AEON MALL Kofu Showa AEON REIT Investment Corporation Presentation Material for Investor Meeting For the 12th Fiscal Period Ended January 31, 2019 March 19, 2019 Securities Code: 3292 Asset Manager: https://www.aeon-jreit.co.jp/en/index.html AEON Reit Management Co., Ltd. Table of Contents I. Overview of Financial Results for the 12th Fiscal Period III. Forecasts of Performances and Future Objectives Ended January 31, 2019 Financial Highlights of the 12th Fiscal Period Ended January 31, １． --- P. 4 １． Financial Forecasts(13th&14th) --- P. 26 2019 ２． Topics for 12th Fiscal Period—External Growth/Internal Growth— --- P. 5 ２． Activities to Achieve Sustainability—AEON Group and AEON --- P. 27 REIT— ３． Topics for 12th Fiscal Period—Financing Matters— --- P. 6 Overview of Financial Results for the 12th Fiscal Period Ended ３． Future Growth Objectives --- P. 28 ４． --- P. 7 January 31, 2019 ４． Messages from the Management Team --- P. 29 ５． Portfolio Indicators at the End of 12th Fiscal Period --- P. 8 II. AEON REIT’s Strengths and Growth Strategy １． Trends in Results for Five-Year Period After Listing --- P. 10 ２． AEON REIT’s Advantages --- P. 11 Appendix 1 Characteristics of AEON REIT --- P. 31-48 ３． External Growth—Pipeline Support— --- P. 12 External Growth—AEON Group’s business domains and ４． --- P. 13 pipelines— Appendix 2 Supplement --- P. 50-69 ５． External Growth—Advantages of investment targets— --- P. 14 External Growth—Stance on property acquisitions and future ６． --- P. 15 initiatives— ７． Internal Growth—Investment for Expansion and Renewal— --- P. 16 Internal Growth—Robust Matter Lease Agreement with the AEON ８． --- P. 17 Group— ９． Internal Growth—Lease Structure— --- P. 18 10． Introduction of Individual Property (AEON Mall Kurashiki) --- P. 19 Financing policy—Diversification of Lenders and Financing 11． --- P. 20 Methods (1)— Financing policy—Diversification of Lenders and Financing 12． --- P. 21 Methods (2)— 13． Risk Management --- P. 22 14． Strategic cash management—Cash Generation Skills— --- P. 23 Strategic cash management Utilization for the growth of 15． --- P. 24 distribution 2 I. Overview of Financial Results for the 12th Fiscal Period Ended January 31, 2019 Financial Highlights of the 12th Fiscal Period Ended January 31, 2019 Improved quality of the portfolio through sustained and stable growth. 12th Fiscal Period Ended January 31, 2019 Distributions per unit 3,066 yen Distributions Up 56 yen (+1.9%) from 3,010 yen, the initial forecast Acquired the extended building at Kofu Showa External Unrealized gain up 0.8 billion yen Growth Increase in rent (annualized) up 0.53 billion yen Investing in revitalization of property to boost revenue and competitiveness Kurashiki (accessibility improvement work) Internal Increase in rent: up 3.10 million yen/year Growth Kagoshima and Yamagata Minami (disaster prevention work) Increase in rent: up 3.32 million yen/year Refinancing 27.0 billion yen (including 15.0 billion yen through issuance of retail bonds) Financial Average residual period 3.7 years → 4.6 years Overall situation of Strategy interest-bearing debt Average financing cost 0.80% → 0.78% 4 Topics for 12th Fiscal Period - External Growth/Internal Growth - Strengthened profitability by utilizing sufficient cash on hand without depending on borrowings. External Acquisition of an extended building of the existing AEON MALL building at Kofu Showa. Growth Effects of the acquisition of the extended building at Kofu Showa and renewal of the existing building Evolution to an overwhelmingly top- Overview of AEON MALL Kofu Showa 1 Increase of 0.8 billion yen in 2 Increase in annual rent 3 unrealized gain (note) rated local community mall After acquisition of 1,346 extended building （㎡） Existing building million yen (Existing and Store areas in the 10 km trading area (Acquired) extended buildings) 80,000 Increased 70,000 806 of rent AEON Group’s strength +0.8 60,000 in development capability Location Nakakoma-gun, Yamanashi Pref. billion million yen 50,000 yen 1.3 40,000 Acquisition 8.3 bilion yen 15.4 billion yen Rent Rent 30,000 price billion yen of the of the 20,000 Appraisal 0.5 existing existing 10,000 8.6 billion yen 17.3 billion yen building building price billion 0 Site area 119,064.22㎡ yen Before acquisition After acquisition Rent of the Rent of the extended building 増築棟取得前 増築棟取得後 Total floor 66,417.84 ㎡ 99,680.71㎡ of the extended of the extended existing building + Rent after renewal of the area building building (before renewal) existing building (Note) Unrealized gain: (Appraisal value at the end of the 11th fiscal period – Book value at the end of the 11th fiscal period) + Appraisal value at the time of acquisition of the extended building at Kofu Showa (existing and extended buildings) – (Book value of the existing building + Acquisition value of the extended building + Expenses for investment in the revitalization of the existing building) Internal Improved accessibility by installing a new exit and