Sumitomo Mitsui Trust Bank, Limited

16

Ⅳ. Financial Forecasts

July January

2018 2019

11th Fiscal Period Result

12th Fiscal Period Forecast vs.

Previous Period

12th Fiscal Period Forecast

vs. Forecast

Announced on Aug. 24, 2018


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


yen)16,201 16,283 + 81 16,147 + 136


yen)10,019 10,014 ▲ 5 10,128 ▲ 114


yen)6,182 6,269 + 87 6,019 + 250


yen)5,297 5,362 + 64 5,130 + 231


yen)5,254 5,357 + 102 5,125 + 231

Distributions per Unit (yen) 2,956 3,010 + 54 2,880 + 130


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

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

18


yen)

Operating Revenues

Impact of property disposition in 11th period

▲ 407

Full-period contribution of property acquired in 11th period

+ 364

Contribution of property acquired in 12th period

+ 221

Difference in proceeds from dispostion of AEON MALL Kumamoto

▲ 35

Dividends from SPC, Insurance revenue, etc.

▲ 61

Operating Expenses

Operating expenses of property disposed in 11th period

▲ 224

Operating expenses of property acquired in 11th period

+ 82


+ 144


Major Factors of Changes from the Forecast(vs. Forecast announced on Mar. 16, 2018）

(Millions of yen)

Operating Revenues

Impact of property disposition in 11th period

▲ 493

Full-period contribution of property acquired in 11th period

+ 437

Contribution of property acquired in 12th period

+ 221

Taxes and dues for properties, etc. ▲ 30

Operating Expenses

Operating expenses of property disposed in 11th period

▲ 316


+ 97


+ 141


January July

2018 2019



vs. Forecast



(A) (B) (B-A)


yen)16,283 16,331 + 47


yen)10,014 10,149 + 135


yen)6,269 6,181 ▲ 87


yen)5,362 5,318 ▲ 43


yen)5,357 5,313 ▲ 43

Distributions per Unit (yen) 3,010 2,985 ▲ 25


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

Forecasts of Performances for the 13th Fiscal Period Ending July 31, 2019

19


yen)

Operating RevenuesFull-period contribution of property acquired in 12th period

+ 47

Operating Expenses

Taxes and dues for properties acquired in 11th period

+ 65

Taxes and dues for properties acquired in 12th period

+ 23

Repairs and maintenance expenses + 37

Depreciation for propery acquired in 12th period

+ 27


Ⅴ. Retail Properties Owned by AEON REIT

2.5 2.6 2.8 3.0 3.2

26.4 26.2 26.1 26.4 26.6

28.9 28.8 28.9 29.4 29.8

2014 2015 2016 2017E 2018E

Differences between Retail Environments in Japan and the US

Japan US

Population120

million320

million2.5 times

（compared to Japan）

Number ofLarge Malls

3,211 46,86014.5times

（compared to Japan）

Population per one Large Mall

39thousand

7thousand

5.5 times（compared

to US）

21

Number of Large Malls & Population

Real market overwhelming in Sales Amount

AEON MALL has Food-centered GMS as core with high percentage of food & service tenants.

AEON MALL US

Core TenantsＧＭＳ（food items sales 60%)

Large specialty stores / Movie theaterDepartment stores/

Large specialty stores / Movie theater

TenantsComposition

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

Product sales: Approx. 80％（Centered on apparel）

（note 1）

（note 2）

（note 4）

（note 5）（note 6）

Characteristics of Malls

Real Market & Ecommerce market（note３）

USJapan

Real market EC market （Trillion yen）

（注1）Population in Japan is as of July 1, 2018(Homepage of Ministry of Internal Affairs and Communications). Population in the US is as of May 2018.(Homepage of US Federal Bureau)（注2）Number of Large Malls in Japan（over 1,500㎡ of store area）is based on Japan Shopping Center Association SC White Paper 2017. Number of Large Malls in the US（excluding CVC

（under 2,750㎡ of store area） is based on CoStar, ICSC, Office J.K.（注3）Prepared by the Asset Manager Euromonitor data (1$=¥111.8 as of July 31, 2018) . The data of 2017&2018 is forecast. The above is the data excluding foods.（注4）Prepared by the Asset Manager based on Supplementary of 92th Financial Results for FY2017 of AEON Co., Ltd..（注5）Prepared by the Asset Manager based on data of the properties owned by AEON REIT.（注6）Source: ICSC、Office J.K

Oversupplied Large Malls in the US

Percentage of Ecommerce

is limited to 10.7％.

（2018 forecast）

15.1 17.0 19.1 21.4 23.8

110.7 113.3 114.0 116.4 118.9

125.8 130.3 133.0

137.8 142.6

2014 2015 2016 2017E 2018E

Consumption expenditure in Japanand AEON MALL that can respond to changes in business environment

22

（note1） Source: Prepared by the Asset Manager based on "Commercial Sales Value by Type of Business and the Percentage Change from the Same Month/Term of the Previous Year” from Current Survey of Commerce (Ministry of Economy, Trade and Industry)

（note2） .Source: Prepared by the Asset Manager based on the result briefing materials of AEON MALL Co., Ltd. for FY2010 through FY2016.

（note3） Sales by industry have been calculated by setting the sales at AEON Mall specialty stores in FY2010 to 100 and using the rates of year-on-year change in subsequent years.

Sales trends of AEON MALL specialty stores（note2,3）

Consumption expenditure changes with the time,

and Tenant of AEON MALL changes with Consumption expenditure change

（1990＝100）

0

20

40

60

80

100

120

140

160

180

1990 1995 2000 2005 2010 2015

Consumption expenditure

Food

Housing

Furniture and housework

equipmentClothing and footwear

Transportation and communication

Education

Culture and pastimes

Changes in consumption expenditure per household (note1)

80%

2010 2011 2012 2013 2014 2015 2016

Sales at specialty stores (after

adjusting days of the week)Sales at large specialty stores

Clothing

Accessories

Sundries

Food

Amusement

Evolving as Infrastructure Assets of Local Communities

Not only for shopping, but also for community as infrastructure of community

23

Health Experience Earth

Clinic

Walking in Malls

YOGA

Opera Library

Administrative contact

Post Office

Theme Park for Kids

BBQGymnastics

Breakdown of renewal store

new transfer renew

75 26 35

Infrastructure Assets of Local Communities①-Aeon Mall Kofu Showa-

（note）Indexing with 2010 as 100 based on "Census" Statistics Bureau of the Ministry of Internal Affairs and Communications (As of October 1 each year) "Population Forecast Population by Region of Japan“ & "Population Forecast Population by Region of Japan" National Institute of Population and Social Security Research (March 2013 estimate: 2010 standard)

24

Changes in sales of specialty stores from the previous year(AEON MALL Kofu Showa)

Trends in the population of Showa machi

60%

90%

120%

150%

180%

17/6 17/7 17/8 17/9 17/10 17/11 17/12 18/1 18/2 18/3 18/4 18/5

before after

Change in sales of specialty stores

after the extension from the previous year

161.0%

(Period: November 23, 2017 to May 31, 2018)

(note) Prepared by the Asset Manager based on Financial Results for FY2018 Q1of AEON MALL Co., Ltd..

■ Evolving as “Third Place” meeting all the needs of local community

■ Realized overwhelming size and number in tenants in the closed trading area

■ Core tenant “AEON Style Kofu Showa” supporting Various lifestyles(note)Third Place means a comfortable third favorite place other than at home, office.

