HEP Five NISHINOMIYA GARDENS Kitano Hankyu Building Hankyu Corporation Head Office Building Dew Hankyu Yamada AEON MALL SAKAIKITAHANADA Takatsuki-Josai Shopping Center MANDAI Honan Store Ueroku F Building Kita-Aoyama San cho-me Building Nitori Ibaraki-Kita Store DAILY QANAT Izumiya Horikawa Marutamachi Store Kohnan Hiroshima Nakano-Higashi Store kotocross Hankyu Kawaramachi Sphere Tower Tennozu LIFE Shimoyamate Store Shiodome East Side Building MANDAI Gojo Nishikoji Store Hotel Gracery Tamachi KOHYO Onohara Store LAXA OASIS Town Itami Konoike th Fiscal Period Semi-Annual Report LaLaport KOSHIEN METS OZONE 25 Vessel Inn Hakata Nakasu From June 1, 2017 to November 30, 2017

Hankyu REIT, Inc. 19-19 Chayamachi, Kita-ku, Osaka http://www.hankyu-reit.jp/eng/ Growth Strategy/Management Policy

Implementation of management that emphasizes stability of 1 Distribution Policy distributions in the medium-to-long-term period Further sustainable growth of portfolio by utilizing the comprehensive Hankyu REIT, Inc. 2 External Growth Strategy strengths of the Group 3 Internal Growth Strategy Deepening of operational management 25th Fiscal Period Semi-Annual Report From June 1, 2017 to November 30, 2017 4 Financial Strategy Implementation of stable financial operations and LTV controls

Table of Contents To Our Unitholders 03 To Our Unitholders Hankyu REIT is implementing measures toward 04 25th Fiscal Period Highlights continued growth and enhancement of distributions. 06 Topics We hereby report on the management status of Hankyu REIT for the 25th fiscal period from June 1, 2017 to November 30, 2017. ◦Achieving Continued Growth through Public Offering In the fiscal period under review (25th fiscal period), Hankyu REIT took a solid and Property Acquisitions step forward toward expanding its asset scale, enhancing portfolio quality and raising distributions on an ongoing basis. ◦External Growth Initiatives In terms of external growth, we resolved on November 28, 2017 to acquire Vessel ◦Internal Growth Initiatives Inn Hakata Nakasu, a hotel specialized in accommodations, located in Fukuoka City. Moreover, we resolved on the acquisition of METS OZONE, a community-based retail ◦Financial and Other Initiatives facility located in City, Aichi, on January 25, 2018 (26th fiscal period), when we also made a resolution and an announcement of the issuance of new investment units 12 Portfolio Data through public offering, our first such arrangement in approximately 3 years and 8 months. 14 Portfolio Map Yoshiaki Shiraki The two properties we have resolved for acquisition represent the first acquisition for Executive Director, Hankyu REIT, Inc. Hankyu REIT in Fukuoka and Nagoya areas, respectively. President and Representative Director, Vessel Inn Hakata Nakasu is approximately a 1-minute walk from Nakasu-Kawabata Financial Section Hankyu REIT Asset Management, Inc. Station, the nearest station to Nakasu area which is the largest bustling quarter in Kyushu. Close to Tenjin area and featuring good access to Hakata Station and Fukuoka Airport, the property can secure stable earnings by concluding a long-term lease agreement with fixed rents. 16 Asset Management Report METS OZONE is located in a residential area in the center of Nagoya City. The property is a community-based retail facility with highly- 43 Financial Statements convenient transport access as it faces arterial roads and is situated in approximately a 5-minute walk from Ozone Station, which is a major terminal station accessible by 3 lines (JR, Nagoya Municipal Subway and Meitetsu lines). 44 Balance Sheets For these properties, Hankyu REIT secured acquisition at fair values without being roused by seemingly overheated bidding, as it successfully arranged the acquisition through bidding among limited bidders for Vessel Inn Hakata Nakasu and through a one-on-one 46 Statements of Income and Retained Earnings transaction for METS OZONE. As for internal growth, new lease agreements were concluded with two tenants for Sphere Tower Tennozu in the 25th fiscal period. 47 Statements of Changes in Net Assets Consequently, the occupancy rate of the property stood at 93.0% at the end of the 25th fiscal period, and rose to 94.8% as of the end of February 48 Statements of Cash Flows 2018. With regard to Hotel Gracery Tamachi, which had been subject to a legal action since October 2014, a settlement was reached on 49 Notes to Financial Statements September 13, 2017. Although the settlement does not thoroughly satisfy its claim, Hankyu REIT anticipates that, after closely examining the process of the repair plan and relevant expenses and other costs, we can keep its distribution levels by accepting the settlement. Accordingly, 65 Independent Auditor’s Report we agreed to settle the issue as we determined that closing the action and eliminating uncertainty risks in the future should be the best solution to avoid damaging the unitholders’ interests. As a result of these endeavors, Hankyu REIT decided to deliver distribution per unit of ¥2,877 for the 25th fiscal period. For the 26th and Information the 27th fiscal periods, we forecast distribution per unit at ¥2,950 and ¥3,000, respectively. Moreover, our asset scale will be ¥149.7 billion after the acquisition of the two properties is completed. 66 Unitholders’ Information Going forward, while endeavoring to stably secure distribution per unit at the middle of the ¥2,900 level, we will aim to expand the asset scale to ¥200 billion and increase the distribution level to ¥3,000 by pursuing upside gains through acquiring quality properties and other measures. The real estate market remains overheated, while the economic environment is fluctuating every day. However, we are resolved to unwaveringly take measures in accordance with our medium-term management policy. In this way, we will endeavor to steadily increase distributions. Disclaimer As we pursue steady growth for Hankyu REIT going forward to achieve its medium-to-long-term goals, we would greatly appreciate your continued support. “(site)” is added after the name of properties for which Hankyu REIT owns only its land.

2 3 25th Fiscal Period Highlights

25th Fiscal Period Fixed Distribution (per Unit) For the 25th fiscal period, Hankyu REIT achieved ¥4,902 million in operating revenues and ¥1,718 million in net income, showing an increase in revenues and income from the previous fiscal period’s results and over the forecasted figures announced on July 14, 2017. Distribution per unit was ¥2,877, resulting in an increase of ¥160 (5.9%) from the previous fiscal period (¥2,717) as well as an increase of ¥77 (2.8%) from the distribution per unit forecast (¥2,800) announced on July 14, 2017.

¥2,877 Distribution per Unit Forecast Upon the announcement of the 25th fiscal period operating results on January 25, 2018, Hankyu REIT announced the distribution per unit forecast for the 26th fiscal period (fiscal period ending May 2018) and the 27th fiscal period (fiscal period ending November 2018) as follows. ● Distribution per Unit (Yen) 3,000 2,877 2,775 2,717 Operating Revenues Ordinary Income 2,800 2,620 2,626 2,600 26th Fiscal Period 27th Fiscal Period 2,400 2,200 2,000 million million 1,800 ¥4,902 ¥1,793 1,600 1,400 1,200

0 Operating Income Net Income 21st FP 22nd FP 23rd FP 24th FP 25th FP ¥2,950 ¥3,000 The distribution per unit forecasted is based on certain assumptions available to Hankyu REIT as of January 25, 2018. Actual distribution per unit may differ substantially due to changes in conditions, and the forecasts are not a guarantee of any distribution amount. million million Furthermore, the above forecast figures are based on the content announced in “Hankyu REIT, Incorporated Financial Results for the 25th Fiscal Period from June ¥2,150 ¥1,718 1, 2017 to November 30, 2017” dated January 25, 2018.

Total Acquisition Price/Total Number of Properties LTV LTV at the end of the 25th fiscal period decreased due to an increase in appraisal values of properties owned, among other reasons.

● Total Acquisition Price (Billions of Yen)/Total Number of Properties ● LTV (%) 23 23 23 23 25 150 21 60 141.62 141.62 141.62 140 139.30 20 132.89 50 43.2 billion 41.9 43.0 42.2 41.4 130 15 40 ¥141.62 120 10 110 % 30 5 properties 100 23 41.4 0 0 0 21st FP 22nd FP 23rd FP 24th FP 25th FP 21st FP 22nd FP 23rd FP 24th FP 25th FP Investor Ratings Occupancy Rate (Occupancy by End-Tenants) As of the end of the 25th fiscal period, Hankyu REIT has attained a long-term issuer rating of AA– (rating outlook: stable) from Maintained a high-level of occupancy rate through aggressive leasing activities. Credit Rating Agency, Ltd. (JCR) and an issuer rating of A+ (rating outlook: stable) from Rating and Investment Information, Inc. (R&I).

● Occupancy Rate (%) Japan Credit Rating Agency, Ltd. (JCR) Rating and Investment Information, Inc. (R&I) 98.8 98.8 99.1 99.6 99.8 100

50 % 99.8 0 21st FP 22nd FP 23rd FP 24th FP 25th FP AA–(Outlook: Stable) A+(Outlook: Stable)

4 5 Topics Achieving Continued Growth through Public Offerings and Property Acquisitions

Achieving Continuous Growth Based on Medium-Term Management Policy and Enhancing Portfolio Quality

Hankyu REIT is engaged in operating its portfolio with an aim to enhance unitholder value over the medium-to-long-term. Since 2013, Hankyu As Hankyu REIT continued investigations on property acquisitions in the 25th fiscal period, it resolved in November 2017 to acquire Vessel Inn REIT has achieved higher profitability and enhanced quality of its portfolio by conducting strategic asset replacement with the sponsor, etc., and Hakata Nakasu, a hotel specialized in accommodations, located in Fukuoka City. It also resolved on the acquisition of METS OZONE, a community- acquiring properties focusing on excellent quality of retail facilities in , while working to solve problems by making investments for value based retail facility located in Nagoya City, Aichi, in January 2018 (26th fiscal period), when it also made a resolution and an announcement of the enhancement at existing properties and promoting their lease, among other endeavors. issuance of new investment units through public offering. Going forward, Hankyu REIT will continue its endeavors to further expand its asset scale and maintain and enhance the distribution level by acquiring vigorously selected quality properties, etc., based on its medium-term management policy.

Properties acquired Properties acquired upon 2nd public offering Properties acquired upon 3rd public offering Properties acquired in the 23rd FP Properties acquired (to be acquired) in the 26th FP Medium-Term Management Policy in the 16th FP (April 2013) (17th FP (June 2013)) (19th FP (June 2014)) (July 2016) (November 2016)

Acquired in February 2018

HANKYU NISHINOMIYA GARDENS (28% of the Hankyu Corporation Head METS OZONE 1. Further expand the asset scale quasi co-ownership of the trust beneficiary interests) KOHYO Onohara Store OASIS Town Itami Konoike (site) Office Building AEON MALL MANDAI Toyonaka Honan kotocross Hankyu LIFE Shimoyamate Store (site) SAKAIKITAHANADA (site) Store (site) Kawaramachi Asset replacement Asset replacement

Properties transferred in 16th FP (April 2013) Property acquired in the 17th FP (November 2013) Properties transferred in 22nd FP (April 2016)

DAILY QANAT Izumiya Horikawa Marutamachi Store (site) To be acquired in March 2018 2. Maintain and increase the distribution level Kita-Aoyama San cho-me Building Vessel Inn Hakata Nakasu

Comparison with MANDAI Gojo Nishikoji Store (site) -Hanshin Building Richmond Hotel Hamamatsu end of 15th FP (Note 2) HEP Five (31% of the quasi co-ownership N chayamachi of the trust beneficiary interests) U_ ¥149.7 billion ¥139.3 billion ¥139.3 billion ¥139.3 billion ¥141.6 billion ¥141.6 billion ¥141.6 billion 3. Implement environmental- Asset scale friendly, etc., initiatives Asset scale ¥132.8 billion (Total (proposed) acquisition price) ¥127.8 billion ¥127.8 billion +23.5% and systematically conduct repairs and capital Distribution per unit ¥121.3 billion ¥2,877 expenditures in order to ¥116.1 billion ¥2,775 ¥2,717 Distribution per unit ¥2,620 ¥2,626 maintain and enhance the ¥2,597 ¥2,537 ¥2,567 +17.7% ¥2,445 ¥2,492 property value ¥2,361 After acquiring Average NOI yield End of 15th FP End of 16th FP End of 17th FP End of 18th FP End of 19th FP End of 20th FP End of 21st FP End of 22nd FP End of 23rd FP End of 24th FP End of 25th FP 2 new +0.3 points Nov. 2012 May 2013 Nov. 2013 May 2014 Nov. 2014 May 2015 Nov. 2015 May 2016 Nov. 2016 May 2017 Nov. 2017 properties (Note 1) Average yield after Average NOI yield 4.6% 5.0% 4.8% 4.7% 4.8% 4.8% 4.8% 4.8% 4.8% 4.8% 4.9% 4.9% depreciation +0.7 points 4. Investigate and implement Average yield after depreciation 3.0% 3.4% 3.3% 3.2% 3.4% 3.4% 3.4% 3.5% 3.7% 3.6% 3.7% 3.7% asset replacement to Unrealized gain/loss enhance portfolio quality Unrealized gain/loss ¥-8.3 billion ¥-5.8 billion ¥-3.6 billion ¥-0.9 billion ¥1.6 billion ¥4.7 billion ¥8.4 billion ¥12.6 billion ¥14.6 billion ¥17.6 billion ¥20.4 billion ¥20.6 billion ¥+28.9 billion LTV 55.8% 53.5% 48.6% 47.3% 45.4% 44.4% 43.2% 41.9% 43.0% 42.2% 41.4% 40.2% LTV -15.6 points

Replacement of disaster Adoption of LED lighting Repair of Repair of Beautification of Food court Renovation Value enhancement Operational management prevention equipment for common-use portion exterior walls exterior walls common-use portion renovation 5. Cope with the risk factors of the future

HANKYU NISHINOMIYA Kitano Hankyu Building Sphere Tower Tennozu Dew Hankyu Yamada Takatsuki-Josai LAXA Osaka Kitano Hankyu Building HANKYU NISHINOMIYA GARDENS Shopping Center GARDENS Problem solving LTV improvement Shift to position of unrealized gain Occupancy rate improvement Settlement reached

Granted Gold Award Granted 5 Stars in Granted 4 Stars in Granted Award for ESG awareness results (Note 3) in the 5th Japan DBJ Green Building DBJ Green Building Minato City Local Green Adoption of ASSET business SC Awards Certification Certification City Development 6. Achieve stable financial operations

Sphere Tower Tennozu Hotel Gracery Tamachi HANKYU NISHINOMIYA HANKYU NISHINOMIYA HEP Five Kita-Aoyama Kitano Hankyu Building GARDENS GARDENS San cho-me Building (Note 1) The respective figures after acquiring the 2 new properties have been calculated by simply adding the respective figures for already-acquired properties and the figures for the 2 new properties under certain assumptions, and may not necessarily be identical with the actual figures after acquiring the 2 new properties; the same shall apply hereinafter. (Note 2) The figures for asset scale, average NOI yield, average yield after depreciation, unrealized gain/loss and LTV indicate the value obtained by comparing the respective figures at the end of the 15th fiscal period and after acquiring the 2 new properties. The figure for distribution per unit indicates the value obtained by comparing the respective figures at the ends of the 15th and the 25th fiscal periods. (Note 3) ESG awareness results represent the results of initiatives with a focus on Environment, Social and Governance awareness. 6 7 Topics

External Growth Initiatives

New Properties Acquired (to be acquired) Overview of Newly Acquired Properties

■ Hankyu REIT endeavors to enhance earnings stability with progress in the diversification of investment locations and property use by acquiring properties in Nagoya and Fukuoka areas – the first such properties for Hankyu REIT. METS OZONE ■ Hankyu REIT strives to steadily expand the asset scale by acquiring properties at appropriate levels, as it acquires METS OZONE, a community- 1 Location featuring excellent traffic access based retail facility, through a negotiated transaction and Vessel Inn Hakata Nakasu, a hotel, through bidding among limited bidders. Community-based retail facility The property is highly convenient as it is located in a residential area ■ Hankyu REIT works to further expand the property acquisition methods by achieving property acquisitions in line with CRE (Corporate Real Estate) close to the center of Nagoya City, is approximately a 5-minute walk from the nearest station that is accessible by three lines, and faces proposals utilizing solutions by the sponsor group. arterial roads. 2 Trade zone with a high retail potential The property covers an area with a concentrated and increasing Acquisition of Properties Located Closely to Major Stations on the Tokaido Sanyo Line population, and a high retail potential. – First Property Acquisitions in Nagoya and Fukuoka Areas 3 Composed of tenants that meet everyday needs The tenants are composed of those that meet everyday needs of the community residents.

Focused investment area Vessel Inn (Kansai Region) Hakata Nakasu (to be acquired in the 26th FP) Acquisition price ¥5,400 million Occupancy rate 100% Nitori Holdings Co., Ltd., Hotel NOI yield 5.4% Major tenants EDION Corporation METS OZONE Yield after depreciation 4.2% Opened April 2002 (acquired in the 26th FP) Higashi-ku, (Tokyo metropolitan Location Property Nagoya City, Aichi Pref. TOKYU COMMUNITY CORP. manager area) Community-based retail facility Site area (Note)/ 17,422.32 m2/ Leased area 15,681.37 m2 Acquisition date February 15, 2018 Nagoya (Note) The figure includes a leased portion (ground parking lot) of 3,660.77 m2. Features of Surrounding Areas Hiroshima Utilizing Sponsor Solutions Located in a residential area featuring good access to the center of Nagoya City Osaka ■ Located in a residential area close to the center of Nagoya City Hankyu REIT achieved property acquisition through a negotiated transaction by utilizing

(Note) solutions fostered by the operational management of the sponsor group, in addition to the Fukuoka ■ Located in an area where demand for apartment units is expected from singles and DINKs who value accessibility as well as from families, etc. property information channel proprietary to the Asset Management Company. (Note) It refers to Double Income No Kids. Proprietary property Facing arterial roads to secure good vehicle access information channel of the ■ The property faces Inner Ring Route, a wide-area arterial road, and is close to National Road No. 19 and Asset Management Company Nagoya Expressway Ring Route, offering good access by car. ■ The property has a ground parking lot for 124 vehicles to the west of the store, as well as a multilevel + parking lot for 558 vehicles. Property KOHYO Onohara Store OASIS Town Itami Konoike (site) Nearest station is a transportation hub, accessible by 3 lines Sponsor solutions acquisition Tokaido Sanyo Shinkansen (acquired in the 23rd FP) (acquired in the 23rd FP) through negotiated ■ Ozone Station, the nearest station, is accessible by 3 lines (JR Chuo Line, Nagoya Municipal Subway Meijo (by Hankyu Sekkei Consultant) transaction Areas where major stations are located Community-based retail facility Community-based retail facility Line and Meitetsu Seto Line), and is the origin and destination of the Yutorito Line operated by Nagoya Guide-way Bus Co., Ltd. (Note) For METS OZONE, the Asset Management Company collaborated with Hankyu Sekkei ■ The property is located within a 5-minute walking distance from the nearest station, featuring highly- Consultant, which belongs to the sponsor group, to make a proposal to the seller convenient transport access. regarding reductions of energy costs for its CRE (Corporate Real Estate) operations. Enhancement of Earnings Stability with Progress in the Diversification of Investment Locations and Property Use Good Retail Market of Nagoya City Bolstered by Strong Purchasing Ability

■ Nagoya City has a population of approximately 2.3 million, which is the 4th largest in Japan after Tokyo (23 Wards), Yokohama City and Osaka City and is on an increasing trend.