entrance and implemented disaster prevention Growth measures, preferentially. Increase in rent Property Detail Effect Investment (annualized) Installation of a new exit and entrance on Improvement in AEON MALL Kurashiki 44 million yen ＋3.1 million yen the north side of the mall accessibility AEON MALL Kagoshima 72 million yen ＋2.1 million yen Anti-smoke hanging walls made of Disaster prevention inflammable films measures AEON MALL Yamagata Minami 38 million yen ＋1.1 million yen 5 Topics for 12th Fiscal Period -Financing Matters- Successfully diversified our means of financing, extending our procurement period and reducing our procurement cost. Poster Issuance AEON REIT’s first retail bonds announcing the Conditions of investment Effects of investment issuance corporation bonds Issuance corporation bonds 15 billion yen amount Diversification of financing means Retail bonds with Term 10 years JREIT’s largest Enhancement of the investment issuance amount Interest rate 0.783% corporation’s popularity and longest term Gift for AEON gift (Acquisition of potential investors) purchasers certificate Refinancing Overview of Results of refinancing refinancing 1 Implemented the refinancing of 27 billion yen, funds borrowed when an IPO 1 Extended the term and reduced procurement cost. was made. Increased the number of financial institutions 2 Allotted funds procured through the issuance of retail bonds to funds for the 2 refinancing. that provide loans to 23 (21 at the end of the 3 Raised new loans from The Yamaguchi Bank and The Gunma Bank, Ltd. in 11th fiscal period). efforts to diversify procurement sources. Comparison of procuring conditions (27 billion yen) Comparison of interest-bearing debts (150billion yen) Before refinancing After refinancing Before refinancing After refinancing Total amount of refinancing 27 billion yen 27 billion yen Interest-bearing debts 150 billion yen 150 billion yen Initial procurement period 4.9 years 7.8 years Average residual period 3.7 years 4.6 years Average financing cost 0.78% 0.71% Average financing cost 0.80% 0.78% 6 Overview of Financial Results for the 12th Fiscal Period Ended January 31, 2019 Removed the impact of disasters and achieved distribution of 3,066 yen, a significantly larger amount than the initial announcement. 11th Fiscal Period 12th Fiscal Period Ended January 2019 Ended July 2018 Result Result vs. Previous Period Initial Forecast vs. Forecast (A) (B) (B-A) (C) (B-C) Operating Revenues (Millions of yen) 16,201 16,329 ① +127 16,283 ⑦ +45 Operating Expenses (Millions of yen) 10,019 9,993 ② ▲25 10,014 ⑧ ▲20 Operating Income (Millions of yen) 6,182 6,335 +153 6,269 +66 Ordinary Income (Millions of yen) 5,297 5,448 ③ +151 5,362 ⑨ +86 Extraordinary income (Millions of yen) - 152 ④ +152 - ⑩ +152 Extraordinary Loss (Millions of yen) 37 274 ⑤ +237 - ⑪ +274 Net Income (Millions of yen) 5,254 5,325 +71 5,357 ▲31 Reversal of dividend (Millions of yen) reserves - 122 ⑥ +122 - ⑫ +122 Distributions per Unit (yen) 2,956 3,066 +110 3,010 +56 NOI (Millions of yen) 11,299 11,553 +254 11,529 +23 (Note) The number of investment units issued for each period is 1,777,347. 【Major factors of changes from the previous period】 【Major factors of changes from the forecast】 No. Main items Amount (million yen) No. Main items Amount (million yen) Newly acquired properties/ +586 Income from dividends paid by overseas SPCs +9 rent income from extended properties ⑦ Rent income from properties sold ① ▲407 Insurance income +27 in the previous period Absence of gains from sale of properties ▲35 Expenses for the leasing business +5 as posted in the previous fiscal period ⑧ Rent expenses for properties sold ▲224 Fund costs ▲25 in the previous fiscal period ② Depreciation for newly-acquired properties +211 Loan related costs ▲58 and extended properties ⑨ Loan related costs ▲37 Investment corporation bond related costs +39 ③ Investment corporation bond related costs +39 ⑩ Insurance income +152 ④ Insurance income +152 ⑪ Disaster related losses +274 ⑤ Disaster related losses +237 ⑫ Reversal of dividend reserves(⑪－⑩) +122 ⑥ Reversal of dividend reserves +122 7 Portfolio Indicators at the End of 12th Fiscal Period Portfolio that features stable revenues, and sufficient borrowing capacities and unrealized gains. Asset size（Note 1）40 properties Portfolio NOI yield Unrealized gains（Note 2） 362.4 billion yen 6.4% Up 45.0 (up 7.1 billion yen from NOI yield after portfolio depreciation billion yen the end of the 11th period) (up 4.4 billion yen from 3.9% the end of the 11th period) Net asset value (NAV) Loan to Value (LTV) Distributions per unit per unit (excl. leasehold deposits) 41.4％ (incl. leasehold deposits) 44.9％ yen 3,066 yen 133,464 Available capacity（Note 4） (up 2,507 yen from (up 1.9% from initial forecast) the end of the 11th period) (Note 3) Approx. 37.0 billion yen Note 1: The total purchase price not including expenses (brokerage fees, taxes and dues, etc.) incurred for the purchase of the real estate, etc.