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

Co.,Ltd..

・ 136 tenants (80％ of all the tenants) renewed

・ New 21 tenants in Koushinetsu region

& 35 in Yamanashi pref. welcomed

with ”Muji” “H＆M” “ZARA” “GAP” and more familiar tenants

Comparison of store areas in the 10km trading area

25000 50000 75000

80%

100%

120%

2010 2015 2020 2025 2030

Showa Machi Kofu

0 15000 30000 45000 60000 75000

Retail Property C

Retail Property B

Retail Property A

before extension

0 15000 30000 45000 60000 75000

Retail Property C

Retail Property B

Retail Property A

after extension

Local Communities and Their Community Infrastructure Assets2:Example of AEON MALL Kurashiki and AEON Group BCM Project

Retail and related properties for regional promotion and disaster prevention carried out in cooperation with the government

Takahashi River July 2011

• Signed a comprehensive community contribution alliance agreement with the Kurashiki government (promotion of local industry, local consumption of locally produced goods, disaster control and assistance, etc.)

July 2018: 2018 West Japan heavy rain disaster

• Takahashi River’s water level exceeded the dangerous level. AEON provided an evacuation site for neighboring residents and 2,300 vehicles. • Operated a free shuttle bus that connected evacuation sites, AEON MALL Kurashiki, and hot bath facilities

25

AEON Group’s BCM Project• June 2012

Signed the first “Agreement for Requesting the Supply of

Goods in the Event of a Large-Scale Disaster” with the Self-

Defense Forces as a retailer

• March 2016

Signed the first “Memorandum for Transportation of

Emergency Relief Supplies” with Japan Airlines in Japan

• Installed valves used in the event of a disaster that would supply

water in a water tank for drinking at the time of water and power

outage

• Set up a large emergency evacuation tent, a “balloon shelter,” which

can serve as an evacuation space in the event of a disaster

AEON MALL Kurashiki

AEON’s business continuity plans (BCP)

Stable revenues from master lease rent

(see Slide 27)

26

Lease Structure that Secures Stable Revenues

AEON Group

Master lease

companies

AEON MALL Co., Ltd.

AEON RETAIL Co., Ltd.

AEON Hokkaido Co.,Ltd.

AEON KYUSHU Co., Ltd.

The Daiei, Inc.

AEON CO. (M) BHD.

Aeon Global SCM Co.,

Ltd.

Sublease agreement

Core tenant

General

merchandise

store

Core tenant

Amusement facilities /

large specialty stores

Specialty store area in the mall

Major specialty stores<Apparel>

Clothing for men and women

Clothing for children Bags and shoes Accessories

<Sundries specialty stores>

Housewares Room interiors Character goods

<Service specialty stores> Beauty treatment clinics

Banks Continuing education

<Restaurants> Fast food Cafés Ramen restaurants

Master Lease Agreement (Note)

Stable revenues secured through a long-term fixed-rent wholesale lease contract (master lease agreement) for a building

N o t e : c o n t r a c t o v e r v i e w

L e a s e t e r m : 2 0 y e a r s

T h e r e n t i s b a s i c a l l y f i x e d .

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

✓ The amount of the variable rent will be revised every year according to changes in the fixed asset tax and city planning tax.

I n M a l a y s i a , t h e l e a s e t e r m i s 1 0 y e a r s a n d t h e r e n t i s b a s i c a l l y f i x e d ; h o w e v e r , t h e r e n t c h a n g e s e v e r y t h r e e y e a r s a c c o r d i n g t o t h e c o n s u m e r p r i c e i n d e x .

３

Long-Term

Fixed Rent

Subleased to each end tenant

Stable net sales and occupancy rate of end tenants (see Slide 27)

1 ２

99.9% 99.5%101.0%

99.6%100.2%

100.8%99.3%

101.4% 100.9%

80%

90%

100%

110%

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

Movement of Rent Revenues at Master Lease Companies （note4）

Performance of Properties in Portfolio(34 Retail Domestic Properties Portfolio) （note１）

YoY Sales Comparison of End Tenants （note2）

The net sales and occupancy rate of end tenants and rent revenues of master lease companies have been stable

27

（note1）These all graph is estimated at Retail Domestic Properties Portfolio which the Investment Corporation have as of 11th fiscal period（july2017）. (AEON STYLE Kemigawahama ,AEON REIT acquired on November 30, 2017 , excluded)

（note2） 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.

（note3） 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.

（note4） Revenue such as rent income and income incidental thereto received by the master lease company from end tenant as a percentage of sales for the same periods of the previous year.（note5） All chart shown above are data based on interviews of master lease companies. The percentage of properties with master lease contracts is 100%.（note6） All chart shown above have been rounded to the nearest hundredth of a percent.

1

３

Actual End-Tenant Occupancy Rate （note3）２

99.4% 98.7%100.6%

97.9% 99.1% 100.0% 99.0%101.1% 100.8%

80%

90%

100%

110%

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

99.3% 99.3% 99.2%99.0% 99.1% 99.2% 99.1% 99.0% 99.1%

95%

96%

97%

98%

99%

100%

May 2016 Aug 2016 Nov 2016 Feb 2017 May 2017 Aug 2017 Nov 2017 Feb 2018 May 2018

Ⅵ. Future Strategies

Activities to Achieve Sustainability (AEON REIT)

29

Evaluation of AEON REIT's efforts to achieve sustainability

AEON REIT received GRESB Real Estate Assessment

AEON REIT received SMBC Environmental Assessment

• AEON REIT achieved the “Green Star” in

two consecutive years

DBJ Green Building Certification

• SMBC evaluates companies’ environmental efforts, provides loans, and considers conditions to be set.

• AEON REIT received assessment rank “A.”

Aeon Mall Itami KoyaAeon Mall KYOTO Aeon Mall Mito Uchihara

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.

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

Activities for environmental protection

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

Aeon Mall Morioka

AEON REIT obtained Certification for CASBEE for Real Estate

SMBC Sustainable Building Assessment Loan

• AEON REIT achieved the highest rank, S, for two properties

• Environmental efforts with buildings are assessed and loans are provided based on conditions corresponding to the result

• Assessment rank of “Gold” for retail and related properties

ICSC Sustainable Design Award

Aeon Mall YamatokoriyamaAeon Mall Kagoshima

• In 2011, AEON REIT received the Best of the Best: Sustainable Design Award from the International Council of Shopping Centers (ICSC) as the first shopping mall operator in Japan.

Aeon Lake Town mori / kaze

100,000

110,000

120,000

130,000

140,000

August 2017 October 2017 January 2018 April 2018 July 2018

(Yen)

Sep. 12, 2017

4th public offering

Purchased 4 properties for

¥24.5 billion

Aeon Mall Shimozuma

Aeon Kire UrirwariShopping Center

Aeon Style Kemigawahama

Daiei IbarakProcess Center

Aeon Mall Kyoto Gojo

Aeon Mall KumamotoSold

Purchased

Asset replacement

Increased profitability

Eliminate unrealized loss of ¥1.8 billion

Period Ended January 31, 2018 Period Ended July 31, 2018

■ Seek an increase in profitability through asset replacement in addition to property purchase through public offerings and borrowings. ■ Purchase new properties, invest in property revitalization, etc. as appropriate depending on the conditions using strong cash flow.