■ For the annual retail sales volume by city (2014), Nagoya City is ranked the fourth in Japan after Tokyo (23 Wards), Osaka City and Yokohama City. Moreover, Hankyu REIT believes that the retail Diversification by investment location Diversification by property use market of Nagoya City is bolstered by consumers with a high income level.

Other regions 1.5% Other regions 6.9% Other 0.8% Other 0.8% Top 10 Japanese cities by population (2015) Annual retail sales volume by city (2014) Urban retail Tokyo area Umeda area Urban retail (Note) Tokyo (23 Wards) 9.272 (Note) Tokyo Office facilities Office facilities Tokyo (23 Wards) 12.4 24.2% 17.2 % 16.3% Yokohama City 3.724 Osaka City 22.9% 26.1% 14.4% 24.7% 13.6% 3.9 Other part of Osaka City 2.691 Yokohama City 3.4 Kansai Region Other part of Hotel Nagoya City 2.295 Nagoya City 2.9 Areas along Areas along Hotel Community- Community- Kansai Region Sapporo City 1.952 Sapporo City 2.0 7.9 % Hankyu- Hankyu- based retail 9.2% based retail % 7.7% Fukuoka City 1.538 Fukuoka City Hanshin Lines 7.5 Hanshin Lines facilities facilities 1.7 Kobe City 1.537 Kobe City 1.6 49.1% 46.4% 51.7% 50.9% Kawasaki City 1.475 Kyoto City 1.6 Kyoto City 1.475 Hiroshima City 1.2 Saitama City 1.263 Sendai City 1.2 End of 25th FP After acquiring 2 new properties End of 25th FP After acquiring 2 new properties 0 2.000 4.000 6.000 8.000 10.000 (millions of people) 0 5.0 10.0 15.0 (trillions of yen) (Source) Prepared by the Asset Management Company based on the 2015 Population Census by the Statistics (Source) Prepared by the Asset Management Company based on the Commerce Statistics 2014, Volume 3, Kansai Region 74.3% Kansai Region 70.2% Retail-use zone 73.0% Retail-use zone 74.5% Bureau, Ministry of Internal Affairs and Communications. Industries (table of municipalities) by Nagoya City. (Note) The figure indicates the sum total of the 23 Wards of Tokyo. (Note) The figure indicates the sum total of the 23 Wards of Tokyo. 8 9 Topics

External Growth Initiatives Internal Growth Initiatives

Overview of Newly Acquired (to be acquired) Properties Sphere Tower Tennozu and Hotel Gracery Tamachi

■ The occupancy rate of Sphere Tower Tennozu dropped to 39.0% as of the end of the 19th fiscal period due to move-outs of large tenants, etc. Vessel Inn Hakata Nakasu Since the 20th fiscal period, focus had been placed on meticulous leasing activities by demonstrating the advantages and strengths of the area as well as the property’s characteristics and location, etc., on top of strengthening its appeal through value enhancement works. 1 Location in close proximity to Hakata and Tenjin areas Moreover, even after the occupancy rate dropped, Hankyu REIT had continued leasing activities without lowering target rents, taking into Hotel The property is approximately a 1-minute walk from Nakasu-Kawabata Station, the nearest station to Nakasu account the rent levels over the medium-to-long-term. area which is the largest bustling quarter in Kyushu, and is in close proximity to Hakata and Tenjin areas. Along with these leasing activities, the property’s rent level and its appeal point of offering large zones in blocks have matched the tenant needs in light of the upward trend of rents in Tokyo metropolitan area due to a decrease in the office vacancy rates. This has resulted in an 2 Good access from the nearest station increase in the property’s occupancy rate at the end of the 24th fiscal period to 88.1%. The nearest station offers good access to Hakata Station, a major terminal station, and Fukuoka Airport. The focus on leasing activities continued in the 25th fiscal period, leading to the conclusion of lease agreements with two new tenants 3 Highly-stable long-term lease agreement with fixed rents since October 2017. With the lease agreements coming into effect on November 1, 2017 and February 1, 2018, respectively, the occupancy A long-term lease agreement with fixed rents secures stable earnings. rate of the property increased to 93.0% at the end of the 25th fiscal period and 94.8% in February 2018. Going forward, Hankyu REIT will work on the management and leasing of the property in close communication with Premier Investment Corporation, which acquired 67% quasi co-ownership interests (the portion other than what is owned by Hankyu REIT) in June 2017, in an Proposed acquisition price ¥2,760 million Operator Vessel Hotel Development Co., Ltd. Sphere Tower Tennozu (external appearance) effort to further enhance the property’s value. NOI yield 4.3% Lease agreement term (Note) 25 years Yield after depreciation 2.7% No. of guest rooms 166 rooms in total (of which, 153 single rooms) Occupancy Rate Trend Location Hakata-ku, Fukuoka City February 2010 ■ As for Hotel Gracery Tamachi, an action for rent reduction was filed by Fujita Kanko Inc., the lessee of Opened (Rebranded on October 2014) (%) Site area/ 405.98 m2/ the property, in October 2014 via Mizuho Trust & Banking Co., Ltd., the trustee of the property. 94.8% 100.0 93.0% Leased area 2,776.49 m2 Proposed acquisition date March 29, 2018 Hankyu REIT had considered the claim by Fujita Kanko Inc. for rent reduction to lack reasonable 88.1% (Note) The lease agreement term indicates the contract period (years) based on the lease agreement that is effective as of the proposed grounds, and filed a counterclaim for rent increase in July 2015. 80.0 acquisition date by Hankyu REIT. With the court recommendation of a settlement, a settlement was reached as of September 13, 2017. Although the settlement does not thoroughly satisfy its claim, Hankyu REIT anticipates 60.0 39.0% 40.9% that, after closely examining the process of the repair plan and relevant expenses and other costs 40.0 52.5%

Vessel Inn Shinkansen Sanyo as well as considering the balance of income and expenditures, it can keep its distribution levels Fukuoka Naka River Hakata Nakasu Subway Fukuoka 39.0% Urban Expressway Hakozaki Line Urban Expressway by accepting the settlement. Accordingly, Hankyu REIT agreed on the settlement, determining that 20.0 Circular Route Circular Route Gofukumachi Sta. Hakataza 阪急ﾘｰﾄ_地図作成費_ﾍﾞｯｾﾙｲﾝ博多中洲(詳細図)_英_CS55.ai closing the action and eliminating uncertainty risks in the future should be the best solution to avoid Theater Subway Airport Line 0 Mikasa River damaging the unitholders’ interest. May Nov. May Nov. May Nov. Feb. Nakasu-Kawabata Sta. 2015 2015 2016 2016 2017 2017 2018

Subway Airport Line Hakataza Theater Subway Ha Hakozaki Line kat Subway Tenjin Sta. a-e Airport Showa-dori kim Hakata Sta. Line Fukuoka PARCO ae-dori Nishitetsu Fukuoka Sta. CANAL CITY Riverain Center Bld. Akasaka Sta. Tenjin-minami Sta. HAKATA Hakata Hankyu Hakatagawa-dori Hakata Marui Dept. Store Nakasu-chuo-dori Showa-dori

Nishitetsu Tenjin-Omuta Line Vessel Inn Maizuru Subway NanakumaNakasu Line area Hakata Nakasu Nakasu-Kawabata Sta. Financial and Other Initiatives Park Sennichimae-dori Approx. 1-minute

Exit 3 walk from Kunihiro-jinja-dori Nakasu- Hankyu REIT had significantly improved its financial position through the 20th fiscal period by conducting public offerings for two consecutive years in the 17th and the 19th fiscal periods Tenjin area Hakata area Kawabata Sta. Meiji-dori and other measures. In addition, Hankyu REIT obtained AA– rating (Rating Outlook: Stable) for a long-term issuer rating from Japan Credit Rating Agency, Ltd. (JCR) in the 18th fiscal period. A favorable financial standing has been maintained in the 25th fiscal period as well. In the 25th fiscal period, Hankyu REIT refinanced ¥2.5 billion in long-term debt that matured in July Property Features Changes in the Number of Foreign Visitors to Japan (Fukuoka Airport and Port of Hakata) 2017 in short-term debt (variable interest rate), ¥3.0 billion in long-term debt that matured in September 2017 in long-term debt (10 years, fixed interest rate), and ¥1.5 billion in long-term debt that matured in Trends of Average Debt Financing Costs and Average Remaining Years ■ The property features good access to Hakata Station, a major terminal station, and (thousand people) October 2017 in short-term debt (variable interest rate), all for the same amount. 3,000 Fukuoka Airport, and is in close proximity to such office zones and bustling quarters as Fukuoka Airport Port of Hakata With the refinances, Hankyu REIT worked to secure flexibility of fund management and reduce (%) Average debt financing costs (including investment corporation bonds) (left axis) (Year) 2,570 1.5 Average remaining years (right axis) 6 Hakata and Tenjin areas. As such, demand is expected to grow going forward both for 2,500 fund procurement costs by refinancing ¥4.0 billion in short-term, variable rate debt, while achieving an leisure and business purposes. 2,080 extension of the average remaining years and diversification of debt repayment dates by refinancing ¥3.0 1.4 5 2,000 billion in long-term, fixed rate debt, in an effort to further improve its financial standing and maintain and 1.3 1.23 3.4 5.1 ■ Vessel Inn is one of the brands of the hotel groups (with a total of 18 hotels throughout 4.8 4 1,500 increase distributions. 4.4 4.4 4.4 4.4 Japan) operated by Vessel Hotel Development Co., Ltd. Under the concept of “providing 1,200 1.2 As a result of these endeavors, the long-term debt ratio, fixed rate debt ratio and average debt financing comfortable and clean spaces at reasonable prices,” the Vessel Inn brand has adopted 900 3 1,000 820 costs at the end of the 25th fiscal period marked 89.1%, 85.7% and 0.88%, respectively. 1.1 beds by Simmons, air purifiers with a humidifying function and Wi-Fi equipment, etc., 590 LTV decreased to 41.4% at the end of the 25th fiscal period from 42.2% at the end of the 24th fiscal 2.7 0.94 2 500 1.0 1.08 1.07 1.06 0.92 for all guestrooms, with an aim to provide spaces that feature both cleanliness and 1.04 period, given an increase in the appraisal value of the properties owned. 0.88 1 functionality. 0 0.9 2011 2012 2013 2014 2015 2016 (Year) Going forward, Hankyu REIT will seek continuation of stable financial operations and improvement in 0.8 0 distributions by further reducing fund procurement costs, extending debt maturity and diversifying repayment 18th FP 19th FP 20th FP 21st FP 22nd FP 23rd FP 24th FP 25th FP Hotel Market in Fukuoka City with Demand Expected to Expand (Source) Prepared by the Asset Management Company based on the Statistics on Legal Immigrants by the dates, taking into account its financial status, etc., while closely watching market trends including interest rates. for both Sightseeing and Business Purposes Ministry of Justice. Changes in Guestroom Occupancy Rates of Accommodations Facilities (Fukuoka City) Diversification of Repayment Dates ■ Thanks to an increase in the number of users of Fukuoka Airport and the number of inbound foreign tourist visiting Fukuoka Prefecture, among other factors, the guest room (%) Monthly 12-month average (Billions of Yen) (Note) 95 occupancy rate of accommodation facilities in the city has been stable, at over 80% 10 since 2016, remaining at a high level. 90 8 ¥2.0 billion in ■ 85 investment As a core city in the Kyushu region, Fukuoka City has a concentration of offices, allowing corporation bonds expectations for hotel accommodations needs from business guests. 80 6 1.5 ■ The number of international conventions held in Fukuoka City has been the second ¥2.0 billion in 75 4 investment largest in Japan after the 23 Wards of Tokyo for 7 consecutive years, allowing 7.0 7.0 corporation bonds 70 5.2 6.0 5.5 5.0 5.0 5.2 5.0 expectations for expanded accommodation demand for business use and academic 2 2.5 4.0 2.8 3.0 65 2.0 2.0 2.0 occasions in addition to sightseeing. 1.0 1.2 0 60 25th FP 26th FP 27th FP 28th FP 29th FP 30th FP 31st FP 32nd FP 33rd FP 34th FP 35th FP 36th FP 37th FP 38th FP 39th FP 40th FP 41st FP 42nd FP 43rd FP 44th FP 45th FP 46th FP 47th FP 48th FP 49th FP 50th FP 51st FP 52nd FP 53rd FP (Note) The guestroom occupancy rate indicates the figures obtained by dividing the number of guestrooms sold Jan. 2013 Jul. 2013 Jan. 2014 Jul. 2014 Jan. 2015 Jul. 2015 Jan. 2016 Jul. 2016 Jan. 2017 Jul. 2017 Nov. 2017 May 2018 Nov. 2018 May 2019 Nov. 2019 May 2020 Nov. 2020 May 2021 Nov. 2021 May 2022 Nov. 2022 May 2023 Nov. 2023 May 2024 Nov. 2024 May 2025 Nov. 2025 May 2026 Nov. 2026 May 2027 Nov. 2027 May 2028 Nov. 2028 May 2029 Nov. 2029 May 2030 Nov. 2030 May 2031 Nov. 2031 in the relevant month or in the past 12 months including the relevant month, respectively, by the number of available rooms. (Source) Prepared by the Asset Management Company based on the Travel and Staying Statistics by the Japan Tourism Agency. 10 11 Portfolio Data

Portfolio Summary Portfolio List

(Note) Total Total Total Acquisition Price Occupancy Rate Total Number of Properties PML Site area Occupancy Acquisition Code Completion leasable area number PML Date of Investment Name Location (m2) rate price (Note 1) year (m2) of tenants (Note 4) acquisition ratio (Note 2) (Note 3) (Millions of Yen) (Note 3) (Note 3) HEP Five (14% of the quasi co-ownership Kita-ku, Osaka 6,337.37 100.0% 1 ¥141.62 billion 99.8% (99.8%) 23 properties 3.5% R1 (K) 1998 5,596.11 5.0% Feb. 1, 2005 6,468 4.6% of the trust beneficiary interests) City (2,958.94) (99.7%) (129) (Note) Figures in parenthesis indicate the occupancy rate based on the total leased area for end-tenants. Kita-ku, Osaka 28,194.15 100.0% 2 R2 (K) Kitano Hankyu Building 1985 4,450.05 10.1% Feb. 1, 2005 7,740 5.5% City (18,477.35) (98.8%) (24) City, Osaka R3 (K) Dew Hankyu Yamada 2003 7,914.22 13,027.28 100.0% 27 4.7% Feb. 1, 2005 6,930 4.9% Investment Ratio by Use and Zone Investment Ratio by Region Income Ratio by Rent Category and Variation Factors Prefecture Takatsuki City, R4 (K) Takatsuki-Josai Shopping Center 2003 31,007.58 31,451.81 100.0% 1 5.9% Nov. 15, 2005 8,600 6.1% Of ce-use zone Zones for other uses Other regions Overage-rent (Note 5) (Note 6) tenants Variable-rent 26.1% 0.8% 1.5% Ibaraki City, Osaka portion 1.0% R5 (K) Nitori Ibaraki-Kita Store (site) — 6,541.31 6,541.31 100.0% 1 — Mar. 29, 2006 1,318 0.9% 8.4% Prefecture Umeda area Tokyo Kohnan Hiroshima Nakano-Higashi Store Aki-ku, Hiroshima 25,469.59 Oct. 2, 2006 2,170 17.2 % R6 — 25,529.73 100.0% 1 — 1.5% 24.2% (site) City 60.14 Apr. 9, 2007 5 Retail-use Fixed-rent Fixed-rent R8 Hotel Gracery Tamachi Minato-ku, Tokyo 2008 1,724.01 4,943.66 100.0% 1 10.3% Dec. 25, 2008 4,160 2.9% zone portion 7.4 % tenants Other part of 73.0% Nishinomiya City, 6.4% Kansai Region 91.6% R9 (K) LaLaport KOSHIEN (site) — 126,052.16 126,052.16 100.0% 1 Jan. 22, 2009 7,350 5.2% Hyogo Prefecture (Note 7) 7.9 % Areas along HANKYU NISHINOMIYA GARDENS Of which, Hankyu-Hanshin Lines Nishinomiya City, R11 (K) (28% of the quasi co-ownership of the 2008 79,003.72 65,372.41 100.0% 1 9.2% Apr. 16, 2013 18,300 12.9% hotel-use zone Kansai Region Hyogo Prefecture (Note 8) (Note 9) 49.1% trust beneficiary interests) 7.7% 74.3% Kita-ku, Sakai City, Retail-use facilities R12 (K) AEON MALL SAKAIKITAHANADA (site) — 64,232.77 64,104.27 100.0% 2 — Jun. 27, 2013 8,100 5.7% Osaka Prefecture (Note) The ratios are calculated based on the acquisition (Note) The calculation is based on the acquisition price. Hankyu REIT collects only fixed rent payments from fixed-rent tenants. Toyonaka City, price. (For multiple-use zone properties, the amount is From overage-rent tenants, Hankyu REIT collects rent that includes R13 (K) MANDAI Toyonaka Honan Store (site) — 8,159.41 8,159.41 100.0% 1 — Jun. 27, 2013 1,870 1.3% proportionate to the rent income and common service sales based variable rent, in addition to collecting the fixed portion of Osaka Prefecture fees for each zone during the fiscal period.) the rent, such as rent from fixed-lease contracts, common service fees DAILY QANAT Izumiya Horikawa Kamigyo-ku, Kyoto R14 (K) — 3,776.15 3,776.15 100.0% 1 — Jun. 4, 2014 3,100 2.2% and the minimum guarantee rent. Marutamachi Store (site) City (Note) The ratios are calculated based on the rent income and common service fees during the fiscal period. Shimogyo-ku, R15 (K) kotocross Hankyu Kawaramachi 2007 638.62 4,400.13 100.0% 1 2.6% Jun. 4, 2014 2,770 2.0% Kyoto City (Note 10) Chuo-ku, Kobe R16 (K) LIFE Shimoyamate Store (site) — 2,397.83 2,397.83 100.0% 1 — Jun. 4, 2014 1,421 1.0% City Ukyo-ku, Kyoto R17 (K) MANDAI Gojo Nishikoji Store (site) — 9,182.80 9,182.80 100.0% 1 — Jun. 24, 2014 4,182 3.0% Occupancy Rate of the Entire Portfolio (Occupancy by End-Tenants) City Minoh City, Osaka R18 (K) KOHYO Onohara Store 2016 4,479.14 3,310.31 100.0% 1 5.3% Jul. 1, 2016 1,631 1.2% Prefecture Occupancy rate Kansai Region Other regions Occupancy Itami City, Hyogo R19 (K) OASIS Town Itami Konoike (site) 17,997.10 17,997.10 100.0% 1 — Nov. 25, 2016 7,100 5.0% rate Total leasable area Prefecture ー (%) (m2) 99.5 98.6 98.6 98.7 98.7 98.8 98.8 99.1 99.6 99.8 100 O1 Shiodome East Side Building Chuo-ku, Tokyo 2007 1,932.54 9,286.58 100.0% 6 4.6% Feb. 29, 2008 19,025 13.4% 500,000 Kita-ku, Osaka facilities

Office-use O2 (K) Hankyu Corporation Head Office Building 1992 3,396.82 27,369.37 100.0% 1 3.7% Apr. 10, 2013 10,200 7.2% 488,728 488,728 488,728 City 90 480,862 480,862 480,858 461,105 461,105 467,410 ●439,530 ●439,530 ●439,530 Chuo-ku, Osaka 388,175 ●424,679 ●424,679 ●424,675 M1 (K) Ueroku F Building 1993 915.22 4,611.82 93.8% 11 3.2% Nov. 1, 2005 2,980 2.1% ● 49,197 ● 49,197 ● 49,197 City ●332,614 ●404,922 ●404,922 ● 56,182 ● 56,182 ● 56,182 ●418,222 80 ● 56,182 ● 56,182 ● 49,187 ● 55,561 400,000 Sphere Tower Tennozu (33% of the quasi -ku, 1993 M2 co-ownership of the trust beneficiary 6,106.11 8,818.09 93.0% 24 2.7% Oct. 2, 2007 9,405 6.6% Tokyo (Note 11) interests) 70 Fukushima-ku, M3 (K) LAXA Osaka 1999 5,678.87 30,339.91 100.0% 1 3.7% Jan. 22, 2009 5,122 3.6% Osaka City (Note 12) 60 300,000 M5 Kita-Aoyama San cho-me Building Minato-ku, Tokyo 2013 415.42 619.76 100.0% 3 7.4% Nov. 12, 2013 1,680 1.2% Mixed-use (complex) facilities (complex) Mixed-use

50 501,823.43 99.8% 91 3.5% — 141,628 100.0% Total (488,728.20) (99.8%) (241)

(Note 1) The properties owned by Hankyu REIT are assigned codes classified by the facility (type of use) and region. The letters on the left represent the facility (type of use): “R” is for retail-use facility, “O” is for office- 40 200,000 use facility and “M” is for mixed-use (complex) facility. The numbers are assigned to each facility in chronological order of acquisition. The letter “(K)” in parentheses to the right of the numerals indicates that the property is located in Kansai Region. (Note 2) Site area indicates figures equivalent to 100% ownership. 30 (Note 3) Figures in parentheses indicate the total leasable area for end-tenants, the occupancy rate based on the area and the number of end-tenants, respectively. For HEP Five, the total leasable area indicates the figure equivalent to 14% quasi co-ownership of the trust beneficiary interests. For Sphere Tower Tennozu, the total leasable area indicates the figure equivalent to 33% quasi co-ownership of the trust beneficiary interests. For HANKYU NISHINOMIYA GARDENS, the total leasable area indicates the figure equivalent to 28% quasi co-ownership of the trust beneficiary interests. (Note 4) Although there is no single precise definition of PML (Probable Maximum Loss), PML refers to the percentage of expected loss that may result from a large earthquake that occurs once every 475 years (annual 20 100,000 exceedance probability: 0.21%) to the replacement cost (the cost of rebuilding the existing building at the time of investigation). However, the expected amount of loss shall be the direct loss of the building only (structural parts, non-structural parts and construction equipment) caused by seismic movements and shall not include secondary damage such as damage to equipment, furniture or fixtures, or post-quake losses caused by water or fire, compensation for victims, operating loss caused by suspension of operation and other losses. (Note 5) Site area includes leased land portion of 8,409.40 m2. 10 (Note 6) Total leasable area includes area for a parking lot of 9,476.49 m2. (Note 7) PML is for the parking garage space (394.88 m2) portion. (Note 8) Site area includes leased land portion of 6,255.29 m2. 0 0 (Note 9) Total leasable area includes area for a parking lot of 8,929.49 m2 (equivalent to 28% quasi co-ownership of the trust beneficiary interests). (Note 10) Site area includes leased land portion of 205.08 m2. 16th FP 17th FP 18th FP 19th FP 20th FP 21st FP 22nd FP 23rd FP 24th FP 25th FP (Note 11) The completion year for the office and store portions is indicated. (Note 12) Site area includes portion owned by other sectional owners of 1,204.93 m2 and leased land portion of 320.49 m2. 12 13 Portfolio Map

1 Center of Osaka 9 20 kotocross Hankyu Kawaramachi Shinkansen MANDAI Toyonaka Honan JR Shin-Osaka Store (site) Hankyu DAILY QANAT Izumiya Horikawa 10 11 Hanshin Marutamachi Store (site) Kintetsu Osaka and Nara Line Kawaramachi 13 Kyoto Kita-Osaka Kyuko MANDAI Gojo Nishikoji Store (site) Subway Midosuji Line Hankyu Corporation Subway KOHYO R1 (K) Head Office Building Onohara M2 Subway Nitori Ibaraki- 14 Store HEP Five Subway Kita Store (site) Sphere Tower Tennozu Kitano Hankyu Building 2 Umeda梅田 HEP Five Takatsuki 1 Dew Hankyu Yamada Takatsuki City 5 OASIS Town Itami Konoike (site) 22 4 Award for 2 Kyobashi 21 Osaka Osaka International Airport Minato City Hyogo Prefecture Takarazuka LAXA Osaka 16 3 Yamada Local Green City HANKYU NISHINOMIYA 23 Itami Osaka Airport Takatsuki-Josai Development GARDENS Shopping Center Nishinomiya Nishi-Kujo Kitaguchi 7 Shin-Osaka Imazu Kadoma City Shin-Kobe 6 Umeda Kobe- Ueroku F Building 12 Osaka LaLaport KOSHIEN Namba Namba 15 Tanimachi kyu-chome Nara Prefecture R2 (K) (site) Tennoji M5 Kitano Hankyu Building Kita-Aoyama San cho-me Building LIFE Shimoyamate Store (site) Uehommachi 3 AEON MALL SAKAIKITAHANADA (site) 8 22 Tennoji

Retail-use facilities Office-use facilities R3 (K) R18 (K) Dew Hankyu Yamada Mixed-use facilities KOHYO Onohara Store

4 7 10 13 18 19 20 21 23 Hotel Gracery Tamachi Shiodome East Side Building Sphere Tower Tennozu Kita-Aoyama San cho-me Building

Kohnan Hiroshima Nakano-Higashi Store (site)

To be acquired in the 26th FP R4 (K) R11 (K) R14 (K) R17 (K) Vessel Inn Hakata Nakasu R19 (K) Takatsuki-Josai Shopping Center HANKYU NISHINOMIYA GARDENS DAILY QANAT Izumiya Horikawa Marutamachi Store (site) MANDAI Gojo Nishikoji Store (site) 24 OASIS Town Itami Konoike (site) 17 Acquired in 5 8 11 14 25 18 24 the 26th FP

Acquired in the 26th FP METS OZONE

R5 (K) R12 (K) R15 (K) O2 (K) R8 R20 Nitori Ibaraki-Kita Store (site) AEON MALL SAKAIKITAHANADA (site) kotocross Hankyu Kawaramachi Hankyu Corporation Head Office Building Hotel Gracery Tamachi METS OZONE

To be 6 9 12 15 16 17 19 25 acquired in the 26th FP

R9 (K) R13 (K) R16 (K) M1 (K) M3 (K) R6 O1 R21 LaLaport KOSHIEN (site) MANDAI Toyonaka Honan Store (site) LIFE Shimoyamate Store (site) Ueroku F Building LAXA Osaka Kohnan Hiroshima Nakano-Higashi Store (site) Shiodome East Side Building Vessel Inn Hakata Nakasu

14 15 Asset Management Report

1. Overview of Asset Management (Note 1) Figures shown in parentheses are per annum figures based on days of operation. (Note 2) Ordinary income/([Total assets at beginning of period + Total assets at end of period]/2) (Note 3) Net income/([Net assets at beginning of period + Net assets at end of period]/2) (1) Trends in Hankyu REIT’s Asset Management (Note 4) Net assets at end of period/Total assets at end of period

(Note 5) (Amount of interest-bearing debt at end of period + Security deposits and guarantees at end of period ‒ Matched money to 25th Fiscal 24th Fiscal 23rd Fiscal 22nd Fiscal 21st Fiscal Fiscal Period security deposits and guarantees at end of period)/(Total assets at end of period ‒ Matched money to security deposits and Period Period Period Period Period guarantees at end of period) Jun. 1, 2017 Dec. 1, 2016 Jun. 1, 2016 Dec. 1, 2015 Jun. 1, 2015 Total assets at end of period refer to the amount recorded on the balance sheets at the end of the current period. Figures Operation Period to Nov. 30, to May 31, to Nov. 30, to May 31, to Nov. 30, shown in parentheses were calculated based on the amount obtained by adding or subtracting the difference between 2017 2017 2016 2016 2015 appraisal value and book value of tangible fixed assets at the end of the fiscal period to/from the total assets at the end of the period. Operating Revenues Millions of Yen 4,902 4,740 4,721 5,527 4,875 (Note 6) Interest-bearing debt at end of period/Total assets at end of period Rental revenues Millions of Yen 4,902 4,740 4,721 4,795 4,875 (Note 7) Net income before Interest expense and Depreciation for current fiscal period/Interest expense (Note 8) Gain/loss on rental revenues + Depreciation Operating Expenses Millions of Yen 2,752 2,760 2,745 3,474 2,913 (Note 9) Net income + Depreciation ‒ Gain/loss on sale of real estate

Property-related expenses Millions of Yen 2,269 2,297 2,284 2,387 2,471 Operating Income Millions of Yen 2,150 1,979 1,976 2,053 1,961 Ordinary Income Millions of Yen 1,793 1,625 1,570 1,659 1,566 Net Income Millions of Yen 1,718 1,623 1,569 1,657 1,565 Total Assets Millions of Yen 147,953 147,834 147,958 143,964 144,092 (Change from previous period) % (+0.1) (‒0.1) (+2.8) (‒0.1) (‒0.0) Net Assets Millions of Yen 73,378 73,283 73,228 73,317 73,224 (Change from previous period) % (+0.1) (+0.1) (-0.1) (+0.1) (+0.0) Unitholders’ Capital Millions of Yen 71,659 71,659 71,659 71,659 71,659 Total Number of Investment Units 597,500 597,500 597,500 597,500 597,500 Units Issued and Outstanding Net Assets per Unit (net asset Yen 122,809 122,649 122,558 122,706 122,552 value) Total Distributions Millions of Yen 1,719 1,623 1,569 1,658 1,565 Distributions from Profit per Unit Yen 2,877 2,717 2,626 2,775 2,620 㻌 Distributions per unit Yen 2,877 2,717 2,626 2,775 2,620 㻌 Total distributions in excess of Yen — — — — — earnings Return on Assets (ROA) % 1.2 (2.4) 1.1 (2.2) 1.1 (2.1) 1.2 (2.3) 1.1 (2.2) (Notes 1 and 2) Return on Equity (ROE) % 2.3 (4.7) 2.2 (4.4) 2.1 (4.3) 2.3 (4.5) 2.1 (4.3) (Notes 1 and 3) Equity Ratio (Note 4) % 49.6 49.6 49.5 50.9 50.8 (Change from previous period) % (+0.0) (+0.1) (-1.4) (+0.1) (+0.0) Payout Ratio % 100.0 100.0 100.0 100.0 100.0 Actual Days of Operation during Days 183 182 183 183 183 Fiscal Period Loan to Value Ratio at End of % 47.3 (41.4) 47.4 (42.2) 47.4 (43.0) 45.8 (41.9) 45.9 (43.2) Period (LTV) (Note 5) Ratio of Interest-bearing Debt to Total Assets at End of Period % 44.5 44.6 44.5 43.0 43.0 (Note 6) Debt Service Coverage Ratio Times 9.5 9.2 8.5 8.9 8.7 (DSCR) (Note 7) Net Operating Income (NOI) Millions of Yen 3,474 3,288 3,286 3,335 3,373 (Note 8) Funds from Operation (FFO) Millions of Yen 2,560 2,469 2,418 2,486 2,534 (Note 9)

1 2 16 17 Asset Management Report

(2) Asset Management Process during the Period under Review In managing the 23 properties it owns, Hankyu REIT focused on implementing operational management, one of its strengths, in an optimum manner. In doing so, Hankyu REIT conducted meticulous management 1) Basic Asset Management Policy operations tailored to the needs of tenants, in closer coordination with property management companies, to Hankyu REIT is an integrated real estate investment trust that invests in real estate properties for retail or enhance tenant satisfaction, and worked to maintain and increase the unit value of rents and occupancy rates office use throughout Japan with the purpose of securing stable income in the medium-to-long-term and through effective sales promotion activities. As for Hotel Gracery Tamachi, for which an action for rent achieving the best possible returns for unitholders. reduction had been filed by Fujita Kanko Inc. (the lessee of the property) via Mizuho Trust & Banking Co., Hankyu REIT will focus its investments in the retail-use zone (zone in which visitors receive goods and Ltd. (the trustee of the property), a settlement was reached as of September 13, 2017. Hankyu REIT had services in return for payment) and Kansai Region (the 6 prefectures of Osaka, Kyoto, Hyogo, Nara, Shiga and considered the claim by Fujita Kanko for rent reduction to lack reasonable grounds, and filed a counterclaim Wakayama). for rent increase. Although the settlement does not thoroughly satisfy its claim, Hankyu REIT anticipates that, In principle, the ratio of investment in the retail-use zone and Kansai Region will be 50% or more, after closely examining the relevant expenses and other costs and considering the balance of income and respectively, of the total investment portfolio (on an acquisition price basis) as of the end of each fiscal period. expenditures, it can keep its distribution levels by accepting the settlement. Accordingly, Hankyu REIT Hankyu REIT will utilize the planning and management capacities in the real estate business of the Hankyu determined that closing the action and eliminating uncertainty risks in the future should be the best solution to Hanshin Holdings Group (a corporate group formed under Hankyu Hanshin Holdings, Inc. as the holding avoid damaging the unitholders’ interest. (For more details, please refer to the press release “Notice company; hereinafter also called the “sponsor group”). Concerning Settlement for Rent Reduction Action (Hotel Gracery Tamachi)” dated September 13, 2017.) At Sphere Tower Tennozu, lease agreements were concluded with new tenants to raise its occupancy rate from 2) Asset Management Status 88.1% at the end of the previous fiscal period to 93.0% at the end of the 25th fiscal period. The figure rose to (i) Major Trends of Hankyu REIT 94.8% in February 2018 (the 26th fiscal period). Moreover, at Kitano Hankyu Building and Dew Hankyu Hankyu REIT was established on December 3, 2004 pursuant to the Act on Investment Trusts and Yamada, we successfully invited tenants that should help vitalize the facilities. The occupancy rate of the Investment Corporations (Act No. 198 of 1951, including all subsequent revisions; hereinafter the “Investment entire portfolio was kept at a high level, standing at 99.8% (Note) as of the end of the period under review. Trusts Act”), with Hankyu REIT Asset Management, Inc., its asset management company (hereinafter the At the same time, Hankyu REIT sought to maintain or improve tenant satisfaction levels to bolster its “Asset Management Company”), serving as the organizer. Subsequently, Hankyu REIT was listed on the competitiveness, while working to optimize management expenses by improving the quality and efficiency of Tokyo Stock Exchange Real Estate Investment Trust Market (securities code number 8977) on October 26, asset operation and management. 2005. As of the end of the previous fiscal period (24th fiscal period ended May 2017: December 1, 2016 to As of the end of the 25th fiscal period, the total leasable area was 488,728.20 m2, and the share of retail-use May 31, 2017), it owned 23 properties in its portfolio. zone investment and Kansai Region investment as a percentage of the entire portfolio stood at 73.0% and Hankyu REIT made no acquisition or transfer of properties in the fiscal period under review (25th fiscal 74.3%, respectively (on an acquisition price basis). period ended November 2017: June 1, 2017 to November 30, 2017). Accordingly, it had 23 properties under management as of the end of the 25th fiscal period, with total assets amounting to ¥147,953 million. The (Note) Occupancy rates for pass-through-type master lease properties are calculated based on end-tenant occupancy. number of investment units issued and outstanding stood at 597,500 units as of the date. (iii) Overview of Fund Procurement (ii) Asset Management Performance Hankyu REIT’s basic financial policy is to develop and execute stable and efficient financial strategies with During the fiscal period under review, the Japanese economy was on a moderate recovery track, due to a view to maximizing unitholder value by securing stable income from, and generating steady growth of its steady improvements in corporate earnings and the employment and income environments backed by the portfolio properties. To this end, Hankyu REIT uses an effective mix of equity and debt financing as well as government’s economic policies and ongoing monetary easing measures by the Bank of Japan. In terms of security deposits and equivalent guarantees obtained in relation to retail-use facilities. As of the end of the personal consumption, the consumer sentiment has continued to pick up in the light of a modest increase in the period under review, the balance stood at ¥7,168 million. When Hankyu REIT undertakes borrowings, it real wage income of employees. endeavors to lower debt financing costs while at the same time extend the remaining years of debt and The TSE REIT Index recovered to the lower half of the 1,700-point level later in July 2017, given a diversify debt repayment dates, in consideration of interest rate trends. decrease in the yield of 10-year Japanese government bonds caused by higher geopolitical risks such as During the 25th fiscal period, Hankyu REIT refinanced ¥7,000 million (comprising long-term debt) for conditions in relation to North Korea. However, with the capital outflow from investment trusts (mutual which the repayment date arrived, into long-term (10 years) and fixed interest debt (¥3,000 million) and funds) delivering monthly distributions failing to stop, the Index remained weak as it dropped to the lower half short-term and variable interest debt (¥4,000 million) from the perspective of stable fund procurement and of the 1,600-point level by mid-November 2017. Subsequently, the figure remained in a range around the contribution to distributions, among other considerations. upper half of the 1,600-point level through the end of November, with investors becoming positive to J-REITs As of the end of the period under review, Hankyu REIT had interest-bearing debt totaling ¥65,900 million. that appeared to be lagging behind foreign REITs. Of this sum, ¥61,900 million was debt financing (¥7,200 million in short-term debt and ¥54,700 million in Following the previous fiscal period, the real estate transaction market continued to see such players as long-term debt (including ¥3,000 million due within one year)) and ¥4,000 million in investment corporation newly listed J-REITs, existing listed REITs, private placement REITs and foreign investment funds actively bonds (no portion due within one year). The ratio of interest-bearing debt to total assets was 44.5%. acquire properties in the 25th fiscal period. With competition over the acquisition of properties remained As of the end of the 25th fiscal period, Hankyu REIT had a long-term credit rating of AA‒ (stable) by the overheated, it is essential for Hankyu REIT to take advantage of the comprehensive strengths of the sponsor Japan Credit Rating Agency, Ltd. (JCR) and a credit rating of A+ (stable) by the Rating and Investment group and the proprietary sourcing channels of the Asset Management Company in order to acquire properties Information, Inc. (R&I). at fair values (which refer to appropriate price levels; the same shall apply hereinafter). Under such circumstances, Hankyu REIT resolved on November 28, 2017 to acquire Vessel Inn Hakata (iv) Performance and Distribution Nakasu, a hotel specialized in accommodations, located in Fukuoka City. Moreover, on January 25, 2018 (the As a consequence of these asset management operations, operating revenues and operating income reached 26th fiscal period) following the closing of the fiscal period under review, Hankyu REIT resolved on the ¥4,902 million and ¥2,150 million, respectively. Ordinary income after deducting interest expense and others acquisition of METS OZONE, a community-based retail facility located in Nagoya City, , and was ¥1,793 million, and net income was ¥1,718 million. the issuance of the new investment units through public offering (primary offering) – its first such With the aim of having the maximum amount of distributable income deducted as expense pursuant to arrangement in approximately 3 years and 8 months. The 2 properties resolved for acquisition as stated above Article 67-15 of the Act on Special Measures Concerning Taxation (Act No. 26, 1957, including all (hereinafter referred to as the “2 new properties”) represent the first acquisition for Hankyu REIT in Fukuoka subsequent amendments; hereinafter referred to as the “Special Taxation Measures Act”), Hankyu REIT and Nagoya areas, respectively. Going forward, in acquiring properties, Hankyu REIT will take into account resolved to distribute the entire amount of unappropriated income for the period under review, excluding the the fair values based on property valuations over a medium-to-long-term while considering the diversification fraction of distribution per unit that was less than ¥1. Consequently, the distribution per unit was ¥2,877. of investment areas and property use, in an effort to enhance portfolio quality and reinforce earnings stability.