Jun. 28, 2018

Property replacement to

increase investor value

30

Concept of Further Pursuit of Investor Value

Aeon Mall Kofu Showa

Strategic cash management

Strategic property replacement

Aug. 24, 2018

Purchase of

extended

building at

Kofu Showa

Period Ending January 31, 2019

Asset Size

2,461 yen 2,880 yen

Roadmap for Growth

3rd Period

（July 2014 Period)

31

2,748 yen 2,930 yen2,749 yen

Seek an increase in investor value by implementing a range of measures, such as

property acquisition, expansion / revitalization, capital policy, etc., taking market

trends and the investment unit price level into account.

355.3bn yen

Dividend per Unit

NAV per Unit 112,635yen

128,301yen

127,912yen

130,957yen

127,358yen

Mid-termTaget（Note1）

500bn yen

Seek an increase

in investor value

（Note2）

355.1bn yen330.6bn

yen

268.5bn yen

158.3bn yen

8th Period

（Jan 2017 Period)

9th Period


10th Period

（Jan 2018 Period)

11th Period


(Note 1) 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.(Note 2) Dividend excluding or added with special factors such as investment unit issuance expenses due to capital increase and deferral effects of fixed asset tax, etc. during a property purchase period.

Appendix 1 Characteristics of AEON REIT Investment Corporation

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).

33

Portfolio Policy

34

TypeInvestment ratio (Note1)

Domestic Overseas

85% or more No more than 15%

Reta

il p

ropert

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.

Carefully Selected Investment in Retail Properties That Can Respond to Changes

Retail facilities that can respond to changes in business environment, including the diversification of consumption, falling population and aging, and the expansion of e-commerce

Cinemas, sports, bookstores, etc.

Strength that only large-scale retail properties have: ever-changing composition of end-

tenants in response to customer needsTotal sales of specialty stores at AEON MALLs are stable due to the optimization of the composition of tenants

Response to changes 1

Ever-changing anchor tenant GMS: AEON STYLEBreak away from the stereotypical GMS in the past and gather attractive specialty stores

in accordance with customer needs in the region. A new style of AEON store that

proposes lifestyles to customers.


Mall zone for diverse, attractive specialty stores

Anchor tenants

Anchor tenant

AEON Group’s initiatives to combine the brick-and-mortar

store and e-commerceBrick-and-mortar stores, small and large, of the AEON Group are connected with e -

commerce and respond to a variety of lifestyles and shopping styles of customers in

the region. The also tap into customers’ needs for e -commerce.


Small and large

Brick-and-mortar stores

Orders are placed on the Web, and

goods are delivered to home

Online supermarket

Wide variety of goods

E-commerce

• Want to buy goods after looking at them

• Want to enjoy shopping

• Want to buy goods soon

• Want goods to be sent from the store usually used in the neighborhood

• Want to place orders for goods that they have forgotten to buy

• Want to buy goods that are not sold at stores

• Want to buy goods although there are no stores available

• Want to send gifts• Goods are too heavy to carry

• Want to buy goods soon

Goods are bought at a store and are

delivered to home

Same-day delivery

35

Creative merchandising

Workout in an event space

Mall walking

G.G storeA new type of store where enjoyable services and goods are given to customers, primarily those in the G.G generation in the community

Face-to-face selling that allows customers to eat promptly

Space where customers can bring food

Strengthening the deliRespond to a variety of needs for food, such as

home-meal replacement and ready-to-eat food. A

new type of sales floor where customers can bring

goods that they have bought in the store and can

drink a small amount of alcohol

Logistic Properties That Support Retail Properties

Function of Strategic Logistic Properties of Aeon Group

Strategic Logistic Properties of Aeon Group

manufacturer ／wholesale

store store store

Efficient storage / delivery network according to product characteristics

XD（note）

（Store sorting function, etc.）

PC:ProcessCenter

（Fresh food）

Back Yard Function

High rotation

products

（RDC）

Low rotation

products

（NDC（注））

Large scale

intensive sorting

（NXD（注））

● Logistics facilities in the Aeon Group operate over 50

facilities nationwide and play an important role as

backyards of each commercial facility in the group

● Development of distribution network for each

function, realizing efficient distribution of various

products

● It has not only a delivery function but also a

procurement / storage function and

manufacturing / processing function

according to the characteristics of the product,

contributing to the improvement of the value of

each commercial facility

（note）「NDC」 means National DistributionCenter, 「NXD｣ means National Cross-DockCenter, XD means Cross-Dock Center.

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 holds Aeon Reit holds

36

Portfolio Map (as of July 31, 2018)

Malaysia

● M-1

AEON MALL Ishinomaki

AEON MALL Morioka

AEON MALL Nogata

AEON MALL Yamagata-

Minami

AEON MALL Rifu

AEON MALL Sapporo-Hiraoka

AEON Lake Town mori

AEON MALL Mitouchihara

AEON Lake Town k a z e

ASEAN region

AEON Chigasaki-Chuo

Shopping Center

Daiei-Kawasaki Process Center

AEON MALL Ota

AEON Sagamihara Shopping Center

AEON MALLChiba-New Town

（Mall, Cinema and Sports building)

M - 1 AEON Taman

Universiti Shopping Centre

Hokkaido and Tohoku

Kanto

Kyushu and Okinawa

40properties(domestic38, overseas2）

Asset Size 355.3bn yen

SRSC: Super regional shopping center

RSC: Regional shopping center

CSC: Community shopping center

Logistics facility

16 17 16

1 2

1 2 AEON MALL Kushiro-Showa

17

AEON MALL Tomakomai

2418 19

24

1

2

18193 4

5 22 1 1

AEON MALL Oyama25

21

4 3

5

22

11

25

13

13

AEON MALL Kofu Showa

AEON MALL Yokkaichi

AEON MALL Suzuka

AEON MALL Meiwa

AEON MALL Ogaki

AEON MALL Yamatokoriyama

AEON MALL Ayagawa

AEON MALL KYOTO

AEON MALL Hiezu

AEON MALL Kurashiki

AEON MALL Kasai-Hojo

Kinki, Chugoku and Shikoku

20

23

6 7

8

9 10 11

211512

10

11

12

915

21

27

M - 2 AEON MALL SEREMBAN 2

27

28

28

AEON MALL Tsuchiura

29 AEON MALL Kahoku

2 AEON MINAMI-OSAKA RDC

2

26 AEON MALL Itamikoya

7

29

8

6 23

20

AEON MALL Kagoshima

● M-2

Tokai, Hokuriku and Chubu

26

30

30 AEON MALL Shimotsuma AEON STYLE

Kemigawahama2

2

3

33

3

AEON KireuriwariShopping Center

Daiei-Ibaraki Process Center

37

31 AEON MALLKyoto Gojo

31

SRSC

RSC

CSC

L

Portfolio Highlights (as of July 31, 2018)

By property type

Portfolio Data

By location

Summary of Portfolio

7.9%（Super regional shopping center）

79.3%（Regional shopping center）

4.1%（ Community shopping center）

8.7%（Logistics facility）

8.8%

35.5%

10.8%

26.6%

9.7%

6.9%

1.7%

38

Hokkaido･Tohoku

Kanto

Tokai･Hokuriku・Chubu

Kinki

Chugoku･Shikoku

Kyushu・Okinawa

Malaysia

Number of properties 40

Total acquisition price 355.3bn

Portfolio appraisal NOI yield before depreciation 6.5%

Portfolio appraisal NOI yield after depreciation 4.0%

Average remaining lease term 16.7years

Average building age 14.5years

Total leasable area 3,390,000m²

Occupancy rate 100%

Policies

LTV (Note) Maintain leverage with an LTV of 40–50% range

Extension of debt maturities &

fixing of interest ratesSet loan terms according to the status of cash flows based on tenant lease terms and content

Mix of lenders Achieve appropriate diversification of different lender financial institutions, primarily megabanks

(1) Investment contributing to

an increase in income

(2) Measures aimed at

stabilizing financial

position

(3) Capital strategies that

protect unitholder

interests

a. Appropriation of funds to acquire new properties

b. Investing in revitalization of property to boost

revenues and competitiveness

c. Reduction in the cost of our debt by repayment of

interest-bearing debt

d. Distributions in excess of earnings

e. Increased capital efficiency through unit buy-backs

Growth

driven by

efficient

use of

capital

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.