3 4 18 19 Asset Management Report

(3) Capital Increase (4) Performance of Distributions, etc.

The total number of investment units issued and outstanding and unitholders’ capital over the last 5 years are as With regard to the distribution for the period under review (25th fiscal period), Hankyu REIT decided to follows. distribute the entire amount of unappropriated income, excluding the fraction of distribution per unit that was less than ¥1, with the aim of having the maximum amount of distributable income deducted as expense in application Total Number of Investment Unitholders’ Capital of the special tax treatment (Article 67-15 of the Special Taxation Measures Act). Consequently, the distribution Units Issued and Outstanding (Millions of Yen) per unit came to ¥2,877. Date Remarks (Units) Notes

Change Balance Change Balance 25th Fiscal 24th Fiscal 23rd Fiscal 22nd Fiscal 21st Fiscal Fiscal Period Dec. 1, 2014 Split of investment units 478,000 597,500 — 71,659 (Note 1) Period Period Period Period Period Capital increase through Jun. 1, 2017 to Dec. 1, 2016 to Jun. 1, 2016 to Dec. 1, 2015 to Jun. 1, 2015 to Jun. 27, 2014 1,300 119,500 667 71,659 (Note 2) Operation Period third-party allotment Nov. 30, 2017 May 31, 2017 Nov. 30, 2016 May 31, 2016 Nov. 30, 2015 Capital increase through Thousands Jun. 2, 2014 13,000 118,200 6,675 70,991 (Note 3) Total net income 1,718,771 1,623,587 1,569,198 1,657,924 1,565,338 public offering of Yen Capital increase through Retained earnings Thousands Jul. 10, 2013 1,800 105,200 815 64,316 (Note 4) 515 335 171 309 420 third-party allotment brought forward of Yen Capital increase through Total unappropriated Thousands Jun. 18, 2013 18,000 103,400 8,155 63,500 (Note 5) 1,719,286 1,623,922 1,569,370 1,658,233 1,565,759 public offering retained earnings of Yen Thousands Retained earnings 279 515 335 171 309 (Note 1) Hankyu REIT implemented a five-for-one split of investment units with a cut-off date of November 30, 2014 and an of Yen effective date of December 1, 2014. Thousands (Note 2) Hankyu REIT issued new investment units through a third-party allotment at an issue price of ¥513,503 per unit to fund Total distributions 1,719,007 1,623,407 1,569,035 1,658,062 1,565,450 of Yen future acquisitions of specified assets, redeem security deposits and guarantees and repay loans that were used for the acquisition of specified assets. (Distribution per unit) Yen (2,877) (2,717) (2,626) (2,775) (2,620) (Note 3) Hankyu REIT issued new investment units through a public offering at ¥532,057 per unit (issue price ¥513,503) to Of these, total Thousands partially fund the acquisitions of new specified assets. distribution from 1,719,007 1,623,407 1,569,035 1,658,062 1,565,450 of Yen (Note 4) Hankyu REIT issued new investment units through a third-party allotment at an issue price of ¥453,091 per unit to fund profit the acquisitions of new specified assets, as well as to redeem security deposits and guarantees and repay loans that were (Distribution from Yen (2,877) (2,717) (2,626) (2,775) (2,620) used for the acquisition of portfolio assets. profit per unit) (Note 5) Hankyu REIT issued new investment units through a public offering at ¥469,462 per unit (issue price ¥453,091) to fund Of these, total Thousands the acquisitions of new specified assets, as well as to redeem security deposits and guarantees and repay loans that were — — — — — used for the acquisition of portfolio assets. contribution return of Yen (Contribution return Yen (—) (—) (—) (—) (—) (Changes in Securities Exchange Prices) per unit) The highest and lowest prices (closing price basis) for each fiscal period at the Tokyo Stock Exchange Real Of the total contribution return, total distribution Estate Investment Trust Market on which Hankyu REIT is listed are as follows. Thousands from reserve for — — — — — of Yen temporary difference adjustments Fiscal Period 25th Fiscal Period 24th Fiscal Period 23rd Fiscal Period 22nd Fiscal Period 21st Fiscal Period (Of the contribution return per unit, distribution per unit from Yen (—) (—) (—) (—) (—) Account reserve for temporary Nov. 2017 May 2017 Nov. 2016 May 2016 Nov. 2015 closing month difference adjustments) Of the total contribution Highest Yen 144,400 156,500 151,000 139,500 147,500 return, total distribution Thousands through reduction in — — — — — Lowest Yen 130,100 141,400 120,300 119,200 108,200 of Yen unitholders’ capital for tax purposes (Of the contribution return per unit, distribution through Yen (—) (—) (—) (—) (—) reduction in unitholders’ capital for tax purposes)

5 6 20 21 Asset Management Report

(5) Future Asset Management Policy and Issues to Be Addressed 2) Acquisition of Assets Based on the basic policies of asset management, etc., stipulated in its Article of Incorporation, Hankyu In accordance with its basic policy, Hankyu REIT will target real estate with retail-use and office-use zones, REIT resolved at the Asset Management Company’s Board of Directors Meeting held on January 25, 2018 to and its investment target area will be the whole of Japan. acquire the following property by using the proceeds from the issuance of new investment units, as described Regarding external growth strategies, Hankyu REIT’s basic policy is to expand and stabilize income by in 1) Issuance of New Investment Units, and cash on hand, and acquired the property on February 15, 2018. maximizing its asset scale, increasing the number of its properties, diversifying risk and enhancing the liquidity of investment units. To this end, it will continually examine the acquisition of quality properties and make METS OZONE investment decisions after thoroughly analyzing the relevant property’s features. Specifically, Hankyu REIT Type of asset : Right of ownership and leasehold makes use of a priority negotiation right for the acquisition of property-related information and properties owned Acquisition price : ¥5,400,000,000 (excluding acquisition-related expenses, property tax, city or developed by the Real Estate Information Provision Companies based on an information sharing agreement it planning tax and consumption tax, among others) has entered into with Hankyu Corporation, Hankyu Realty Co., Ltd. and Hankyu Investment Partners, Inc. Acquisition date : February 15, 2018 (hereinafter may be referred to as the “Real Estate Information Provision Companies”). In addition, Hankyu REIT Location : Higashi-ku, Nagoya City, Aichi Prefecture continually approaches companies directly via the Asset Management Company’s own network with a view to Seller : The name, etc., are not disclosed as consent has not been obtained from the acquiring property-related information. seller, which is a domestic corporation. There are no capital, personnel or Regarding internal growth strategies, Hankyu REIT will focus its energies on maintaining or improving rental business relationships to be specially noted between Hankyu REIT or the income. Utilizing its formidable operational management prowess, Hankyu REIT will extend its focus to the use Asset Management Company and the seller. In addition, the seller does not of relevant floor space and zones, manage assets based on corresponded viewpoints of tenants as well as fall under the definition of “related party.” “end-user” consumers and strive with special effort to lease in particular office buildings whose occupancy rates are low. Regarding financial growth strategies, Hankyu REIT will continue to use an effective mix of equity and debt (Reference information) financing as well as security deposits and guarantees obtained in relation to retail-use facilities, etc. When Hankyu Based on the basic policies of asset management, etc., stipulated in its Article of Incorporation, Hankyu REIT undertakes borrowings, it will select an appropriate method of funding with a focus on fixed rate debt ratio REIT resolved at the Asset Management Company’s Board of Directors Meeting held on November 28, 2017 and diversification of repayment dates in consideration of interest rate trends. to acquire the following property by using cash on hand, etc. Hankyu REIT aims to secure stable medium-to-long-term revenue and achieve the best possible returns for unitholders. In the midst of the ever-heating competition to acquire superior properties, Hankyu REIT will aim to Vessel Inn Hakata Nakasu achieve steady growth by making investment decisions that carefully consider the profitability of the applicable Type of asset : Real estate trust beneficiary interests property and the overall portfolio balance. Furthermore, in view of the societal demand for compliance, Hankyu (Trustee: Shinsei Trust & Banking Co., Ltd.) REIT will continue to strengthen its internal control systems and compliance functions, including the Proposed acquisition price : ¥2,760,000,000 (excluding acquisition-related expenses, property tax, city implementation of strict checks on transactions that involve conflicts of interest relating to Hankyu REIT or the planning tax and consumption tax, among others) Asset Management Company. Proposed acquisition date : March 29, 2018 Location : Hakata-ku, Fukuoka City (6) Material Events Arising after the End of the 25th Fiscal Period Seller : The name, etc., are not disclosed as consent has not been obtained from the

1) Issuance of New Investment Units seller, which is a domestic corporation. There are no capital, personnel or Hankyu REIT resolved at its Executive Meetings held on January 25, 2018 and February 5, 2018, to issue business relationships to be specially noted between Hankyu REIT or the new investment units, as outlined below. Payments for the issuance of the new investment units through public Asset Management Company and the seller. In addition, the seller does not fall under the definition of “related party.” offering and through third-party allotment have been completed on February 13, 2018 and March 13, 2018, respectively and the new investment units have been issued as resolved. As a result, the unitholders’ capital is ¥76,736 million and the total number of investment units issued is 638,500 units as of March 13, 2018.

(i) Issuance of new investment units through public offering (primary offering) Number of investment units to be issued : 39,000 units Issue price : ¥128,115 per unit Total issue price : ¥4,996,485,000 Amount to be paid in : ¥123,844 per unit Total amount to be paid in : ¥4,829,916,000 Payment date : February 13, 2018

(ii) Issuance of new investment units through third-party allotment Number of investment units to be offered : 2,000 units Amount to be paid in : ¥123,844 per unit Total amount to be paid in : ¥247,688,000 Payment date : March 13, 2018 Allottee : Nomura Securities Co., Ltd.

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2. Overview of Hankyu REIT (3) Matters Concerning Executive Officers, etc.

(1) Investments 1) Executive Directors, Supervisory Directors and Auditors during the Period under Review

25th Fiscal 24th Fiscal 23rd Fiscal 22nd Fiscal 21st Fiscal Total Remuneration for Each Name or Period (as of Period (as of Period (as of Period (as of Period (as of Title Principal Concurrent Businesses, etc. Position during Period under Company Name Nov. 30, 2017) May 31, 2017) Nov. 30, 2016) May 31, 2016) Nov. 30, 2015) Review (Thousands of Yen) Total number of investment units Executive Director President and Representative Director, Hankyu — 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 Yoshiaki Shiraki authorized (Units) (Note 1) REIT Asset Management, Inc. (Note 2) Total number of investment units Supervisory 597,500 597,500 597,500 597,500 597,500 issued and outstanding (Units) Director Tamio Uda Attorney, Uda Law Office Number of unitholders 13,261 11,862 12,459 13,775 13,521 (Note 3) 3,600 Supervisory Certified Public Accountant/Certified Public (Note 4) (2) Matters Concerning Investment Units Director Motofumi Suzuki Tax Accountant, Suzuki Certified Public (Note 3) Accountant Office The major unitholders as of November 30, 2017 are as follows. Auditor KPMG AZSA LLC — 10,500

Share of Number of (Note 1) Executive director owns 39 investment units using Hankyu REIT’s cumulative investment program as of November 30, Units Held to Total 2017. Number of Units Name Number of Investment (Note 2) Executive director does not receive remuneration from Hankyu REIT. Held (Units) Units Issued and (Note 3) Supervisory directors do not own Hankyu REIT’s investment units in their name or someone else’s name. While the Outstanding (%) supervisory director may serve as an executive of companies other than those listed above, there is no conflict of interest with Hankyu REIT, including with respect to the items listed above. Japan Trustee Services Bank, Ltd. (Trust account) 139,267 23.31 (Note 4) The figure refers to the amount paid during the period under review.

The Master Trust Bank of Japan, Ltd. (Trust account) 65,477 10.96 2) Policy for Determining Dismissal or Refusal of Reappointment of Auditors Hankyu Corporation 21,000 3.51 Hankyu REIT will determine at its Executive Meetings whether to dismiss an auditor in accordance with the provisions of the Investment Trusts Act and will determine whether to refuse reappointment by The Nomura Trust and Banking Co., Ltd. (Investment accounts) 20,319 3.40 comprehensively considering the quality of the auditing, the amount of remuneration for the auditing and various other factors. Trust & Custody Services Bank, Ltd. (Securities investment trust account) 16,061 2.69 (4) Asset Management Company, Asset Custodian and General Administrative Agencies The Hachijuni Bank, Ltd. 13,620 2.28 THE CHUKYO BANK, Ltd. 11,385 1.91 The asset management company, asset custodian and general administrative agencies as of November 30, 2017 are as follows. The Senshu Ikeda Bank, Ltd. 7,710 1.29 Category of Entrusted Operation Name Aozora Bank, Ltd. 6,292 1.05 Asset management company Hankyu REIT Asset Management, Inc.

Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. 6,260 1.05 Asset custodian Mitsubishi UFJ Trust and Banking Corporation

General administrative agency (accounting, administrative function, administrative agency of unit register, administration Mitsubishi UFJ Trust and Banking Corporation regarding investment corporation bonds, etc.)

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3. Hankyu REIT’s Portfolio Assets (2) Main Portfolio Assets

The overview of Hankyu REIT’s main portfolio assets (top 10 book values) as of November 30, 2017 is as (1) Hankyu REIT’s Asset Structure follows.

( % ) ( % ) 25th Fiscal Period 24th Fiscal Period Calculation otal

) T ental ental (as of November 30, 2017) (as of May 31, 2017) Dates

Book Method Total ) Lease Leased Value Mentioned Leasable 2 R Primary Name Method Area (m ) ays 2 evenues

(Millions on the Area (m ) D Use ( R

(Note 1) (Note 2) ( Note 3 Type of Asset Use (Note 1) Region (Note 1) of Yen) Right (Note 2) evenue to

Ownership Ownership Ratio of

(Note 1) Operation R ental Occupancy Rate

Amount Share of Amount Share of R (Millions of Total Assets (Millions of Total Assets Yen) (%) Yen) (%) HANKYU (Note 2) (Note 2) NISHINOMIYA GARDENS (28% of Fixed-type 65,372.41 65,372.41 Retail-use the quasi 17,383 (C) 100.0 12.6 183 Kansai Region 17,383 11.7 17,459 11.8 master lease (Note 4) (Note 4) zone Retail-use zone co-ownership of the Outside Kansai Region 3,532 2.4 3,521 2.4 trust beneficiary interests) Kansai Region — — — — Office-use zone Shiodome East Side Office-use Real estate Outside Kansai Region 474 0.3 489 0.3 17,183 Direct lease (C) 9,286.58 9,286.58 100.0 8.2 183 Building zone Kansai Region — — — — Zones for other uses Fixed-type Outside Kansai Region — — — — Hankyu Corporation master lease Office-use 9,568 (C) 27,369.37 27,369.37 100.0 7.3 183 Head Office Building and direct zone Subtotal 21,390 14.5 21,470 14.5 lease Kansai Region 71,479 48.3 71,742 48.5 Retail-use zone Sphere Tower Outside Kansai Region 5,334 3.6 5,671 3.8 Tennozu (33% of the Office-use quasi co-ownership 8,525 Direct lease (C) 8,818.09 8,203.27 93.0 3.6 183 Kansai Region 10,375 7.0 10,414 7.0 zone of the trust Real estate in Office-use zone Outside Kansai Region 22,982 15.5 22,636 15.3 beneficiary interests) trust (Note 3) Kansai Region — — — — AEON MALL Zones for other uses — Retail-use SAKAIKITAHANA 8,189 Direct lease (C) 64,104.27 64,104.27 100.0 183 Outside Kansai Region 1,045 0.7 1,242 0.8 (Note 5) zone DA (site) Subtotal 111,217 75.2 111,707 75.6 LaLaport KOSHIEN Retail-use 7,748 Direct lease (C) 126,052.16 126,052.16 100.0 5.2 183 Deposits and other assets (Notes 3 and 4) 15,344 10.4 14,657 9.9 (site) zone 147,953 100.0 147,834 100.0 Total assets (Note 5) Calculated (132,608) (89.6) (133,177) (90.1) based on the lease (Note 1) Retail-use zone: Zone in which visitors receive goods and services in return for payment at offices, stores, restaurants, agreement 28,194.15 28,194.15 100.0 with the amusement facilities, clinics, private preparatory schools (juku), schools, beauty salons, rental meeting rooms, halls, theaters, hotels and entertainment facilities, as well as supplementary zone that provides goods and services. master Office-use zone: Zone and supplementary zone intended for office use. lessee (A) Zones for other uses: Zones that do not fall under either the retail-use or office-use categories (such as residential areas). Pass-through- Kansai Region: The six prefectures of Osaka, Kyoto, Hyogo, Nara, Shiga and Wakayama. type master (Calculated Kitano Hankyu lease and based on Retail-use (Note 2) Regarding the ownership amount by zone, the amounts recorded on the balance sheet at the end of the current period for 7,702 11.8 183 real estate and real estate in trust, book value after depreciation are divided proportionally to the rent (sum of the rent Building fixed-type Pass-through zone income and common service fees) from each zone during the fiscal period. master lease - type: Lease However, LAXA Osaka has a fixed-type master lease method making it difficult to calculate the ownership amount by (Note 6) agreement with zone during the fiscal period. Therefore, the amount is divided proportionally to the rent (sum of the rent income and (18,477.35) (18,262.08) (98.8) common service fees) for each zone during the fiscal period that pertains to the end-tenants as of the month (January 2009) end-tenants in which the acquisition date (January 22, 2009) fell. and Fixed (Note 3) Real estate in trust, deposits and other assets represent “other assets” as stipulated in the Cabinet Office Ordinance on type: Lease Disclosure of Information, etc., of Regulated Securities (Ordinance of the Ministry of Finance No. 22, 1993, including all agreement subsequent amendments). with master (Note 4) Deposits and other assets for the 24th fiscal period include ¥7,424 million in deposits within the assets in trust, and lessee (B)) deposits and other assets for the 25th fiscal period include ¥7,616 million in deposits within the assets in trust. Real estate in trust does not include savings within trust assets in account. (Note 5) The figures shown in parentheses are the portion of the assets that represents actual real estate, etc., ownership.

11 12 26 27 Asset Management Report

(3) Details of Portfolio Assets ( % ) ( % ) Calculation otal

)

T Dates

Book Method Total ) Lease Leased 1) Itemization of Real Estate, etc., as Portfolio Assets Value Mentioned Leasable 2 R ental Primary Name Method Area (m ) ays The details of the real estate, etc., owned by Hankyu REIT as of November 30, 2017 are as follows. (Millions on the Area (m2) evenues Use ( D R (Note 1) (Note 2) ( Note 3 of Yen) Right (Note 2) evenue to

Ratio of Appraisal

(Note 1) Operation R ental Value at End Book Occupancy Rate R Type of of Period Value Appraiser Name Location Ownership (Millions of (Millions (Note 2) OASIS Town Itami — Retail-use 7,391 Direct lease (C) 17,997.10 17,997.10 100.0 183 Yen) of Yen) Konoike (site) (Note 5) zone (Note 1)

HEP Five (14% of the quasi Real estate trust 5-15 Kakuda-cho, Kita-ku, co-ownership of the trust beneficiary 8,890 5,558 Tanizawa Fixed-type Osaka City Takatsuki-Josai master lease 31,451.81 31,451.81 Retail-use beneficiary interests) interests 7,003 (C) 100.0 5.8 183 Shopping Center and direct (Note 7) (Note 7) zone Real estate trust lease 1-8-1 Shibata, Kita-ku, Kitano Hankyu Building beneficiary 7,350 7,702 Tanizawa Osaka City Calculated interests based on the Real estate trust lease 4-1-2 Yamada-nishi, Suita City, Dew Hankyu Yamada beneficiary 8,690 5,530 Tanizawa agreement 6,337.37 6,337.37 100.0 Osaka Prefecture with the interests HEP Five (14% of master the quasi Pass-through- 6-28 Josai-cho, Takatsuki City, lessee (A) Retail-use Takatsuki-Josai Shopping Center Real estate 8,480 7,003 Richi co-ownership of the 5,558 type master 6.3 183 Osaka Prefecture zone trust beneficiary lease (Calculated interests) based on the 1-31 Nishi-toyokawa-cho, Nitori Ibaraki-Kita Store (site) Real estate 1,720 1,340 Tanizawa lease Ibaraki City, Osaka Prefecture agreement (2,958.94) (2,950.93) (99.7) with the Kohnan Hiroshima Nakano-Higashi 7-28-1 Nakano-higashi, Aki-ku, Real estate 1,890 2,280 Tanizawa end-tenants Store (site) Hiroshima City (B)) Real estate trust 3-8-1 Shibaura, Minato-ku, Sum of (A) Hotel Gracery Tamachi beneficiary 4,120 3,653 Richi 384,983.33 384,368.51 99.8 Tokyo and (C) interests Total 96,253 — 69.0 — — (Sum of (B) (371,888.10) (371,050.00) (99.8) 1-100 Koshien Hachiban-cho, Real estate trust and (C)) LaLaport KOSHIEN (site) Nishinomiya City, Hyogo beneficiary 7,770 7,748 Richi Prefecture interests (Note 1) Master lease method: The trustee or Hankyu REIT leases to a master lessee (sublessor) who then subleases to an end-tenant HANKYU NISHINOMIYA (sublessee). 14-2 Takamatsu-cho, Real estate trust GARDENS (28% of the quasi Direct lease method: The trustee or Hankyu REIT, instead of adopting the master lease method, leases directly to the Nishinomiya City, Hyogo beneficiary 24,976 17,383 Tanizawa co-ownership of the trust end-tenants (lessees). Prefecture interests beneficiary interests) Pass-through-type master lease method: A master lease method in which the rent paid by the master lessee and the rent paid by the end-tenant are always the same amount. 4-1-12 Higashi-asakayama-cho, Real estate trust AEON MALL Fixed-type master lease method: A master lease method in which the master lessee pays a fixed amount regardless of the Kita-ku, Sakai City, Osaka beneficiary 9,980 8,189 Richi SAKAIKITAHANADA (site) amount paid by the end-tenants to the master lessee. Prefecture interests Master lessees: A sublessor who rents properties from the trustee or Hankyu REIT and subleases the space to an end-tenant. End-tenants: A lessee or sublessee who uses the property for commercial, office or other purposes without subleasing the 3-1-20 Honan-cho-higashi, Real estate trust MANDAI Toyonaka Honan Store space. Toyonaka City, Osaka beneficiary 2,310 1,889 Daiwa (site) (Note 2) The total leasable area and leased area do not include warehouse, parking or machinery room space, except in cases where Prefecture interests a master lease method is adopted. The figures for HEP Five, HANKYU NISHINOMIYA GARDENS and Sphere Tower Tennozu show the leasable area and 146 Horikawa-cho, Real estate trust leased area corresponding to the quasi co-ownership of trust beneficiary interests. DAILY QANAT Izumiya Marutamachi Kudaru, beneficiary 3,680 3,127 Daiwa (Note 3) Occupancy rate is the leased area as a percentage of the total leasable area. Horikawa Marutamachi Store (site) Horikawa-dori, Kamigyo-ku, interests (Note 4) The total leasable area and leased area include 8,929.49 m2 (28% of the quasi co-ownership of the trust beneficiary Kyoto City interests) of parking garage space. 67-1 Shin-cho, Kobashi (Note 5) These items are not disclosed because no consent has been obtained from the tenants for the disclosure of rent, etc., and Real estate trust Nishi-iru, because, as the Asset Management Company determined, there is a possibility that the disclosure would affect the kotocross Hankyu Kawaramachi beneficiary 3,330 2,668 Daiwa Shijo-dori, Shimogyo-ku, competitiveness of Hankyu REIT and eventually damage the interests of unitholders. interests (Note 6) The hotel portion (the space subleased to Hankyu Hanshin Hotels Co., Ltd.) is calculated by the fixed-type master lease Kyoto City method (with Hankyu Corporation as the master lessee). The rest of the asset (the non-hotel space subleased to end-tenants) Real estate trust is calculated by the pass-through-type master lease method (with Hankyu Hanshin Building Management Co., Ltd. as the 7-1-7 Shimoyamate-dori, LIFE Shimoyamate Store (site) beneficiary 1,640 1,434 Tanizawa master lessee). Chuo-ku, Kobe City interests (Note 7) The total leasable area and leased area include 9,476.49 m2 of parking garage space.

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Appraisal The rental revenues from real estate, etc., owned by Hankyu REIT are as follows. Value at End Book Type of of Period Value Appraiser 25th Fiscal Period 24th Fiscal Period Name Location Ownership (Millions of (Millions (Note 2) Jun. 1, 2017 to Nov. 30, 2017 Dec. 1, 2016 to May 31, 2017

Yen) of Yen)

(Note 1)

) ) ) )

( % ) ( % ) ) ) ) ) ) ) ) )

Real estate trust T enants MANDAI Gojo Nishikoji Store 33 Saiin Rokutanda-cho, beneficiary 4,750 4,213 Daiwa Name and 2 and and 3 and (site) Ukyo-ku, Kyoto City interests ( % ) ( % ) otes 1 umber of N ( N ( Notes 2 3 and ( Notes 1 2 and ( Notes 2 ( during period ( during period

6-2-1 Onohara-higashi, Minoh Rental Revenue Rental Revenue Occupancy Rate Occupancy Rate ( Millions of Yen ( Millions of Yen ( at endof period KOHYO Onohara Store Real Estate 1,750 1,647 Tanizawa ( at endof period City, Osaka Prefecture ( at endof period ( at endof period Ratio of Rental Revenue Ratio of Rental Revenue to Total Rental Revenues Revenues to Rental Total Revenues to Rental Total Total Total Number of Tenants Tenants Total of Number HEP Five (14% of the quasi 1 100.0 1 100.0 4-183 Konoike, Itami City, OASIS Town Itami Konoike (site) Real Estate 7,440 7,391 Daiwa co-ownership of the trust beneficiary 311 6.3 310 6.6 Hyogo Prefecture interests) (129) (99.7) (124) (98.5) 2 100.0 2 100.0 Kitano Hankyu Building 576 11.8 548 11.6 Real estate trust (24) (98.8) (23) (97.7) Shiodome East Side Building 5-4-18 Tsukiji, Chuo-ku, Tokyo beneficiary 14,700 17,183 Richi interests Dew Hankyu Yamada 27 100.0 373 7.6 26 97.8 373 7.9 Takatsuki-Josai Shopping Center 1 100.0 284 5.8 1 100.0 284 6.0 Real estate trust Hankyu Corporation Head Office 1-16-1 Shibata, Kita-ku, Osaka — — — — beneficiary 12,200 9,568 Daiwa Nitori Ibaraki-Kita Store (site) 1 100.0 1 100.0 Building City (Note 4) (Note 4) (Note 4) (Note 4) interests Kohnan Hiroshima Nakano-Higashi 1 100.0 68 1.4 1 100.0 68 1.5 Real estate trust Store (site) 5-3-5 Uehommachi-nishi, Ueroku F Building beneficiary 2,790 2,609 Daiwa Chuo-ku, Osaka City Hotel Gracery Tamachi 1 100.0 118 2.4 1 100.0 121 2.6 interests LaLaport KOSHIEN (site) 1 100.0 257 5.2 1 100.0 257 5.4 Sphere Tower Tennozu (33% of the Real estate trust HANKYU NISHINOMIYA 2-2-8 Higashi-shinagawa, quasi co-ownership of the trust beneficiary 6,864 8,525 JREI GARDENS (28% of the quasi Shinagawa-ku, Tokyo 1 100.0 618 12.6 1 100.0 618 13.0 beneficiary interests) interests co-ownership of the trust beneficiary interests) Real estate trust 5-6-16 Fukushima, AEON MALL SAKAIKITAHANADA — — — — LAXA Osaka beneficiary 5,720 4,233 Tanizawa 2 100.0 2 100.0 Fukushima-ku, Osaka City (site) (Note 4) (Note 4) (Note 4) (Note 4) interests — — — — MANDAI Toyonaka Honan Store (site) 1 100.0 1 100.0 3-12-13 Kita-aoyama, (Note 4) (Note 4) (Note 4) (Note 4) Kita-Aoyama San cho-me Building Real estate 2,030 1,726 Daiwa DAILY QANAT Izumiya Horikawa — — — — Minato-ku, Tokyo 1 100.0 1 100.0 Marutamachi Store (site) (Note 4) (Note 4) (Note 4) (Note 4) Total 153,070 132,608 — kotocross Hankyu Kawaramachi 1 100.0 102 2.1 1 100.0 102 2.2 — — — — LIFE Shimoyamate Store (site) 1 100.0 1 100.0 (Note 4) (Note 4) (Note 4) (Note 4) — — — — (Note 1) Appraisal value at end of period shows the value appraised by an appraiser in accordance with Hankyu REIT’s Articles of MANDAI Gojo Nishikoji Store (site) 1 100.0 1 100.0 Incorporation and the provisions stipulated by the Investment Trusts Association of Japan. (Note 4) (Note 4) (Note 4) (Note 4) — — — — (Note 2) In the Appraiser column, Tanizawa, Richi, Daiwa and JREI represent Tanizawa Sōgō Appraisal Co., Ltd., Richi Appraisal KOHYO Onohara Store 1 100.0 1 100.0 Institute, DAIWA REAL ESTATE APPRAISAL CO., LTD. and the Japan Real Estate Institute, respectively. (Note 4) (Note 4) (Note 4) (Note 4) — — — — OASIS Town Itami Konoike (site) 1 100.0 1 100.0 (Note 4) (Note 4) (Note 4) (Note 4) Shiodome East Side Building 6 100.0 402 8.2 6 100.0 397 8.4 Hankyu Corporation Head Office 1 100.0 359 7.3 1 100.0 359 7.6 Building Ueroku F Building 11 93.8 135 2.8 11 93.8 138 2.9 Sphere Tower Tennozu (33% of the quasi co-ownership of the trust 24 93.0 175 3.6 23 88.1 136 2.9 beneficiary interests) LAXA Osaka 1 100.0 254 5.2 1 100.0 254 5.4 — — — — Kita-Aoyama San cho-me Building 3 100.0 3 100.0 (Note 4) (Note 4) (Note 4) (Note 4) 91 99.8 89 99.7 Total 4,902 100.0 4,740 100.0 (241) (99.8) (233) (99.6)

15 16 30 31 Asset Management Report

(Note 1) Total number of tenants shows the total number of tenants renting a site or room. In cases in which one tenant rents 4. Capital Expenditures multiple sites or rooms in a specific property, the tenant is counted once. However, in cases in which one tenant rents multiple properties, the tenant is counted each time for each property and each count is added to the amount stated in (1) Plan of Capital Expenditures the total field. (Note 2) The figures shown in parentheses represent the total number of tenants and occupancy rates calculated based on end-tenants; these figures are shown for properties that adopt the pass-through-type master lease method. The main capital expenditures currently planned with respect to owned real estate, etc., are as set forth in the (Note 3) Occupancy rate is the leased area as a percentage of the total leasable area. table below. The planned construction amounts include portions that are expensed as separate account items in (Note 4) These items are not disclosed because no consent has been obtained from the tenants for the disclosure of rent, etc., accounting costs. and because, as the Asset Management Company determined, there is a possibility that the disclosure would affect competitiveness of Hankyu REIT and eventually damage the interests of unitholders. Planned Construction Amount (Millions of Yen) 2) Details of Renewable Energy Power Generation Facility Name Location Purpose Planned Period Amount Paid in the Amount Total Not applicable. 25th Fiscal Already Paid Period 3) Details of Right to Operate Public Facility, etc. Heat-source equipment Sep. 2017 to Feb. 2018 71 — — Kitano Hankyu Kita-ku, renovation (1st phase) Not applicable. Building Osaka City Escalator restoration Apr. 2018 to May 2018 30 — — Drainpipe restoration Apr. 2018 to May 2018 33 — — 4) Details of Portfolio Securities Suita City, Dew Hankyu Refractory coating for Osaka Jan. 2018 to Mar. 2018 25 — — Yamada parking lot steel Not applicable. Prefecture

Fukushima- (4) Other Assets LAXA Osaka ku, Osaka Fan coil unit renovation Dec. 2017 to Mar. 2018 64 — — City Not applicable. (Note) Careful examination of planned construction work may result in changes to construction amounts, etc. (5) Assets Owned in Each Country/Region (2) Capital Expenditures Made during the 25th Fiscal Period Not applicable. The main construction works (in owned real estate, etc.) on which capital was expended during the fiscal period under review were as set forth in the table below. Capital expenditures during the period were ¥273 million. Including ¥74 million of repair expenses charged to expenses in accounting, Hankyu REIT implemented ¥348 million worth of construction works in the 25th fiscal period.

Construction Name Location Purpose Period Amount (Millions of Yen) Jul. 2017 Elevator restoration 23 to Nov. 2017 Kitano Hankyu Building Kita-ku, Osaka City Oct. 2017 Toilet replacement 24 to Nov. 2017 Air conditioning system Apr. 2017 renovation on 15th and 16th 25 Hankyu Corporation Head to Sep. 2017 Kita-ku, Osaka City floors Office Building Sprinkler piping renovation on Mar. 2017 44 15th and 16th floors to Sep. 2017 Chuo-ku, Osaka Emergency power generation Nov. 2017 Ueroku F Building 16 City equipment renovation to Nov. 2017 Other 138 Total 273

(3) Reserve Fund for Long-Term Repair and Maintenance Plans

Repair and maintenance work in each fiscal period, in principle, is to be covered by cash flows from operating activities during the respective fiscal period. However, Hankyu REIT has also set aside money based on the engineering report of each owned property as stated below.

17 18 32 33 Asset Management Report

25th Fiscal 24th Fiscal 23rd Fiscal 22nd Fiscal 21st Fiscal (2) Short-Term Debt and Long-Term Debt Period Period Period Period Period Operation Period Jun. 1, 2017 to Dec. 1, 2016 to Jun. 1, 2016 to Dec. 1, 2015 to Jun. 1, 2015 to Short-term debt and long-term debt as of November 30, 2017 are as follows. Nov. 30, 2017 May 31, 2017 Nov. 30, 2016 May 31, 2016 Nov. 30, 2015

Balance of reserve fund at start

) of period 178 175 178 200 200 ) ( % ) (Millions of Yen)

ate R

Amount set aside ) — 2 0 — — Date of Maturity Repayment (Millions of Yen) Lender Purpose Notes Borrowing Date Method nterest ( Note 1 I Millions of Yen ( Millions Amount withdrawn of Yen ( Millions

18 — 3 21 — (Millions of Yen) Classification Period Amount carried forward Period Average 160 178 175 178 200 ofat Balance Current End (Millions of Yen) Balanceat Start of Current

(Note) The amount withdrawn in the 22nd fiscal period is the reversal of amount equivalent to the reserve fund for Namba-Hanshin Sumitomo Building and Richmond Hotel Hamamatsu in line with the transfer of real estate trust beneficiary interests in Namba-Hanshin May 31, May 28, Mitsui Trust 500 500 0.19364 Building and Richmond Hotel Hamamatsu on April 8, 2016. The amount withdrawn in the 25th fiscal period is the reversal 2017 2018 of amount in line with the construction works at Sphere Tower Tennozu. Bank, Limited

Mitsubishi UFJ Trust and May 31, May 28, 5. Expenses and Liabilities 500 500 0.19364 Banking 2017 2018 Corporation (1) Details of Expenses Related to Asset Management

Sumitomo May 31, May 28, 25th Fiscal Period 24th Fiscal Period Mitsui Banking 500 500 0.19364 Item 2017 2018 Jun. 1, 2017 to Nov. 30, 2017 Dec. 1, 2016 to May 31, 2017 Corporation Thousands of Asset management remuneration 349,244 344,461 Yen Mizuho Bank, May 31, May 28, 500 500 0.19364 Ltd. 2017 2018 Thousands of

Asset custodian fees 18,803 18,816 Yen The Bank of Unsecured/ Thousands of May 31, May 28, Lump-sum Administrative agency fees 36,576 36,459 Tokyo-Mitsubishi 500 500 0.19364 (Note 2) non-guaranteed Yen 2017 2018 repayment UFJ, Ltd. Variable interest Thousands of Directors’ compensation 3,600 3,600 Yen

- TermShort Debt Mizuho Trust & May 31, May 28, Thousands of Banking Co., 500 500 0.19364 Auditors’ remuneration 10,500 10,500 2017 2018 Yen Ltd.