(Note) LTV = Total remaining interest-bearing debt plus tenant leasehold and security deposits (including tenant leasehold and security deposits in trust) for the assets held by AEON REIT Investment Corporation.

Strategic Cash Management

Stable Financial Position

Strategic Cash Management and a Stable Financial Position

39

• Response to other unpredictable events

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

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 July 31, 2018)

Co-owned properties 3 (as of July 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

40

(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.

Trend of Investment Unit Price

AEON REIT Investment Unit Price and Trading Volume

41

Trend of Net assets per unit

2nd FiscalPeriod

3rd FiscalPeriod

4th FiscalPeriod

5th FiscalPeriod

6th FiscalPeriod

7th FiscalPeriod

8th FiscalPeriod

9th FiscalPeriod

10th FiscalPeriod

11th FiscalPeriod

（January 2014）（July 2014）（January 2015）（July 2015）（January 2016）（July 2016）（January 2017）（July 2017）（January 2018）（July 2018）

Net assetsper unit（Yen)

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

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

Dec 2

013

Jan 2

014

Feb 2

014

Mar 2

014

Apr 2

014

May 2

014

Jun 2

014

Jul 2

014

Aug 2

014

Sep 2

014

Oct 2

014

Nov 2

014

Dec 2

014

Jan 2

015

Feb 2

015

Mar 2

015

Apr 2

015

May 2

015

Jun 2

015

Jul 2

015

Aug 2

015

Sep 2

015

Oct 2

015

Nov 2

015

Dec 2

015

Jan 2

016

Feb 2

016

Mar 2

016

Apr 2

016

May 2

016

Jun 2

016

Jul 2

016

Aug 2

016

Sep 2

016

Oct 2

016

Nov 2

016

Dec 2

016

Jan 2

017

Feb 2

017

Mar 2

017

Apr 2

017

May 2

017

Jun 2

017

Jun 2

017

Jul 2

017

Aug 2

017

Sep 2

017

Oct 2

017

Nov 2

017

Dec 2

017

Jan 2

018

Feb 2

018

Mar 2

018

Apr 2

018

May 2

018

Jun 2

018

Jul 2

018

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

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.

42

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

AEON MALL Kurashiki AEON MALL Suzuka

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)AEON MALLKumamoto

AEON MALLKyoto Gojo

Increase in “Portfolio Quality”

Making an arrangement of temporary shelter as disaster prevention.

Appendix 2 Supplement

44

9th PeriodAs of July 31, 2017

10th PeriodAs of January 31, 2018

9th PeriodAs of July 31, 2017

10th PeriodAs of January 31, 2018

Amount(thousands of

yen)

Percentage(%)

Amount(thousands of

yen)

Percentage(%)

Amount(thousands of

yen)

Percentage(%)

Amount(thousands of

yen)

Percentage(%)

Assets Liabilities

Ⅰ Current assets 18,237,512 5.0% 22,947,646 6.3% Ⅰ Current liabilities 28,705,412 7.9% 29,474,267 8.1%

Cash and deposits 9,538,680 2.6% 15,392,040 4.2% Operating accounts payable 851,409 0.2% 665,785 0.2%

Cash and deposits in trust 8,041,075 2.2% 7,093,497 2.0%Current portion of long-term loans payable

27,000,000 7.4% 27,000,000 7.4%

Prepaid expenses 647,245 0.2% 444,990 0.1% Accounts payable - other 350,377 0.1% 348,633 0.1%

Income taxes receivable 14 0.0% 12 0.0% Accrued expenses 44,192 0.0% 52,192 0.0%

Other 10,497 0.0% 17,105 0.0% Income taxes payable 605 0.0% 605 0.0%

Ⅱ Non-current assets 344,166,940 94.9% 339,583,837 93.6% Accrued consumption taxes 268,141 0.1% 1,184,456 0.3%

Property, plant and equipment 286,760,656 79.1% 283,281,269 78.1% Provision for loss on disaster - - 32,558 0.0%

Land 108,463 0.0% 108,463 0.0% Other 190,685 0.1% 190,036 0.1%

Buildings in trust 169,553,403 46.7% 161,832,860 44.6% Ⅱ Non-current liabilities 135,915,844 37.5% 135,330,949 37.3%

Structures in trust 579,303 0.2% 446,948 0.1% Investment corporation bond 6,000,000 1.7% 6,000,000 1.7%

Furniture and fixtures in trust 7,917 0.0% 7,571 0.0% Long-term loans payable 117,000,000 32.3% 117,000,000 32.3%

Land in trust 116,511,568 32.1% 120,885,426 33.3% Tenant leasehold and security deposits 2,628 0.0% 2,628 0.0%

Intangible assets 50,178,762 13.8% 49,235,482 13.6%Tenant leasehold and security deposits in trust

12,913,216 3.6% 12,328,321 3.4%

Leasehold rights in trust 50,178,762 13.8% 49,235,482 13.6% Total liabilities 164,621,256 45.4% 164,805,216 45.4%

Investments and other assets 7,227,521 2.0% 7,067,085 1.9% Net Assets 0 0.0% 0 0.0%

Shares of subsidiaries and associates

6,078,453 1.7% 6,078,453 1.7% Ⅰ Unitholders’ equity 198,077,143 54.6% 197,947,907 54.6%

Long-term prepaid expenses 1,138,607 0.3% 978,170 0.3% Unitholders' capital（net） 192,172,327 53.0% 192,172,327 53.0%

Lease and guarantee deposits 10,460 0.0% 10,460 0.0% Unitholders' capital 195,698,024 54.0% 195,698,024 53.9%

Ⅲ Deferred assets 293,946 0.1% 221,639 0.1% Deduction from unitholders' capital △ 3,525,697 △1.0% △ 3,525,697 △ 0.0%

Investment unit issuance expenses

220,787 0.1% 152,102 0.0% Surplus 5,904,815 1.6% 5,775,580 1.6%

Investment corporation bonds issuance costs

73,159 0.0% 69,537 0.0% General reserve 520,000 0.1% 520,000 0.1%

Unappropriated retained earnings(undisposed loss)

5,384,815 1.5% 5,255,580 1.4%

Total net assets 198,077,143 54.6% 197,947,907 54.6%

Total assets 362,698,399 100.0% 362,753,124 100.0% Total liabilities and net assets 362,698,399 100.0% 362,753,124 100.0%

Balance Sheet for the 11th Fiscal Period (as of July 31, 2018)

45

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

10th PeriodFrom August 1, 2017 to

January 31, 2018

11th PeriodFrom February 1, 2018 to

July 31, 2018

Amount(thousands of yen)

Percentage(%)

Amount(thousands of yen)

Percentage(%)

Operating revenue 15,780,299 100.0% 16,201,842 100.0%

Rent revenue - real estate 15,656,508 99.2% 16,025,515 98.9%

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

Dividend income 123,790 0.8% 140,636 0.9%

Operating expenses 9,503,310 60.2% 10,019,439 61.8%

Expenses related to rent business 8,599,621 54.5% 9,081,776 56.1%

Asset management fee 722,381 4.6% 734,982 4.5%

Asset custody fee 18,478 0.1% 18,728 0.1%

Administrative service fees 58,076 0.4% 56,438 0.3%

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

Taxes and dues 1,684 0.0% 19,003 0.1%

Other operating expenses 99,467 0.6% 104,909 0.6%

Ⅰ Operating income 6,276,989 39.8% 6,182,403 38.2%

Non-operating income 7,433 0.0% 1,315 0.0%

Interest income 91 0.0% 84 0.0%

Refund of unpaid distributions 3,382 0.0% 1,134 0.0%

Interest on refund 3,249 0.0% - -

Other 709 0.0% 96 0.0%

Non-operating expenses 895,417 5.7% 886,561 5.5%

Interest expenses 578,222 3.7% 570,881 3.5%

Interest expenses on investment corporation bonds 20,061 0.1% 24,619 0.2%

Amortization of investment unit issuance expenses 77,002 0.5% 68,684 0.4%

Investment unit issuance expenses 30 0.0% - -

Amortization of investment corporation bonds issuance costs 2,832 0.0% 3,621 0.0%

Other offering costs associated with issuance of investment units

4 0.0% - -

Borrowing related expenses 217,262 1.4% 218,626 1.3%

Other - - 127 0.0%

Ⅱ Ordinary income 5,389,004 34.2% 5,297,156 32.7%

Ⅲ Extraordinary loss - - 37,459 0.2%

Loss on disaster - - 4,900 0.0%

Provision for loss on disaster - - 32,558 0.2%

Ⅳ Profit before income taxes 5,389,004 34.2% 5,259,697 32.5%

Income taxes - current 5,193 0.0% 5,349 0.0%

Total Income taxes 5,193 0.0% 5,349 0.0%

Ⅴ Profit 5,383,811 34.1% 5,254,348 32.4%

Retained earnings (deficit) brought forward 1,004 0.0% 1,231 0.0%

Ⅵ Unappropriated retained earnings 5,384,815 34.1% 5,255,580 32.4%

Portfolio①

46

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)

（％）

1Hokkaido/Tohoku

AEON MALL Sapporo-Hiraoka

Sapporo City, HokkaidoFebruary,

201578,360.81 5,900 5,471 6,340 868 3.5%

2Hokkaido/Tohoku AEON MALL Kushiro-Showa Kushiro City, Hokkaido

February, 2015

51,763.05 1,780 1,777 1,930 152 7.0%

3Hokkaido/Tohoku AEON MALL Tomakomai

Tomakomai City, Hokkaido

September, 2016

71,308.33 7,840 7,720 8,220 499 2.9%

4Hokkaido/Tohoku AEON MALL Morioka Morioka City, Iwate Pref.

November, 2013

98,968.59 5,340 5,579 6,720 1,140 11.1%

5Hokkaido/Tohoku AEON MALL Ishinomaki

Ishinomaki City,MiyagiPref.

November, 2013

60,682.20 6,680 6,005 7,080 1,074 3.9%

6Hokkaido/Tohoku AEON MALL Rifu

Miyagi County, Miyagi Pref.

February, 2015

66,478.91 2,560 2,362 2,770 407 6.9%

7Hokkaido/Tohoku

AEON MALL Yamagata-Minami

Yamagata City, Yamagata Pref.

February, 2015

53,502.94 1,350 1,274 1,470 195 6.2%

8 KantoAEON MALL Mitouchihara(Note 5) Mito City, Ibaraki Pref.

November, 2013

159,997.49 16,565 14,773 17,413 2,639 0.7%

9 Kanto AEON MALL TsuchiuraTsuchiura City, Ibaraki Pref.

February, 2016

86,848.51 12,030 11,704 12,400 695 1.0%

10 Kanto AEON MALL ShimotsumaShimotsuma City, Ibaraki Pref.

September, 2017

58,402.66 9,552 9,416 9,820 403 2.7%

11 Kanto AEON MALL Oyama Oyama City, Tochigi Pref. August, 2016 47,872.33 6,280 6,026 6,430 403 4.5%

12 Kanto AEON MALL Ota Ota City, Gunma Pref.November,

201393,165.27 6,860 6,108 8,060 1,951 4.8%

13 Kanto AEON LakeTown mori(Note 4) Koshigaya City, Saitama Pref.

November, 2013

205,711.70 21,190 19,388 23,800 4,411 2.0%

14 Kanto AEON LakeTown kaze(Note 4) Koshigaya City, Saitama Pref.

November, 2013

127,183.81 6,730 6,154 7,880 1,725 1.7%

15 Kanto AEON MALL Chiba-Newtown Inzai City, Chiba Pref. March, 2016 107,425.97 12,190 11,896 12,400 502 2.7%

16 KantoAEON STYLE Kemigawahama

Chiba City, Chiba PrefNovember,

201729,961.03 3,748 3,689 3,860 170 2.6%

17 KantoAEON Sagamihara Shopping Center

Sagamihara City, Kanagawa Pref.

November, 2013

75,056.62 10,220 9,874 11,000 1,125 13.4%

18 KantoAEON Chigasaki-Chuo Shopping Center

Chigasaki City, Kanagawa Pref.

May, 2016 63,158.24 6,410 6,413 6,570 156 14.8%

19 KantoDaiei-Kawasaki ProcessCenter

Kawasaki City, Kanagawa Pref.

February, 2016

59,265.77 14,280 14,022 15,000 977 3.7%

20Tokai/Hokuri

ku/Chubu

AEON MALL KahokuKahoku City, Ishikawa Pref.

February, 2016

70,948.14 9,940 9,503 10,600 1,096 11.4%

21Tokai/Hokuri

ku/Chubu

AEON MALL Kofu ShowaNakakoma County, Yamanashi Pref.

February, 2016

66,509.51 8,389 8,056 8,610 553 2.5%

22Tokai/Hokuri

ku/Chubu

AEON MALL Ogaki Ogaki City, Gifu Pref.November,

201364,246.26 4,950 3,944 4,960 1,015 9.2%

Portfolio②

(Notes) 1. The valuation date of the Appraisal value is July 31, 2018. The valuation date of the Appraisal value of AEON Mall Kyoto Gojo is July 1, 2018. 2. Unrealized profit (loss) = Appraisal value − Book value at end of period3. 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.4. 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).5. 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).6. Acquisition price of AEON MALL Nogata has decreased because of transfer of land.7. 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.