Thousands of Other operating expenses 63,615 49,431 The Senshu Yen May 31, May 28, Ikeda Bank, 200 200 0.19364 2017 2018 Thousands of Ltd. Total 482,339 463,268 Yen Sumitomo Jul. 24, Jul. 24, Mitsui Banking — 2,500 0.19364 2017 2018 Corporation

The Bank of Oct. 31, May 31, Tokyo-Mitsubishi — 1,500 0.19364 2017 2018 UFJ, Ltd.

Subtotal 3,200 7,200 — — — — — Sumitomo Unsecured/ Jul. 23, Jul. 24, Mitsui Banking 2,500 — 0.85727 non-guaranteed

2012 2017 Corporation Lump-sum Variable interest (Note 2)

Year repayment

- Term Debt Development Unsecured/ Sep. 28, Sep. 29, Bank of Japan 3,000 — 1.33319 non-guaranteed 2012 2017 due within One One due within

Long Inc. Fixed interest

19 20 34 35 Asset Management Report

) ) ) ) ( % ) ( % )

ate ate R R

) ) Date of Maturity Repayment Date of Maturity Repayment Lender Purpose Notes Lender Purpose Notes Borrowing Date Method Borrowing Date Method nterest nterest ( Note 1 ( Note 1 I I Millions of Yen ( Millions of Yen ( Millions Millions of Yen ( Millions of Yen ( Millions

Classification Classification Period Period Period Period Average Average Balance at End of Current ofat Balance Current End ofat Balance Current End Balanceat Start of Current Balanceat Start of Current

The Bank of Unsecured/ Oct. 31, Oct. 31, Sumitomo Tokyo-Mitsubishi 1,500 — 0.75727 non-guaranteed Jul. 23, Jul. 31, 2012 2017 Mitsui Banking 1,000 — 1.15611 UFJ, Ltd. Variable interest 2013 2018 Corporation Mitsubishi UFJ Trust and Feb. 28, Feb. 28, 1,000 1,000 1.01939 Mitsubishi UFJ Banking 2013 2018 Lump-sum Trust and Aug. 30, Aug. 31, Corporation (Note 2) 2,000 2,000 1.31957 repayment Banking 2013 2020 Unsecured/ Corporation Mizuho Bank, Feb. 28, Feb. 28, 1,000 1,000 1.01939 non-guaranteed Ltd. 2013 2018 Fixed interest Mitsubishi UFJ Trust and Oct. 31, Oct. 30, 1,000 1,000 1.20595 Sumitomo Term Debt due within One Year One due within Debt - Term Banking 2013 2020 Jul. 23, Jul. 31, Mitsui Banking — 1,000 1.15611 Corporation 2013 2018

Long Corporation The Senshu Subtotal 9,000 3,000 — — — — — Oct. 31, Oct. 30, Ikeda Bank, 1,000 1,000 1.20595 2013 2020 Ltd.

Sumitomo Oct. 31, Oct. 30, Mitsui Trust 1,000 1,000 1.20595 2013 2020 Bank, Limited

Development Dec. 24, Dec. 24, Bank of Japan 4,000 4,000 1.26104 2013 2020 Unsecured/ Inc. Lump-sum (Note 2) non-guaranteed repayment - Term Debt Fixed interest Sumitomo Jan. 21, Jan. 31,

Long Mitsui Trust 3,000 3,000 0.85968 2014 2019 Bank, Limited

Mizuho Bank, Jan. 21, Jan. 31, 2,000 2,000 0.95968 Ltd. 2014 2019 The Bank of Jan. 23, Jan. 31, Tokyo-Mitsubishi 1,000 1,000 0.96537 2014 2019 UFJ, Ltd. Sumitomo Jul. 22, Jul. 31, Mitsui Banking 3,500 3,500 0.73972 2014 2019 Corporation Mitsubishi UFJ Trust and Jul. 22, Jul. 31, 2,000 2,000 0.73972 Banking 2014 2019 Corporation Mizuho Bank, Sep. 30, Sep. 30, 1,500 1,500 1.08976 Ltd. 2014 2022 The Bank of Sep. 30, Sep. 30, Tokyo-Mitsubishi 1,400 1,400 1.08976 2014 2022 UFJ, Ltd. Sumitomo Sep. 30, Sep. 30, Mitsui Banking 1,200 1,200 1.08976 2014 2022 Corporation

21 22 36 37 Asset Management Report

) ) ) ) ( % ) ( % )

ate ate R R

) ) Date of Maturity Repayment Date of Maturity Repayment Lender Purpose Notes Lender Purpose Notes Borrowing Date Method Borrowing Date Method nterest nterest ( Note 1 ( Note 1 I I Millions of Yen ( Millions of Yen ( Millions Millions of Yen ( Millions of Yen ( Millions

Classification Classification Period Period Period Period Average Average Balance at End of Current ofat Balance Current End ofat Balance Current End Balanceat Start of Current Balanceat Start of Current

Mitsubishi UFJ Development Unsecured/ May 15, May 30, Trust and Sep. 30, Sep. 30, Bank of Japan 4,000 4,000 1.24659 non-guaranteed 1,200 1,200 1.08976 2015 2025 Banking 2014 2022 Inc. Fixed interest Corporation The Senshu Sumitomo Sep. 30, Sep. 30, Sep. 30, Sep. 30, Ikeda Bank, 1,200 1,200 1.08976 Mitsui Trust 1,200 1,200 0.40727 2014 2022 2015 2024 Ltd. Bank, Limited Unsecured/ Sumitomo non-guaranteed Sep. 30, Sep. 30, Mitsubishi UFJ Mitsui Trust 500 500 1.08976 Trust and Jan. 21, Jan. 31, Lump-sum Variable interest 2014 2022 1,000 1,000 0.41727 (Note 2) Bank, Limited Banking 2016 2025 repayment

Sumitomo - Term Debt Corporation Dec. 24, Dec. 26, Mitsui Banking 1,500 1,500 0.98328

2014 2022 Long Sumitomo Corporation May 31, May 31, Mitsui Trust 2,800 2,800 0.77064 Mizuho Trust & 2017 2027 Unsecured/ Dec. 24, Dec. 26, Bank, Limited Banking Co., 1,000 1,000 0.98328 non-guaranteed 2014 2022 Development Ltd. Sep. 29, Sep. 30, Fixed interest Bank of Japan — 3,000 0.77701 Development 2017 2027 Dec. 24, Dec. 26, Inc. Bank of Japan 500 500 0.98328 2014 2022 Inc. Subtotal 49,700 51,700 — — — — — The Bank of Total 61,900 61,900 — — — — — Dec. 24, Dec. 26, Tokyo-Mitsubishi 500 500 0.98328 2014 2022

UFJ, Ltd. (Note 1) Average interest rates presented are weighted average interest rates based on the balance at the end of the period. (Note 2) Funds are used for the acquisition of ownership and trust beneficiary interests in real estate, as well as related expenses and refinancing of borrowings. Mizuho Bank, Dec. 24, Dec. 26, Unsecured/ 500 500 0.98328 Lump-sum Ltd. 2014 2022 (Note 2) non-guaranteed repayment - Term Debt Fixed interest Mitsubishi UFJ

Long Trust and Dec. 24, Dec. 26, 500 500 0.98328 Banking 2014 2022 Corporation Sumitomo Dec. 24, Dec. 26, Mitsui Trust 300 300 0.98328 2014 2022 Bank, Limited The Senshu Dec. 24, Dec. 26, Ikeda Bank, 200 200 0.98328 2014 2022 Ltd. The Bank of Jan. 23, Jan. 31, Tokyo-Mitsubishi 2,000 2,000 0.79316 2015 2022 UFJ, Ltd. Mitsubishi UFJ Trust and Feb. 27, Feb. 29, 3,000 3,000 1.06833 Banking 2015 2024 Corporation Mizuho Bank, Feb. 27, Feb. 29, 1,400 1,400 1.06833 Ltd. 2015 2024 The Senshu Feb. 27, Feb. 29, Ikeda Bank, 800 800 1.06833 2015 2024 Ltd.

23 24 38 39 Asset Management Report

(3) Investment Corporation Bonds 6. Purchases and Disposals during the Period under Review

Hankyu REIT bonds as of November 30, 2017 are as follows. (1) Purchases and Disposals of Real Estate/Asset-Backed Securities, etc., Infrastructure Assets, etc./Infrastructure Related Assets

Balance at Balance at Start of End of Not applicable. Interest Issue Current Current Maturity Repayment Name Rate Purpose Notes Date Period Period Date Method (2) Purchases and Disposals of Other Real Estate (%) (Millions (Millions of Yen) of Yen) Not applicable.

Hankyu REIT Third (3) Investigation of the Value, etc., of Specified Assets Series of Unsecured Nov. 10, Nov. 10, Lump-sum Unsecured/ 2,000 2,000 0.90000 (Note 1) Investment 2016 2031 repayment non-guaranteed Corporation Bonds Not applicable.

Hankyu REIT (4) Transactions Involving Conflicts of Interest, etc. Second Series of Nov. 10, Nov. 10, Lump-sum Unsecured/ Unsecured 2,000 2,000 0.29000 (Note 1) 2016 2023 repayment non-guaranteed Investment 1) Transactions Corporation Bonds Not applicable. Total 4,000 4,000 — — — — —

2) Payment of Fees, etc. (Note 1) The proceeds of the investment corporation bonds were used for redeeming the Hankyu REIT First Series of Unsecured Investment Corporation Bonds. (Note 2) The terms and conditions of the investment corporation bonds contain inter-bond pari passu clauses. Breakdown of Transactions with Interested Persons, etc. Total Fees, etc. Ratio to (4) Short-Term Investment Corporation Bonds Paid A Classification Total Fees (Thousands of Amount Paid B B/A (%) Not applicable. Yen) Payee (Thousands of Yen) (5) New Unitholder Rights Property Hankyu Hanshin Building Management Co., Ltd. 289,276 84.2 Not applicable. management 343,404 expenses Hankyu Realty Co., Ltd. 1,017 0.3

Hanshin Electric Railway Co., Ltd. 26.2 17,250 Hankyu Corporation 13,939 21.2

Rent expenses 65,796 H2O Retailing Corporation 6,720 10.2

Hankyu Hanshin Building Management Co., Ltd. 3,021 4.6

Hankyu Realty Co., Ltd. 557 0.8 Advertising 35,781 Hankyu Hanshin Building Management Co., Ltd. 35,378 98.9 expenses Other property-related 23,154 Hankyu Hanshin Building Management Co., Ltd. 6,500 28.1 expenses

(Note 1) Amounts paid to interested persons, etc., for construction/repairs in the 25th fiscal period other than the above payment of fees, etc., are as follows. Chuo Densetsu Co., LTD ¥2,874 thousand Hankyu Sekkei Consultant ¥185 thousand Hankyu Advertising Agency Inc. ¥7 thousand Amounts paid (including payable amount) to the following interested persons, etc., are also recorded as assets. Chuo Densetsu Co., LTD ¥17,969 thousand Hankyu Hanshin Building Management Co., Ltd. ¥7,128 thousand Hankyu Sekkei Consultant ¥3,281 thousand (Note 2) Interested persons, etc., as defined in Paragraph 1, Article 201 of the Investment Trusts Act refers to the interested persons of the Asset Management Company (Hankyu REIT Asset Management, Inc.), which has entered into an entrustment contract for asset management with Hankyu REIT.

25 26 40 41 Asset Management Report Financial Statements

Financial Statements (5) Transactions with Asset Management Company Concerning Subsidiary Business Managed by Said Asset Management Company, etc. Balance Sheets………………………………………………………………………………… 44 Statements of Income and Retained Earnings……………………………………………… 46 Not applicable. Reason: The Asset Management Company (Hankyu REIT Asset Management, Inc.) does not Statements of Changes in Net Assets………………………………………………………... 47 undertake any subsidiary business that could be categorized as a Type I Financial Instruments Business, Type II Statements of Cash Flows……………………………………………………………………. 48 Financial Instruments Business, building lots and buildings transaction business or a real estate specified joint Notes to Financial Statements………………………………………………………………...49 enterprise.

7. Status of Accounting

(1) Assets, Liabilities, Net Assets and Profit/Loss, etc.

Please refer to the following: Balance Sheets; Statements of Income and Retained Earnings; Statements of Changes in Net Assets; Statements of Cash Flows; and Notes to Financial Statements.

(2) Changes in Calculation Methods for Depreciation

Not applicable.

(3) Changes in Valuation of Method for Real Estate, etc./Infrastructure Assets, etc.

Not applicable.

8. Others

(1) Notices

Not applicable.

(2) Disclosure Concerning In-house Investment Trust Beneficiary Certificates, etc.

Not applicable.

(3) Disclosure Concerning Overseas Real Estate Companies

Not applicable.

(4) Disclosure Concerning Real Estate Owned by Affiliated Overseas Real Estate Companies

Not applicable.

(5) Other

In this document, unless otherwise specified, monetary figures are rounded down to the nearest whole unit and ratios are rounded off to one decimal place.

27

42 - 2 - 43

Financial Statements

Hankyu REIT, Inc. Hankyu REIT, Inc. BALANCE SHEETS BALANCE SHEETS, CONTINUED

As of November 30, 2017 and May 31, 2017 As of November 30, 2017 and May 31, 2017

As of As of November 30, 2017 May 31, 2017 November 30, 2017 May 31, 2017 (Thousands of Yen) (Thousands of Yen) Assets Liabilities Current Assets: Current Liabilities: Cash and deposits (Notes 3 and 4) ¥ 6,973,555 ¥ 6,410,747 Operating accounts payable ¥ 540,213 ¥ 539,180 Cash and deposits in trust (Notes 3 and 4) 7,616,558 7,424,705 Short-term debt (Notes 4 and 6) 7,200,000 3,200,000 Tenant receivables 1,911 7,029 Long-term debt due within one year (Notes 4 and 6) 3,000,000 9,000,000 Supplies 2,321 2,428 Distributions payable 6,663 7,290 Deposits paid 83,364 98,449 Accrued expenses 161,608 166,722 Prepaid expenses 152,469 221,078 Income taxes payable 1,341 1,544 Deferred tax assets (Note 12) 16 26 Accrued consumption taxes 63,610 73,943 Total Current Assets 14,830,197 14,164,464 Advances received 731,672 661,823 Investment Properties (Notes 5, 8, 9 and 15): Deposits received (Notes 4 and 8) 239,258 182,411 Land 18,143,525 18,143,525 Total Current Liabilities 11,944,367 13,832,916 Buildings 3,735,022 3,733,797 Long-Term Liabilities: Structures 541,192 541,192 Investment corporation bonds (Notes 4 and 7) 4,000,000 4,000,000 Tools, furniture and fixtures 18,307 18,017 Long-term debt (Notes 4 and 6) 51,700,000 49,700,000 Land in trust 85,466,362 85,466,362 Tenant security deposits (Notes 4 and 8) 1,297,070 1,344,368 Buildings in trust 38,016,909 37,768,725 Tenant security deposits in trust (Notes 4 and 8) 5,633,248 5,674,441 Structures in trust 886,543 877,828 Total Long-Term Liabilities 62,630,319 60,718,810 Machinery and equipment in trust 451,981 451,326 Total Liabilities 74,574,687 74,551,727 Tools, furniture and fixtures in trust 188,369 174,202 Construction in progress in trust 94,400 39,979 Net Assets (Notes 10 and 18) Less: accumulated depreciation (15,855,832) (15,018,209) Unitholders’ Equity: Leasehold rights 957,157 957,157 Unitholders’ capital 71,659,094 71,659,094 Total Investment Properties, Net 132,643,939 133,153,904 Retained earnings 1,719,286 1,623,922 Other Assets: Total Unitholders’ Equity 73,378,381 73,283,017 Lease and guarantee deposits 10,000 10,000 Total Net Assets 73,378,381 73,283,017 Long-term prepaid expenses 387,443 419,555 Total Liabilities and Net Assets ¥ 147,953,069 ¥ 147,834,744 Deferred investment corporation bond issuance costs 22,330 23,568 Others 59,157 63,250 The accompanying notes are an integral part of these financial statements. Total Other Assets 478,931 516,374 Total Assets ¥ 147,953,069 ¥ 147,834,744

The accompanying notes are an integral part of these financial statements.

44 - 3 - - 4 - 45

Financial Statements

Hankyu REIT, Inc. Hankyu REIT, Inc. STATEMENTS OF INCOME AND RETAINED EARNINGS STATEMENTS OF CHANGES IN NET ASSETS

For the six months ended November 30, 2017 and May 31, 2017 For the six months ended November 30, 2017 and May 31, 2017

For the six months ended Unitholders’ Equity Total November 30, 2017 May 31, 2017 Unitholders’ Retained Total Net Unitholders’ (Thousands of Yen) Capital Earnings Assets Equity Operating Revenues: (Thousands of Yen) Rental revenues (Note 17) ¥ 4,902,260 ¥ 4,740,206 Balance as of November 30, 2016 ¥ 71,659,094 ¥ 1,569,370 ¥ 73,228,464 ¥ 73,228,464 Total Operating Revenues 4,902,260 4,740,206 Operating Expenses: Cash distributions declared — (1,569,035) (1,569,035) (1,569,035) Property-related expenses (Note 17) 2,269,827 2,297,630 Net income — 1,623,587 1,623,587 1,623,587 Asset management fees 349,244 344,461 Balance as of May 31, 2017 ¥ 71,659,094 ¥ 1,623,922 ¥ 73,283,017 ¥ 73,283,017 Directors’ compensation 3,600 3,600 Cash distributions declared — (1,623,407) (1,623,407) (1,623,407) Asset custody fees 18,803 18,816 Net income — 1,718,771 1,718,771 1,718,771 Administrative service fees 36,576 36,459 Balance as of November 30, 2017 ¥ 71,659,094 ¥ 1,719,286 ¥ 73,378,381 ¥ 73,378,381 Independent auditors’ fees 10,500 10,500

Other operating expenses 63,615 49,431 Total Operating Expenses 2,752,167 2,760,899 The accompanying notes are an integral part of these financial statements. Operating Income 2,150,093 1,979,306 Non-Operating Revenues: Interest income 62 65 Reversal of distributions payable 1,321 1,956 Interest on refund — 988 Total Non-Operating Revenues 1,383 3,010 Non-Operating Expenses: Interest expense 289,322 289,029 Borrowing related expenses 55,446 54,935 Interest expense on investment corporation bonds 11,856 11,943 Amortization of deferred investment corporation bond issuance costs 1,237 1,237 Other non-operating expenses 30 30 Total Non-Operating Expenses 357,893 357,175 Ordinary Income 1,793,583 1,625,141 Extraordinary Losses: Litigation settlement 73,450 — Total Extraordinary Losses 73,450 — Income Before Income Taxes 1,720,132 1,625,141 Income taxes – current 1,351 1,554 Income taxes – deferred 9 (0) Total Income Taxes (Note 12) 1,361 1,554 Net Income 1,718,771 1,623,587 Retained Earnings Brought Forward 515 335 Retained Earnings at End of Period ¥ 1,719,286 ¥ 1,623,922

The accompanying notes are an integral part of these financial statements.