47

No. Region Property Name Location Acquisition DateTotal Leasable Area

（㎡）Acquisition Price


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

Appraisal value(Note1)

（millions of yen）Unrealized Profit&Loss(Note2)

（millions of yen）PML value(Note3)

（％）

23Tokai/Hokuriku

/Chubu

AEON MALL Suzuka Suzuka City, Mie Pref.November,

2013125,253.74 9,660 9,414 10,600 1,185 7.5%

24Tokai/Hokuriku

/Chubu

AEON MALL Meiwa Taki County, Mie Pref.November,

201344,193.80 3,290 3,194 3,660 465 4.6%

25Tokai/Hokuriku

/Chubu

AEON MALL Yokkaichi-Kita Yokkaichi City, Mie Pref.February,

201541,447.33 2,210 2,232 2,630 397 6.0%

26Tokai/Hokuriku

/Chubu

AEON MALL KYOTO Kyoto City, Kyoto Pref.February,

2015136,468.45 21,470 20,458 22,500 2,041 13.5%

27Tokai/Hokuriku

/Chubu

AEON Mall Kyoto Gojo Kyoto City, Kyoto Pref. July, 2018 86,984.79 13,333 13,458 13,600 141 11.6%

28Tokai/Hokuriku

/Chubu

AEON Minami-Osaka RDC Sakai City, Osaka Pref.February,

201750,197.06 9,870 9,783 10,300 516 12.5%

29Tokai/Hokuriku

/Chubu

AEON Kireuriwari Shopping Center

Osaka City, Osaka Pref.September,

201727,603.46 4,394 4,476 4,640 163 9.3%

30Tokai/Hokuriku

/Chubu

Daiei-Ibaraki Process Center Ibaraki City, Osaka Pref. October, 2017 50,783.58 6,810 6,844 7,140 295 12.6%

31Tokai/Hokuriku

/Chubu

AEON MALL Kasai-Hojo Kasai City, Hyogo Pref.November,

201348,229.25 7,230 6,335 7,690 1,354 10.7%

32Tokai/Hokuriku

/Chubu

AEON MALL Itamikoya Itami City, Hyogo Pref.February,

2016122,944.71 16,860 16,556 17,600 1,043 1.8%

33Tokai/Hokuriku

/Chubu

AEON MALL Yamatokoriyama

Yamatokoriyama City, Nara Pref.

February, 2016

105,230.88 14,500 13,807 14,800 992 12.0%

34Tokai/Hokuriku

/Chubu

AEON MALL HiezuSaihaku County, Tottori Pref.

November, 2013

102,045.24 7,780 7,130 8,500 1,369 8.0%

35Tokai/Hokuriku

/Chubu

AEON MALL KurashikiKurashiki City, Okayama Pref.

November, 2013

157,274.78 17,890 16,621 19,700 3,078 0.5%

36Tokai/Hokuriku

/Chubu

AEON MALL AyagawaAyauta County, Kagawa Pref.

November, 2013

113,149.07 8,740 7,199 8,720 1,520 0.6%

37 Kyushu/Okinawa AEON MALL Nogata(Note7) Nogata City, Fukuoka

Pref.November,

2013151,969.51 11,246 10,097 13,200 3,102 0.1%

38 Kyushu/Okinawa AEON MALL Kagoshima

Kagoshima City, Kagoshima Pref.

February, 2016

132,341.35 13,400 13,086 13,900 813 6.1%

39 Overseas AEON Taman Universiti(Note6) Johor, Malaysia June, 2014 22,870.00658

(20 mil RM)654

(20 mil RM)588

（21 mil RM）△65

（△2,405 thousand RM）0.8%

40 Overseas AEON MALL SEREMBAN 2 Negeri Sembilan, MalaysiaSeptember,

201681,135.00

5,252（215 mil RM）

-6,374

（233 mil RM）- 4.0%

Grand total (as of July 31, 2018 with 40 properties) 3,396,940.14 355,378 - 379,476 40,584 1.5%

Appraisal Value for the 40 Properties held in 11th fiscal period

48

Property

numberProperty name Appraisal agency

Acquisition price

(Millions of yen)

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

method (%)

10th Period

(January 31, 2018)

11th Period

(July 31, 2018)Difference

10th Period

(January 31, 2018)

11th Period

(July 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 17,300 ▲ 700 6.0 6.0 0.0

AEON MALL Mitouchihara (Land) Japan Real Estate Institute 105 113 113 0 5.2 5.2 0.0

RSC-4 AEON MALL Ota Japan Real Estate Institute 6,860 8,190 8,060 ▲ 130 6.4 6.4 0.0

RSC-5 AEON Sagamihara Shopping Center Japan Real Estate Institute 10,220 10,900 11,000 100 5.2 5.2 0.0

RSC-6 AEON MALL Ogaki Japan Real Estate Institute 4,950 5,110 4,960 ▲ 150 6.9 7.0 0.1

RSC-7 AEON MALL Suzuka Japan Real Estate Institute 9,660 10,600 10,600 0 6.2 6.2 0.0

RSC-8 AEON MALL Meiwa The Tanizawa Sōgō Appraisal Co., Ltd. 3,290 3,700 3,660 ▲ 40 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 8,500 60 6.8 6.8 0.0

RSC-11 AEON MALL Kurashiki Japan Real Estate Institute 17,890 19,400 19,700 300 6.0 6.0 0.0

RSC-12 AEON MALL Ayagawa Japan Real Estate Institute 8,740 9,270 8,720 ▲ 550 6.4 6.5 0.1

RSC-13 AEON MALL Nogata Japan Real Estate Institute 11,246 13,000 13,200 200 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 2,610 2,630 20 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 8,610 8,610 0 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 9,820 10 6.4 6.4 0.0

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

CSC-1 AEON Chigasaki-Chuo Shopping Center Japan Real Estate Institute 6,410 6,550 6,570 20 5.0 5.0 0.0

CSC-2 AEON STYLE Kemigawahama Japan Real Estate Institute 3,748 3,850 3,860 10 6.2 6.2 0.0

CSC-3 AEON KireuriwariShopping Center The Tanizawa Sōgō Appraisal Co., Ltd. 4,394 4,620 4,640 20 5.2 5.2 0.0

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 7,140 40 5.1 5.1 0.0

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

(20百万RM)600

(21.5百万RM)588

(21.5百万RM)- - - -

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

(215百万RM)6,505

(233百万RM)6,374

(233百万RM)- - - -

合計 355,378 379,307 379,476 - - - -

(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) 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 (January 31, 2018; 1RM = ¥27.92, July 31, 2018; 1 RM = ¥27.36; rounded down to the nearest 100th).

(Note3)The amount in Malaysian Ringgit was converted to Japanese yen based on the exchange rate as of the end of the fiscal period (January 31, 2018; 1RM = ¥27.92, July 31, 2018; 1 RM = ¥27.36; 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）

500 thousand or more less than 500 thousand

（%）

（%）

49

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

Average cap rate of portfolio(Note)

(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）

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）

KYOTO

Lake Town mori

Kurashiki

Itami Koya

Mito Uchihara

Yamatokoriyama

Kawasaki PC

Kagoshima

Kyoto Gojo

Chiba New Town

Other

Ibaraki

Kyoto

Kanagawa

Saitama

Hyogo

Osaka

Okayama

Chiba

Hokkaido

Mie

Other

Portfolio PML and Earthquake Insurance

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.

Conventional policy against earthquake risk

Status of earthquake risk in the current portfolio

PML (％)Probable Maximum

Loss

Domestic portfolio PML 38 properties 1.50 ％ Approx. ¥4.7 billion

*1. Earthquake risk assessment report (Tokio Marine & Nichido Risk Consulting Co., Ltd.)