46 - 5 - - 6 - 47

Financial Statements

Hankyu REIT, Inc. Hankyu REIT, Inc. STATEMENTS OF CASH FLOWS Notes to Financial Statements

For the six months ended November 30, 2017 and May 31, 2017 For the six months ended November 30, 2017 and May 31, 2017

For the six months ended November 30, 2017 May 31, 2017 Note 1 – Organization and Basis of Presentation (Thousands of Yen) Cash Flows from Operating Activities: (a) Organization Income before income taxes ¥ 1,720,132 ¥ 1,625,141 Depreciation and amortization 841,875 846,113 Hankyu REIT was established on December 3, 2004 as an investment corporation under the Act on Investment Amortization of deferred investment corporation bond issuance costs 1,237 1,237 Trusts and Investment Corporations (Act No. 198 of 1951, including subsequent revisions, hereinafter referred to as the “Investment Trust Act”) by the founder (Hankyu REIT Asset Management, Inc., the Asset Management Loss on disposal of investment properties and other assets 290 4,845 Company). On October 26, 2005, Hankyu REIT was listed on the J-REIT section of the Tokyo Stock Exchange. Interest income (62) (65)

Reversal of distributions payable (1,321) (1,956) Interest expense 289,322 289,029 (b) Basis of Presentation Interest expense on investment corporation bonds 11,856 11,943 Litigation settlement 73,450 — The accompanying financial statements have been prepared in accordance with the provisions set forth in the (Increase) decrease in tenant receivables 828 418 Investment Trust Act, the Financial Instruments and Exchange Act and their related accounting regulations and in (Increase) decrease in supplies 106 71 conformity with Generally Accepted Accounting Principles of Japan (“Japanese GAAP”), which are different in (Increase) decrease in deposits paid 15,084 (18,203) certain respects as to application and disclosure requirements from both International Financial Reporting (Increase) decrease in consumption taxes receivable — 258,807 Standards and U.S. Generally Accepted Accounting Principles. (Increase) decrease in prepaid expenses 100,720 (97,723) Increase (decrease) in operating accounts payable 85,192 (159,386) The accompanying financial statements have been reformatted and translated into English from the financial Increase (decrease) in accrued expenses 270 419 statements of Hankyu REIT prepared in accordance with Japanese GAAP and filed with the appropriate Local Increase (decrease) in accrued consumption taxes (10,333) (6,015) Finance Bureau of the Ministry of Finance as required by the Financial Instruments and Exchange Act. In Increase (decrease) in advances received 69,849 (29,884) preparing the accompanying financial statements, relevant notes have been expanded and certain reclassifications Increase (decrease) in deposits received 232 (1,252) have been made from the Japanese GAAP financial statements. Certain supplementary information included in the Interest income received 62 65 statutory Japanese GAAP financial statements, but not required for fair presentation, is not presented in the Interest expense paid (306,563) (302,343) accompanying financial statements.

Litigation settlement paid (73,450) — As permitted by Japanese GAAP, amounts of less than one thousand yen have been omitted. Consequently, the Income taxes refunded (paid) (1,553) (1,552) totals shown in the accompanying financial statements do not necessarily agree with sums of the individual Net Cash Provided by Operating Activities 2,817,228 2,419,708 amounts. Cash Flows from Investing Activities: Payment for purchases of investment properties (412,268) (238,065) Refunds of tenant security deposits (71,224) (135,970) Note 2 – Summary of Significant Accounting Policies Proceeds from tenant security deposits 43,637 32,508 Net Cash Used in Investing Activities (439,855) (341,527) (a) Cash and Cash Equivalents Cash Flows from Financing Activities: Proceeds from short-term debt 4,000,000 3,200,000 Cash and cash equivalents consist of cash on hand and cash in trust, demand deposits and deposits in trust and Repayments of short-term debt — (6,000,000) short-term investments which are highly liquid and readily convertible to cash and which have insignificant risk of Proceeds from long-term debt 3,000,000 2,800,000 market value fluctuation and maturities of three months or less from the date of acquisition. Repayments of long-term debt (7,000,000) — Distributions paid (1,622,712) (1,570,577) (b) Investment Properties

Net Cash Provided by (Used in) Financing Activities (1,622,712) (1,570,577) Investment properties that include investment properties in trust are recorded at cost, which includes the Net Change in Cash and Cash Equivalents 754,660 507,603 allocated purchase price, related costs and expenses for acquisition of the trust beneficiary interests in real estate. Cash and Cash Equivalents at Beginning of Period 13,835,453 13,327,849 Investment property balances are depreciated using the straight-line method over the estimated useful life as Cash and Cash Equivalents at End of Period (Note 3) ¥ 14,590,113 ¥ 13,835,453 follows: (Years) The accompanying notes are an integral part of these financial statements. Buildings 2-50

Structures 2-56

Machinery and equipment 2-17

Tools, furniture and fixtures 2-18

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Financial Statements

(c) Deferred Investment Corporation Bond Issuance Costs Note 3 – Cash and Cash Equivalents

Deferred investment corporation bond issuance costs are amortized on a straight-line basis over the respective Reconciliation between cash and deposits and cash and deposits in trust in the balance sheets and cash and cash terms of the bonds. equivalents in the statements of cash flows is as follows:

(d) Income Taxes As of November 30, 2017 May 31, 2017 Deferred tax assets and liabilities are calculated and recognized for the future tax consequences attributable to (Thousands of Yen) the difference between the financial statement carrying amount of the existing assets and liabilities and their respective income tax bases using the statutory rate. Cash and deposits ¥ 6,973,555 ¥ 6,410,747

Cash and deposits in trust 7,616,558 7,424,705 (e) Real Estate Taxes Cash and cash equivalents ¥ 㻌 14,590,113 ¥ 㻌 13,835,453 Investment properties are subject to various taxes such as property taxes and city planning taxes. Owners of the properties are registered by records maintained in each jurisdiction by the local government. The taxes are imposed on the registered record owner as of January 1 of each year based on an assessment made by the local government. Note 4 – Financial Instruments

When a property is purchased within the calendar year, the taxes for the corresponding calendar year are (a) Qualitative Information for Financial Instruments imposed on the seller. Hankyu REIT pays the seller the corresponding amount of the taxes for the period from the property acquisition date to December 31 of the calendar year and capitalizes these amounts as acquisition costs Policy for Financial Instrument Transactions of the property rather than expensing them. In subsequent calendar years, such taxes on investment properties are charged as operating expenses in each fiscal period. Hankyu REIT raises funds through borrowings and the issuance of investment corporation bonds for the purpose of securing stable revenue and achieving steady growth of portfolio assets. There are no real estate taxes capitalized as acquisition costs of the property during the six months ended November 30, 2017. Surplus funds are managed considering safety and liquidity. Hankyu REIT does not engage in investments that are aimed solely on proactively acquiring gains on investments. (f) Consumption Taxes Hankyu REIT enters into derivative transactions only for the purpose of hedging interest rate risks arising from Consumption taxes are excluded from transaction amounts. borrowings.

(g) Accounting Treatment of Trust Beneficiary Interests in Real Estate Nature and Extent of Risks Arising from Financial Instruments and Risk Management

For trust beneficiary interests in real estate owned by Hankyu REIT, all accounts of assets and liabilities within Proceeds from borrowings and investment corporation bonds are used mainly to acquire ownership and trust the assets in trust and all accounts of revenue generated and expenses incurred from the assets in trust are beneficiary interests in real estate, to repay outstanding borrowings and redeem investment corporation bonds. recognized in the relevant accounts of the balance sheets and statements of income and retained earnings. Floating-rate borrowings are exposed to the risk of interest rate fluctuations. Such risk is managed by The following assets in trust are recognized and presented separately on the balance sheets. maintaining a high proportion of borrowings under long-term fixed rates.

(i) Cash and deposits in trust Borrowings, investment corporation bonds and tenant security deposits are exposed to liquidity risk. Such risk (ii) Land in trust, buildings in trust, structures in trust, machinery and equipment in trust, tools, furniture is managed in ways such as preparing cash flow analyses by the Asset Management Company and maintaining and fixtures in trust and construction in progress in trust sufficient liquidity on hand.

(iii) Other intangible assets in trust included in “other assets-others” (iv) Tenant security deposits in trust Supplemental Explanation Regarding Fair Value of Financial Instruments

The fair value of financial instruments is based on quoted market prices. When there is no observable market price available, fair value is based on a price that may be reasonably estimated. Since certain assumptions and factors are reflected in estimating the fair value, different assumptions and factors could result in a different value.

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Financial Statements

(b) Estimated Fair Value of Financial Instruments 2. Financial instruments whose fair value are deemed extremely difficult to determine

Book value and fair value are as follows: As of November 30, 2017 May 31, 2017 As of November 30, 2017 As of May 31, 2017 (Thousands of Yen) (Thousands of Yen) (Thousands of Yen) Tenant security deposits ¥ 894,957 ¥ 894,957 Assets Book value Fair value Difference Book value Fair value Difference Tenant security deposits in trust 5,472,631 5,511,763 Cash and deposits ¥ 6,973,555 ¥ 6,973,555 ¥ — ¥ 6,410,747 ¥ 6,410,747 ¥ —

Cash and deposits in trust 7,616,558 7,616,558 — 7,424,705 7,424,705 — The fair value of tenant security deposits and tenant security deposits in trust are not disclosed because it is difficult to estimate a period as to when these deposits will be returned. Total ¥ 14,590,113 ¥ 14,590,113 ¥ — ¥ 13,835,453 ¥ 13,835,453 ¥ — 3. Redemption schedule for monetary claims Liabilities

Due after one Due after two Due after three Due after four Short-term debt ¥ 7,200,000 ¥ 7,200,000 ¥ — ¥ 3,200,000 ¥ 3,200,000 ¥ — Due within Due after year to two years to three years to four years to five Long-term debt due within one one year five years 3,000,000 3,006,108 6,108 9,000,000 9,012,325 12,325 As of November 30, 2017 years years years years year (Thousands of Yen) Deposits received 239,258 238,819 (438) 182,411 181,895 (515) Cash and deposits ¥ 6,973,555 ¥ — ¥ — ¥ — ¥ — ¥ —

Investment corporation bonds 4,000,000 3,957,600 (42,400) 4,000,000 3,951,000 (49,000) Cash and deposits in trust 7,616,558 — — — — —

Long-term debt 51,700,000 52,503,253 803,253 49,700,000 50,605,844 905,844 Total ¥ 14,590,113 ¥ — ¥ — ¥ — ¥ — ¥ —

Tenant security deposits 402,113 392,307 (9,805) 449,411 437,403 (12,007)

Due after one Due after two Due after three Due after four Tenant security deposits in trust 160,617 129,377 (31,240) 162,677 131,292 (31,385) Due within Due after year to two years to three years to four years to five one year five years Total ¥ 66,701,988 ¥ 67,427,466 ¥ 725,477 ¥ 66,694,500 ¥ 67,519,762 ¥ 825,261 As of May 31, 2017 years years years years (Thousands of Yen)

The financial instruments whose fair values are deemed extremely difficult to determine are excluded from the Cash and deposits ¥ 6,410,747 ¥ — ¥ — ¥ — ¥ — ¥ — above table. Cash and deposits in trust 7,424,705 — — — — —

Notes: Total ¥ 13,835,453 ¥ — ¥ — ¥ — ¥ — ¥ —

1. Methods used to estimate the fair value of financial instruments 4. Redemption schedule for short-term debt, investment corporation bonds and long-term debt Assets and Liabilities: Due after one Due after two Due after three Due after four Due within Due after year to two years to three years to four years to five one year five years (1) Cash and deposits, cash and deposits in trust and short-term debt As of November 30, 2017 years years years years Due to the short maturities, the book value of these assets and liabilities is deemed a reasonable approximation (Thousands of Yen) of the fair value; therefore, the book value is used as the fair value equivalent. Short-term debt ¥ 7,200,000 ¥ — ¥ — ¥ — ¥ — ¥ — (2) Long-term debt due within one year and long-term debt Investment corporation bonds — — — — — 4,000,000 The fair value of these long-term debts is calculated based on the total amount of principle and interest discounted at the current interest rate based on new borrowings. For long-term debt with floating interest rates that Long-term debt 3,000,000 11,500,000 5,000,000 4,000,000 9,000,000 22,200,000 reflects market interest rates within a short period of time, the book value is deemed a reasonable approximation of the fair value; therefore, the book value is used as the fair value equivalent. Total ¥ 10,200,000 ¥ 11,500,000 ¥ 5,000,000 ¥ 4,000,000 ¥ 9,000,000 ¥ 26,200,000

Due after one Due after two Due after three Due after four (3) Deposits received, tenant security deposits and tenant security deposits in trust Due within Due after year to two years to three years to four years to five The fair value of these liabilities is calculated based on the present value of future cash flows discounted by one year five years interest rates that take into consideration the terms to maturity and credit risk. As of May 31, 2017 years years years years (Thousands of Yen) (4) Investment corporation bonds Short-term debt ¥ 3,200,000 ¥ — ¥ — ¥ — ¥ — ¥ — The fair value of investment corporation bonds is based on their indicative market price obtained from Japan Securities Dealers Association. Investment corporation bonds — — — — — 4,000,000 Long-term debt 9,000,000 7,000,000 5,500,000 9,000,000 2,000,000 26,200,000

Total ¥ 12,200,000 ¥ 7,000,000 ¥ 5,500,000 ¥ 9,000,000 ¥ 2,000,000 ¥ 30,200,000

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Financial Statements

Note 5 – Investment Properties Note 6 – Short-Term Debt and Long-Term Debt

Investment properties consist of the following: Short-term debt and long-term debt consist of the following:

As of November 30, 2017 As of May 31, 2017 As of (Thousands of Yen) (Thousands of Yen) November 30, 2017 May 31, 2017 Acquisition Accumulated Acquisition Accumulated Book value Book value cost depreciation cost depreciation (Thousands of Yen)

Land ¥ 18,143,525 ¥ — ¥ 18,143,525 ¥ 18,143,525 ¥ — ¥ 18,143,525 Short-term debt

Buildings 3,735,022 (1,649,263) 2,085,758 3,733,797 (1,576,340) 2,157,456 0.18% - 0.19% unsecured short-term loans ¥ 7,200,000 ¥ 3,200,000

Structures 541,192 (337,291) 203,900 541,192 (329,484) 211,707 Total short-term debt  ¥ 7,200,000  ¥ 3,200,000

Tools, furniture and fixtures 18,307 (17,845) 461 18,017 (17,767) 250 Long-term debt

Land in trust 85,466,362 — 85,466,362 85,466,362 — 85,466,362 0.75% - 1.33% unsecured loans due 2017 ¥ — ¥ 7,000,000

Buildings in trust 38,016,909 (13,065,713) 24,951,196 37,768,725 (12,344,929) 25,423,796 1.01% - 1.15% unsecured loans due 2018 3,000,000 3,000,000

Structures in trust 886,543 (370,111) 516,432 877,828 (350,814) 527,013 0.73% - 0.96% unsecured loans due 2019 11,500,000 11,500,000 Machinery and equipment 451,981 (303,497) 148,483 451,326 (293,998) 157,327 1.20% - 1.31% unsecured loans due 2020 9,000,000 9,000,000 in trust Tools, furniture and fixtures 188,369 (112,109) 76,260 174,202 (104,875) 69,327 0.79% - 1.08% unsecured loans due 2022 14,000,000 14,000,000 in trust Construction in progress 94,400 — 94,400 39,979 — 39,979 0.40% - 1.06% unsecured loans due 2024 6,400,000 6,400,000 in trust

Leasehold rights 957,157 — 957,157 957,157 — 957,157 0.41% - 1.24% unsecured loans due 2025 5,000,000 5,000,000

Total ¥ 148,499,772 ¥ (15,855,832) ¥ 132,643,939 ¥ 148,172,114 ¥ (15,018,209) ¥ 133,153,904 0.77% unsecured loan due 2027 5,800,000 2,800,000 Total long-term debt ¥ 54,700,000 ¥ 58,700,000 Notes: 1. Average interest rates presented are weighted average interest rates based on the balance at the end of the period. 2. Funds are used for the acquisition of ownership and trust beneficiary interests in real estate, and related expenses and refinancing of borrowings.

The annual maturities of long-term debt as of November 30, 2017 are as follows:

Due after one Due after two Due after three Due after four Due within Due after year to two years to three years to four years to five one year five years years years years years (Thousands of Yen) Long-term debt ¥ 3,000,000 ¥ 11,500,000 ¥ 5,000,000 ¥ 4,000,000 ¥ 9,000,000 ¥ 22,200,000

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Financial Statements

Note 7 – Investment Corporation Bonds Note 9 – Reduction Entry for Investment Properties Purchased with Government Subsidies

Investment corporation bonds consist of the following: The following table shows the amount of government subsidies that are deducted from the acquisition cost of investment properties. As of As of November 30, 2017 May 31, 2017 November 30, 2017 May 31, 2017 (Thousands of Yen) (Thousands of Yen) 㻌 2nd 0.29% unsecured bonds due 2023 (Note 1) ¥ 2,000,000 ¥ 2,000,000 Buildings in trust ¥ 13,238 ¥ 13,238 3rd 0.90% unsecured bonds due 2031 (Note 1) 2,000,000 2,000,000

㻌 㻌 Total ¥ 4,000,000 ¥ 4,000,000 Note 10 – Net Assets

Notes: Hankyu REIT issues non-par value units in accordance with the Investment Trust Act and all of the amounts 1. The proceeds of the investment corporation bonds were used for redemption of the 1st investment corporation bonds. issued are designated as stated capital. Hankyu REIT maintains a minimum of ¥50,000 thousand of net assets as 2. The terms and conditions of the investment corporation bonds contain inter-bond pari passu clauses. required by the Investment Trust Act.

The annual maturities of investment corporation bonds as of November 30, 2017 are as follows:

Due after one Due after two Due after three Due after four Note 11 – Per Unit Information Due within Due after year to two years to three years to four years to five one year five years years years years years Information about earnings per unit and net assets per unit is as follows: (Thousands of Yen)

Investment corporation bonds ¥ — ¥ — ¥ — ¥ — ¥ — ¥ 4,000,000 For the six months ended November 30, 2017 May 31, 2017

Earnings per unit: (Yen) Note 8 – Assets Pledged as Collateral Net income per unit ¥ 2,876 ¥ 2,717

The carrying amount of assets pledged as collateral and secured liabilities are as follows: Weighted average number of units outstanding (Units) 597,500 597,500

As of As of November 30, 2017 May 31, 2017 November 30, 2017 May 31, 2017 (Thousands of Yen) (Yen) Assets pledged as collateral Net assets per unit ¥ 122,809 ¥ 122,649 Buildings ¥ 1,555,281 ¥ 1,616,729 The net income per unit is calculated by dividing the net income by the weighted average number of units outstanding during the Land in trust 3,127,561 3,127,561 period. The net assets per unit is computed based on the number of units outstanding at each period end. Total assets pledged as collateral ¥ 4,682,842 ¥ 4,744,290

As of November 30, 2017 May 31, 2017 (Thousands of Yen)

Secured liabilities

Deposits received ¥ 98,716 ¥ 98,716

Tenant security deposits 795,843 843,141

Tenant security deposits in trust 277,399 279,459

Total secured liabilities ¥ 1,171,958 ¥ 1,221,316

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Financial Statements

Note 12 – Income Taxes Note 14 – Related-Party Transactions

The following table summarizes the significant differences between the statutory tax rate and Hankyu REIT’s Related-party transactions are as follows: effective tax rate. For the six months ended November 30, 2017

For the six months ended Amount of Balance at the Capital stock transaction end of period Ratio of Relation to the Nature of November 30, 2017 May 31, 2017 Classification Name Location (Thousands Principal business (Note 1) Account (Note 1) voting rights related party transaction of Yen) (Thousands of (Thousands of Statutory tax rate 31.69 % 31.69 % Yen) Yen) Executive Director Payment of of Hankyu REIT asset Deductible cash distributions (31.67)% (31.66)% Provision of and the President management Directors and Yoshiaki 0.01% asset Accounts – – and Representative fees to Hankyu ¥ 349,244 ¥ 97,775 Others 0.06 % 0.07 % their relatives Shiraki (Note 2) management payable Director of Hankyu REIT Asset services REIT Asset Management, Effective tax rate 0.08 % 0.10 % Management, Inc. Inc. (Note 3)

The significant components of deferred tax assets and liabilities are as follows: Notes: 1. Consumption taxes are not included in transaction amounts, but are included in the balance at the end of the period. 2. Yoshiaki Shiraki owns 39 units of Hankyu REIT using a cumulative investment program as of November 30, 2017. As of 3. Payment of asset management fees was executed by Yoshiaki Shiraki as the Representative Director of a third party (Hankyu REIT Asset Management, Inc.). The amount of asset management fees was determined based on terms and November 30, 2017 May 31, 2017 conditions as prescribed in the Articles of Incorporation of Hankyu REIT.

(Thousands of Yen) For the six months ended May 31, 2017 Deferred tax assets: Amount of Balance at the Capital stock transaction end of period Accrued enterprise tax ¥ 16 ¥ 26 Ratio of Relation to the Nature of Classification Name Location (Thousands Principal business (Note 1) Account (Note 1) voting rights related party transaction of Yen) (Thousands of (Thousands of Total deferred tax assets 16 26 Yen) Yen) Executive Director Payment of ¥ 16 ¥ 26 of Hankyu REIT asset Net deferred tax assets Provision of and the President management Directors and Yoshiaki 0.01% asset Accounts – – and Representative fees to Hankyu ¥ 344,461 ¥ 92,376 their relatives Shiraki (Note 2) management payable Director of Hankyu REIT Asset services REIT Asset Management, Note 13 – Distribution Information Management, Inc. Inc. (Note 3)

Cash distributions are declared by the Board of Directors after the end of each period. Such distributions are Notes: payable to unitholders of record at the end of each period. Information on retained earnings brought forward after 1. Consumption taxes are not included in transaction amounts, but are included in the balance at the end of the period. 2. Yoshiaki Shiraki owns 36 units of Hankyu REIT using a cumulative investment program as of May 31, 2017. the cash distributions and cash distributions per unit is as follows: 3. Payment of asset management fees was executed by Yoshiaki Shiraki as the Representative Director of a third party (Hankyu REIT Asset Management, Inc.). The amount of asset management fees was determined based on terms and conditions as prescribed in the Articles of Incorporation of Hankyu REIT. For the six months ended November 30, 2017 May 31, 2017 (Yen) Unappropriated retained earnings ¥ 1,719,286,624 ¥ 1,623,922,512 Cash distributions declared 1,719,007,500 1,623,407,500 (Cash distributions per unit) (2,877) (2,717) Retained earnings carried forward ¥ 279,124 ¥ 515,012

Pursuant to the terms of the distribution policy set forth in Article 36(1) of Hankyu REIT’s Articles of Incorporation, the amount of distributions is defined to be in excess of an amount equivalent to 90% of Hankyu REIT’s distributable profit as defined in Article 67-15 of the Special Taxation Measure Act of Japan, but not in excess of the amount of profit set forth in the Articles of Incorporation.

Based on the policy, Hankyu REIT declared total distributions of ¥1,719,007,500 and ¥1,623,407,500 for the six months ended November 30, 2017 and May 31, 2017, respectively, which are the largest integral multiples of the number of investment units issued and outstanding (597,500 units as of November 30, 2017 and May 31, 2017, respectively), and not in excess of unappropriated retained earnings. Furthermore, Hankyu REIT does not make cash distributions in excess of profit as stipulated in Article 36(2) of Hankyu REIT’s Articles of Incorporation.

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Financial Statements

Note 15 – Fair Value of Investment and Rental Properties Information on Major Tenants

Hankyu REIT owns rental properties for commercial and office use in Kansai and other regions throughout A major tenant is a tenant that accounts for 10% or more of the operating revenues recorded in the statement of Japan. income and retained earnings. Details are as follows:

The book value, net changes in the book value and the fair value of the investment and rental properties are as follows: For the six months ended

November 30, 2017 May 31, 2017

As of (Thousands of Yen) Related segment November 30, 2017 May 31, 2017 Hankyu Corporation ¥ 1,257,700 ¥ 1,251,256 Property leasing business (Thousands of Yen)

Book value: Balance at beginning of period ¥ 133,177,175 ¥ 133,654,328 Note 17 – Operating Revenues and Expenses

Change during the period (568,479) (477,152) Rental revenues and expenses are as follows:

Balance at end of period ¥ 132,608,696 ¥ 133,177,175 For the six months ended Fair value ¥ 153,070,000 ¥ 150,785,000 November 30, 2017 May 31, 2017

Notes: (Thousands of Yen) 1. Book value represents acquisition costs after deducting accumulated depreciation. Revenues from property leasing: 2. For the six months ended November 30, 2017 and May 31, 2017, the decreases are primarily due to depreciation. Rental revenues: 3. Fair value is determined based on appraisal values provided by external real estate appraisers. Base rents ¥ 4,403,482 ¥ 4,293,577 The information on Operating Revenues and Expenses is disclosed in Note 17. Utilities charges reimbursements 257,545 209,572

Others 241,232 237,057 Note 16 – Segment Information Total revenues from property leasing 4,902,260 4,740,206

Segment Information Property-related expenses:

Segment information is omitted as Hankyu REIT had only one segment, which was the property leasing Rental expenses: business. Property management expenses 336,275 328,636

Related Information Utilities expenses 321,247 266,457

Rent expenses 65,796 65,178 Information about Products and Services Advertising expenses 35,781 32,553 Disclosure of this information is omitted as operating revenues to external customers for a single product/service category accounts for more than 90% of the operating revenues on the statements of income and Repair expenses 74,932 135,362 retained earnings. Insurance expenses 12,801 14,530

Information by Geographic Areas Taxes and dues 557,962 547,427

Depreciation 841,875 846,113 (1) Operating revenues Disclosure of this information is omitted as domestic operating revenues account for more than 90% of total Others 23,154 61,371 operating revenues. Total property-related expenses 2,269,827 2,297,630 (2) Investment properties Operating income from property leasing ¥ 2,632,433 ¥ 2,442,575 Disclosure of this information is omitted as domestic investment properties account for more than 90% of the book value of the total investment properties.

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Financial Statements

Note 18 – Changes in Unitholders’ Equity Note 20 – Subsequent Events

Total number of investment units authorized and total number of units issued and outstanding are as follows: (a) Issuance of New Investment Units

As of Hankyu REIT resolved at its Executive Meetings held on January 25, 2018 and February 5, 2018, to issue new investment units, as outlined below. Payments for the issuance of the new investment units through public November 30, 2017 May 31, 2017 offering and through third-party allotment have been completed on February 13, 2018 and March 13, 2018, (Units) respectively and the new investment units have been issued as resolved. As a result, the unitholders’ capital is Total number of investment units authorized 10,000,000 10,000,000 ¥76,736 million and the total number of investment units issued is 638,500 units as of March 13, 2018. Total number of investment units issued and outstanding 597,500 597,500 (i) Issuance of new investment units through public offering (primary offering) Number of investment units to be issued : 39,000 units Issue price : ¥128,115 per unit Note 19 – Leases Total issue price : ¥4,996,485,000 Amount to be paid in : ¥123,844 per unit Future minimum rental revenues under existing non-cancelable operating leases are as follows: Total amount to be paid in : ¥4,829,916,000 Payment date : February 13, 2018 As of November 30, 2017 May 31, 2017 (ii) Issuance of new investment units through third-party allotment (Thousands of Yen) Number of investment units to be offered : 2,000 units Amount to be paid in : ¥123,844 per unit Due within one year ¥ 㻌㻌㻌㻌 4,674,598 ¥ 㻌㻌㻌㻌 5,221,428 Total amount to be paid in : ¥247,688,000 Due after one year 22,562,187 24,817,709 Payment date : March 13, 2018 Total ¥㻌㻌㻌㻌 27,236,785 ¥㻌㻌㻌㻌 30,039,137 Allottee : Nomura Securities Co., Ltd.

(b) Acquisition of Assets

Based on the basic policies of asset management, etc., stipulated in its Article of Incorporation, Hankyu REIT resolved at the Asset Management Company’s Board of Directors Meeting held on January 25, 2018 to acquire the following property by using the proceeds from the issuance of new investment units, as described in (a) Issuance of New Investment Units, and cash on hand, and acquired the property on February 15, 2018.

METS OZONE Type of asset : Right of ownership and leasehold Acquisition price : ¥5,400,000,000 (excluding acquisition-related expenses, property tax, city planning tax and consumption tax, among others) Acquisition date : February 15, 2018 Location : Higashi-ku, Nagoya City, Aichi Prefecture Seller : The name, etc., are not disclosed as consent has not been obtained from the seller, which is a domestic corporation. There are no capital, personnel or business relationships to be specially noted between Hankyu REIT or the Asset Management Company and the seller. In addition, the seller does not fall under the definition of “related party.”

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Financial Statements Independent Auditor’s Report

(Reference information)

Based on the basic policies of asset management, etc., stipulated in its Article of Incorporation, Hankyu REIT resolved at the Asset Management Company’s Board of Directors Meeting held on November 28, 2017 to acquire the following property by using cash on hand, etc.

Vessel Inn Hakata Nakasu Type of asset : Real estate trust beneficiary interests (Trustee: Shinsei Trust & Banking Co., Ltd.) Proposed acquisition price : ¥2,760,000,000 (excluding acquisition-related expenses, property tax, city planning tax and consumption tax, among others) Proposed acquisition date : March 29, 2018 Location : Hakata-ku, Fukuoka City Seller : The name, etc., are not disclosed as consent has not been obtained from the seller, which is a domestic corporation. There are no capital, personnel or business relationships to be specially noted between Hankyu REIT or the Asset Management Company and the seller. In addition, the seller does not fall under the definition of “related party.”

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Unitholders’ Information

Company Structure of Hankyu REIT Status of Investment Units

Investment Corporation General administrator/ Hankyu REIT, Inc. asset custodian administrator of unitholders’ register ■ Changes in Investment Unit Price General Unitholders’ Meeting Administrative agency of special account General administrator of Changes in Hankyu REIT’s investment unit price and trading volume on the Tokyo Stock Exchange since its listing on October 26, 2005 to November 30, Executive Meeting investment corporation bonds Executive Director: Yoshiaki Shiraki ② 2017 are as follows (investment unit price is indicated based on closing price). Mitsubishi UFJ Trust and Banking Corporation Supervisory Director: Tamio Uda Supervisory Director: Motofumi Suzuki Volume (Units) Unit Price (Yen) ① Asset management services agreement 80,000 300,000 Administrative agency agreement/asset Accounting auditor ② Volume (Units) Unit Price (Yen) KPMG AZSA LLC ⑤ custody agreement/agreement on 75,000 250,000 administration of unitholders’ Market capitalization: ¥78,212 million (as of November 30, 2017) register/special account management 30,000 Highest price: ¥276,000 ① agreement/financial agency agreement Lowest price: ¥65,000 200,000 Asset Management Company (Note 1) ④ Real estate information service companies (Note 2) ③ Trademark license agreement 25,000 ④ Agreement on information sharing, etc. ③ Hankyu REIT Asset Management, Inc. Hankyu Corporation ⑤ Agreement to transfer part of the asset 20,000 150,000 Hankyu Realty Co., Ltd. and lease agreement (Wholly-owned) Hankyu Investment Partners, Inc. 15,000 Specified related entity (Hankyu REIT 100,000 (Note 3) Asset Management, Inc.’s parent company) 10,000 Hankyu Corporation (Note 1) The company name is scheduled to be changed to Hankyu Hanshin REIT Asset 50,000 Management, Inc. on April 1, 2018. 5,000 (Wholly-owned) (Note 2) Co., Ltd. is scheduled to be added to real estate information service companies on April 1, 2018. On the same day, Hankyu Realty Co., Ltd. and Hankyu 0 0 Specified related entity (Hankyu REIT Investment Partners, Inc. are scheduled to change their company names to Hankyu Hanshin Oct. 26, Nov. 30, Nov. 30, Nov. 30, Nov. 30, Nov. 30, Nov. 30, Nov. 30, Nov. 30, Nov. 30, Nov. 30, Nov. 30, Nov. 30, Asset Management, Inc.’s parent company) Properties Corp. and Hankyu Hanshin Real Estate Investment Advisors, Inc., respectively. 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Brand licensor (Note 3) Hankyu Hanshin Properties Corp. is scheduled to become the parent company by succeeding the entire shares of the Asset Management Company owned by Hankyu (Note) Investment unit price and trading volume before November 25, 2014 are adjusted in consideration of the five-for-one split of Hankyu REIT investment units implemented on December 1, 2014. Hankyu Hanshin Holdings, Inc. Corporation on April 1, 2018.

■ Ratio of Units by Unitholder Category (as of November 30, 2017)

Overview of Hankyu REIT Asset Management, Inc. Financial institutions Other domestic companies Foreign companies, etc., Individuals and others (including securities companies) 54,813 units (9.17%) and individuals 147,426 units (24.67%) ● Address: Applause Tower 19F, 19-19 Chayamachi, Kita-ku, Osaka 530-0013, Japan 364,066 units (60.93%) 31,195 units (5.22%) E-mail: [email protected] ● Paid-in capital: ¥300 million ● Principal businesses: Investment management business based on the Financial Instruments and Exchange Act and specified investment management activities Units by Unitholder Category based on the Act on Investment Trusts and Investment Corporations Total: 597,500 units ● History: March 15, 2004 Established Hankyu REIT Asset Management, Inc. April 28, 2004 Acquired Building Lots and Buildings Transaction Business License: The Governor of Osaka Prefecture (3) No. 50641 Unitholders by (Renewed April 28, 2014) Unitholder Category September 1, 2004 Acquired approval of discretionary dealing trustee etc., under the Building Lots and Buildings Transaction Business Total: 13,261 unitholders Act: No. 23 by the Minister of Land, Infrastructure, Transportation and Tourism November 4, 2004 Obtained approval to conduct businesses related to investment trust contractor (Prime Minister of Japan No. 34) 0 20 40 60 80 100 August 24, 2006 Obtained approval to change method of business (%) Financial institutions Other domestic companies Foreign companies, etc., Individuals and others November 30, 2007 Registered as Financial Instruments Business: Director-General of the Kinki Local Finance Bureau Ministry of Finance (including securities companies) 217 unitholders (1.64%) and individuals 12,833 unitholders (96.77%) (Kinsho) No. 44 97 unitholders (0.73%) 114 unitholders (0.86%)

● Organization of Asset Management Company (Note 1) The constituent members of the Compliance Committee shall General Meeting of Shareholders be the Compliance Officer (Chairman), the President and Representative Director, full-time Directors and two outside experts, and they shall deliberate and determine matters Reorganization of the Sponsor Group’s Real Estate Business Auditors related to compliance, approval of transactions involving conflicts of interest, etc. The Compliance Committee meetings Starting in April 2018, the Hankyu Hanshin Holdings Group plans to launch a new organizational system that integrates the resources and know-how of the group’s real estate Board of Directors Meeting come into effect on the condition that at least three-fourths of business, in an effort to accelerate the realization of “strengthening and expansion of the real estate leasing business both in ‘Umeda and line-side area’ and ‘Tokyo metropolitan area all the committee members including the Compliance Officer and two outside experts are present, and decisions on and overseas’” and “thorough pursuit of the differentiation strategy in the real estate for-sale business, etc.,” that are laid out in its long-term vision. Under the new system, Hankyu President and Representative Director matters indicated above shall be made with approval of all Hanshin Properties Corp. (to be renamed from Hankyu Realty Co., Ltd.) will be established as the business supervisory company directly belonging to Hankyu Hanshin Holdings. attendees. Furthermore, Auditors and the person with the Hankyu REIT Asset Management, Inc., the Asset Management Company, will become a subsidiary of the new company, so that collaboration with Hankyu REIT shall be reinforced. Internal Audit Department approval of the committee may be present at the committee Compliance Committee (Note 1) meetings as an observer and offer opinions. (Note 2) The constituent members of Investment Management Committee shall be the President and Representative Director [Present] [New organizational system] After April 1, 2018 (scheduled) Investment Management Committee (Note 2) (Chairman), full-time Directors and equivalent Directors Compliance Department (excluding the Compliance Officer) and respective department or office general managers (other than full-time Directors and Hankyu Hanshin Holdings Hankyu Hanshin Holdings equivalent Directors and the Compliance General Manager). Investment Planning Investment Management Investment Management IR and Public Relations Corporate Administration and They shall deliberate and determine matters related to creation Department Department 1 Department 2 Department Supervision Department and amendment of management guidelines, creation and Hankyu Hanshin Electric Hankyu Travel Hankyu Hanshin Hankyu Hanshin amendment of asset management plans, acquisition and Corporation Railway International Express Hotels disposition of real estate related assets and fund procurement, Hankyu Hanshin Electric Hankyu Travel Hankyu Hanshin Hankyu Hanshin etc., (presence of the Compliance Officer is required). Corporation Railway International Express Hotels Hankyu Hanshin ● Status of Shareholders Properties (1) Hankyu Realty will become a subsidiary of Hankyu Real estate Real estate Hanshin Holdings business business (2) The real estate business of Hankyu Corporation and Name Address Number of units held Ownership (%) (Note) Hankyu Hankyu Hanshin Hanshin Electric Railway will be transferred to Hankyu Hankyu Realty REIT Asset REIT Asset Realty, and the trade name of Hankyu Realty will be Hankyu Corporation 1-16-1 Shibata, Kita-ku, Osaka 6,000 100 Management Management changed to Hankyu Hanshin Properties. (Note) Ownership refers to ratio of number of shares owned against the total number of shares issued and outstanding.

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