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.

*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

Properties insured Properties held in Japan

38 properties

Maximum payment (deductible: ¥100 million)

¥3.0 billion

Premiums (annual) ¥150 million

AEON uses earthquake insurance for its domestic portfolio in order to increase

protection against the risk of earthquakes.

✓ 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.

Use of earthquake insurance

Diversification of property locations

(23 prefectures in Japan)

Investment ratio (top 10 properties)

6.0%

6.0%

5.0%

4.7%

4.7%

4.1%

4.0%

3.8%

3.8%

3.4%

54.5%

10.7%

9.8%

8.7%

7.9%

6.8%

5.9%

5.0%

4.5%

4.4%

4.3%

32.1%

50

201 196 196 210 201 198 195

213 203

0

50

100

150

200

250

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

2018Notes: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.

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

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

Mar. 2016–Feb. 2017

(12-month period) ¥80.4billion

51

Mar. 2017–Feb. 2018

(12-month period) ¥80.7billion

【Reference】 Sales Trends of individual Properties for December 2017 - May 2018

Performance of Properties in Portfolio

02

17

13

1 1

YoY sales index Less than 90%90%

～95%95%

～100%100%

～105%105%

～110%More than 110%

% of total 0% 5.9% 50.0% 38.2% 2.9% 2.9%

Percentage of properties with

sales index of 100% or higher ：44.1%

(Notes)1. Sales of each property for December 2017 – May 2018 are expressed as a percentage of sales for the same period a year earlier (December 2016 – May 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%.

(Billions of yen)

AEON Group Profile (Note)

52

AEON Group across

14 countries

Total 21,742 stores / locations

Shopping

Center

Development

Business

Synergy Creation

General MerchandiseStore

Supermarket

Discount Store

Drugstore/Pharmacy

Strategic Retail Store

AEON Mall AEON Town

340 malls in Japan and overseas(*)

AEON DELIGHT AEON Fantasy

AEON CardAEON’s

Electronic Money “WAON”

AEON Bank

Number of Consolidated

Subsidiaries: 291

Number of Equity-Method Associates: 31

Retail

Business

Service

Business

Financial

Services

Business

（*）In addition to SC whose name is AEON MALL, SC whose total leasedarea is more than 20,000㎡ included.

GMS (General merchandise store)

SM (Supermarket)

DS (Discount store)

HC (Home center)

CVS (Convenience store)

Specialty store

Drugstore

Other retail store

RSC

NSC

Financial service

Service business

Other business

584

2,185

568

122

5,436

4,324

4,376

938

311

162

690

2,045

1

※1

※2

※3

Business Operations across 14 Countries Synergy from Multiple Businesses

(Note) As of February 28, 2018

Consolidated Operating Revenues approx. ¥8,390billion

Number of Group Employees approx. 410,000employees

AEON Financial Service Credit Card Holder Number of Consolidated valid membership (As of March 31, 2018) approx. 40.64million

※1 Includes alliance partners.

※2 In addition to SC whose name is AEON MALL, SC whose total leased area

is more than 20,000㎡ included.

※3 SC whose name is AEON Town.

The number of stores and office locations, including consolidated subsidiaries

and equity-method associates.

Australia

● 1

Japan

● 490● 2,010● 547● 122● 2 ,264● 4,270● 4 ,370● 828● 256● 162● 366● 1 ,6 55

Combodia

● 1

● 3● 1● 10● 2

Laos● 1

Myanmar

● 14● 3

India● 1

Korea

● 2,501

Indonesia

● 2● 2● 7● 15

Malaysia● 32● 3● 21● 53● 26● 64● 86

Thailand

● 79

● 1● 196● 3 9

PhilippinesPhilippines● 1● 26

China

● 55● 23● 65● 54● 4● 53● 22● 36● 200

Vietnam

● 4● 53● 110● 3● 4● 4● 9

Singapore● 2

THE OUTLETS HIROSHIMA

●●

●

●

AEON MALL Zama

●

●

53

●

●

Realization of Growth Strategies through Collaboration with AEON Group

●Major Shopping Centers currently under development by AEON Group

●Major Shopping Centers developed by AEON Group

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

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

AEON MALL Iwakionahama

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

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 and Okinawa● (tentative name) The project Kitakyushu-shi, Fukuoka

of 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 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

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

54

AEON Group's “Sustainable Management”

Governance

Social

Environment

Establishment of Aeon Sustainability Principles

Corporate Governance

• In 1989, AEON became one of the first retailers to invite an outside director, and in 2003, it became a committee system company ahead of other domestic companies.

AEON’s tree-planting projects AEON’s Eco Project Reduction of food waste

AEON's "zero waste” concept

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 with the aspiration of

being a company that properly uses the profit received from customers for local communities and the future.

✓ Its activities aim to contribute to the healthy growth of the next generation, the promotion of friendships with foreign countries, and the sustainable development of regional communities.

✓ Major AEON Group companies donate 1% of their pre-tax profits to the Foundation.

AEON Environmental Foundation

➢ Established in 1990 to actively carry out environmental protection activities and to support and aid other organizations with the same goal.

➢ Its various activities include tree planting in numerous locations around the world, biodiversity preservation and human resources development in the field of the environment together with local communities.

• Exclusive local WAON cards

• Aeon Happy Yellow Receipt Campaign

• Aiming to raise the AEON Group’s female manager ratio to 50% by FY2020

54

AEON’s original style of

corporate governance

• In FY1991, AEON started tree-planting with customers in numerous locations around the world.

• The total number of trees planted so far reached 11,441,925 (as of February 28, 2017).

• A target for the shopping center’s energy use for FY2020 has been established to achieve a low-carbon society.

• 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 to Achieve Sustainability (AEON Group)

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.

The Daiei, Inc.

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

55

Achieved an increase in monthly rent of

7.35% over current rent linked to CPI

(AEON Taman Universiti SC)

75

85

95

105

115

125

135

145

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8E

201

9E

202

0E

202

1E

202

2E

202

3E

CPI(Malaysia)

CPI(Japan)

Capital Kuala Lumpur Official language Malay

Population32,020,000 (2017)

Government/ sovereign

Constitutional monarchy (parliamentary democracy)

AreaApprox. 330,000 km2 (approx. 90% of the area of Japan)

GDP per capita (nominal)

$9,812 (2017)

56

Overview of Malaysia

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

✓ 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.

Mall-style shopping centers operated in Malaysia

Total net sales of AEON Co. (M) BHD

Property nameAEON Taman Universiti

Shopping CentreAEON MALL Seremban 2

Acquisition price 20 million RM 215 million RM

Appraisal value 21.5 million RM 230 million RM

Date of completion 2002 2005

Appraised NOI yield 7.2%6.30%

(after-tax investment yield: 4.20%)

Source: IMF World Economic Outlook Database, April 2018

Changes in CPI in Malaysia and Japan

Properties held by AEON REIT in Malaysia

Forecast

Fixed rent agreement

(10-year lease term)

CPI-linked rent revision

(every 3 years)

Net lease

* Only AOEN MALL Seremban 2

Outline of Master Lease Agreement

Domestic-overseas ratio

Age composition Malaysia’s position in Southeast Asia

Japan

98.3

％

Overseas

1.7%

Investment in Overseas Properties

2,500

3,000

3,500

4,000

4,500

FY2013 FY2014 FY2015 FY2016 FY2017

24%

70%

6% 0-14 years

old

15-64 years

old

65 yrs. old

and older

56

（Source)：SPEEEDA

(Tenant bears expenses

related to lease business)

（Millions of people）

(Source） International Monetary Fund, World Economic Outlook Database (April 2018)

(Source） THE WORLD BANK DataBank, August 2018

(Source） Bloomberg

Changes in GDP growth rate in Japan & Malaysia

Population growth in Malaysia

(estimated figures for FY2017 onwards) Monthly trends of RM ／ Yen

（Yen）

FTSE Bursa Malaysia KLCI Index trends

Trading volume（RM）

Closing price

(Source） Bloomberg

57

20

25

30

35

40

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

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

0

500

1,000

1,500

2,000

0

200

400

600

800

1,000

trading volume closing price

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)

58

Scheme for acquisition of overseas property

Overseas SPC Scheme (acquired in September 2016)

Malaysia

JapanHolding 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

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.

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

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.

Fiscal year-end (SPC)

X-1 Period X Period X + 1 Period

Acquisition of shares in the overseas SPC

Announcement of results for

the X-1th fiscal period

Conclusion of the sales

agreement

Income from beginning of X+1th

Period to end of X+1th period.

Establishment of the overseas

SPC

X + 2 Period


Overseas SPC

Acquisition of property

Announcement of results for the Xth fiscal

period

Implementation of interim audit on

SPC

Payment of interim

dividends after the numbers

are fixed by audit

Receipt of interim dividends of the overseas SPC

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

Fiscal year-end (SPC)

Completedacquisition of shares in the overseas SPC

Income from the

acquisition of

property to end of

Xth period

59

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

Marking-to-market of properties

owned by the overseas SPC on

end of Xthperiod

Payment of dividends after the numbers

are fixed by audit

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 12th period (ending January 31, 2019) and the 13th period (ending July 31, 2019) is ¥24.5(on July 31, 2018: ¥27.36).

Exchange rate assumed for budgeting

60

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

Overseas SPC

Overseas SPC

Day A Day B

Currency hedging period

Property acquisition

Conclusion of purchase agreement on shares

issued by overseas real estate holding corporation

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✓ Because the Overseas SPC shares that AEON REIT acquires are recognized as

subsidiary shares, revaluation due to exchange rates after fixing the acquisition price shall not be conducted

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

Receipt of dividends from the Overseas

SPC for the Xth fiscal period

Conduct audits of the Overseas SPC

for the Xth fiscal 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

Payment based on capital increase underwriting

agreementFixing of dividends

for the Xth fiscal period

Payment of

dividends for the Xth

fiscal period

Currency hedging period

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6th period 7th period 8th period 9th period 10th period 11th period

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

Short-term loans payable

¥-million ¥-million ¥1,500million ¥1,500million -million ¥-million

Long-termloans payable

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

Investment Corporation bonds


Tenant leasehold and security deposits


Total debt ¥83,512million ¥111,069million ¥134,904million ¥162,683million ¥164,621million ¥164,805million

LTV (including leasehold deposits)

40.8% 42.8% 46.4% 46.7% 44.9% 44.7%

LTV (excluding leasehold deposits)

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

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

Fixed interest rate ratio

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

Average remaining borrowed period

4.0 year 4.1 year 4.7 year 4.4 year 4.2 year 3.7 year

Average interest rate on borrowings

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

Financial Management

61

Debt Snapshot

１． Borrowings

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 billionOctober 10,

202510 years

Without collateral or guarantee

AA- Spread from JGBDaiwa Securities Co., Ltd.SMBC Nikko Securities Inc.

October 13, 2016 ２ 0.470 % ¥1.0 billionOctober 20,

202610 years


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 billionOctober 20,

203610 years


AA- 利率

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

Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.

November 28, 2017

４ 0.680 % ¥2.0 billionDecember 8,

202710 years


AA- 利率SMBC Nikko Securities Inc.Mizuho Securities Co., Ltd.Daiwa Securities Co., Ltd.

62

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%¥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

¥1.2bn October 21, 2019 Effective fixed rate (Note 2) 0.61910%¥4.0bn October 20, 2021 Effective fixed rate (Note 2) 0.88915%¥4.5bn October 21, 2024 Effective fixed rate (Note 2) 1.40390%

February 29, 2016

Long-term ¥23.5bn

¥4.1bn October 21, 2019 Effective fixed rate (Note 2) 0.14750%

March 29, 2016¥6.0bn October 20, 2021 Effective fixed rate (Note 2) 0.35125%¥5.8bn October 20, 2022 Effective fixed rate (Note 2) 0.54100%

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, 2016 Long-term ¥23.4bn

¥3.9bn October 21, 2019 Effective fixed rate (Note 2) 0.23700%¥4.8bn October 20, 2022 Effective fixed rate (Note 2) 0.48750%¥1.2bn October 20, 2022 Fixed rate 0.55000%¥6.7bn October 20, 2023 Effective fixed rate (Note 2) 0.61375%¥2.7bn October 20, 2025 Effective fixed rate (Note 2) 0.87250%¥4.1bn October 20, 2026 Effective fixed rate (Note 2) 1.00300%

March 28, 2017 Long-term ¥29.7bn

¥6.4bn October 21, 2019 Floating base rate(Note 1)＋0.22%¥6.1bn October 20, 2021 Effective fixed rate (Note 2) 0.43200%¥5.2bn October 20, 2022 Effective fixed rate (Note 2) 0.52800%¥0.2bn October 20, 2022 Effective fixed rate (Note 2) 0.63000%¥6.8bn October 21, 2024 Effective fixed rate (Note 2) 0.83800%¥5.0bn October 20, 2026 Effective fixed rate (Note 2) 1.09710%

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%

(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.

Unitholder Information

Number of Unitholders and Number of Investment Units by Unitholder Type

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

63

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 181,080 10.2% 176,343 9.9% 24,053 96.9% 23,612 96.8%

Financial institutions (including financial

instruments firms)864,549 48.6% 849,993 47.8% 161 0.6% 167 0.7%

Other domestic corporations 419,236 23.6% 421,726 23.7% 381 1.5% 374 1.5%

Foreign corporations 312,482 17.6% 329,285 18.5% 220 0.9% 237 1.0%

Total 1,777,347 100.0% 1,777,347 100.0% 24,815 100.0% 24,390 100.0%

Number of Units Number of Unitholders

10th Period

(January 31, 2018)

11th Period

(July 31, 2018)

10th Period

(January 31, 2018)

11th Period

(July 31, 2018)

Unitholder NameNumber of

Units% of Total

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

2 Japan Trustee Services Bank, Ltd. (trust account) 238,302 13.4%

3 The Master Trust Bank of Japan, Ltd. (trust account) 216,209 12.2%

4 The Nomura Trust & Banking Co., Ltd. (trust account) 63,593 3.6%

5 Trust & Custody Services Bank, Ltd. (securities investment trust account) 59,564 3.4%

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

7 NORTHERN TRUST CO. (AVFC) RE HSD00 24,022 1.4%

8 STATE STREET BANK AND TRUST COMPANY 505223 21,261 1.2%

9 NORTHERN TRUST CO. (AVFC) RE HCR00 20,967 1.2%

10 Mizuho Bank, Ltd. 20,000 1.1%

10 Tokyo Century Corporation 20,000 1.1%

1,063,419 59.8%Total

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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