AEON REIT Investment : Semi-Annual Report for the Fiscal Period Ended January 31, 2023

AEON REIT Investment Corporation

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

20th Period

Semi-Annual Report

For the fiscal period ended January 31, 2023

AEON REIT invests primarily in retail and related properties* that form the backbone of local communities.

Retail and related properties are an integral part of the communities in which they are located. We believe that these properties and facilities in which we invest form the backbone of local communities and their retail business infrastructure.

We also aim to ensure stable income and achieve steady portfolio growth over the medium-to-long term by investing in retail and related properties that contribute to the betterment of individual lives and local communities.

*Refers to retail facilities, logistics facilities and related facilities. Retail facilities refers to facilities containing retail businesses and other merchandising businesses, entertainment and amusement facilities and other facilities that attract customers (including parking lots and equipment and systems for logistics). Logistics facilities refers to warehouses and other storage facilities for distribution and transport of merchandise and other goods.

AEON MALL Miyakonojo Ekimae

Contents

AEON REIT Characteristics	2	Financial Section (Audited)
To Our Unitholders	4	Balance Sheets	54
Environmental Certification and Assessment	7	Statements of Income	55
Financial Highlights	8	Statements of Changes in Net Assets	56
AEON REIT as Seen through the Numbers	9	Statements of Cash Distributions	57
Financial Strategy / Risk Management	10	Statements of Cash Flows	58
Growth Strategy	12	Additional Information	59
AEON REIT's Portfolio	15	Notes to Financial Statements	60
Strong Fundamentals	16	Supplemental Schedules	85
Effective and Effiicient Financial Management....	16	Independent Auditor's Report	98
HighlyTransparent Management Structure	18	Structure and Formation of Investment	101
Investment Policy / Distribution Policy	22	Corporation / Profiile of the Asset Manager
	102
Management's Discussion and Analysis	38	Investor Information

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AEON REIT Characteristics

We invest primarily in the retail properties of the AEON Group.

Investment Focused on Large-Scale Retail Properties

We invest primarily in retail properties that are an integral part of the communities in which they are located. In this asset class, we are structuring a portfolio of large-scale retail properties that we expect to generate stable cash flow over the medium-to-long term.

			Investment Percentage*
		Type	Domestic Real Estate	Overseas Real Estate
			85% or more	15% or less
	Large-scale	Super regional shopping centers (SRSC)
	retail	Regional shopping centers (RSC)	80% or more
Retail	properties
Community shopping centers (CSC)
properties,
Other retail	Neighborhood shopping centers (NSC)
etc.	20% or less
	properties	Supermarkets (SM)
		Logistics facilities	10% or less

*Investment percentage is calculated on an acquisition price basis.

Share of large-scale

retail properties in our portfolio

Currently

93.1%

(As of January 31, 2023)

Collaboration with the AEON Group for Stability and Growth

We maintain stability with long-term sources of earnings by investing in retail properties operated by the AEON Group, a leading retailer and developer of large-scale retail properties throughout Japan. We also leverage the AEON Group's retail property expertise to generate growth.

Stable Finances

Group

Consolidated operating

revenue

¥8,715.9 billion

AEON Group employees

Approx. 560,000 (As of February 28, 2022)

Our conservative financial management is based on clear financial policies for target LTV and other matters. As a result, we have strong, stable relationships with financial institutions, primarily megabanks. We have also received a long-term issuer rating of AA- from Japan Credit Rating Agency, Ltd.

Highly Transparent Management

Japan Credit Rating

Agency, Ltd.

long-term issuer rating

AA−

(Positive)

For asset acquisitions from the AEON Group or any other related-party transaction, the decision-making process includes a mechanism to incorporate the opinions of independent third parties having no relationship with the Aeon Group. This creates highly transparent management that ensures win-win relationships with both unitholders and the AEON Group. Please refer to page 18 for details.

Introduction of Cumulative Investment Unit Purchase Program

On May 1, 2014, we introduced a program that enables directors and employees of AEON REIT and the Asset Manager to acquire AEON REIT's investment units using a cumulative investment program through securities firms.

The program will help to further raise awareness toward enhancing the value of AEON REIT's investment unit price and improving business performance to provide greater financial motivation in line with the interests of unitholders.

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AEON REIT Investment Corporation

Initiatives on Sustainability

AEON REIT cares about Environmental, Social and Governance (ESG) issues in all aspects of its operations and cooperates with its stakeholders for such purposes.

Sustainability Policy

1. Environmental Initiatives

1. In order to achieve the realization of a low-carbon society, work to continuously improve energy effciency and reduce emis- sions of greenhouse gases through the use of renewal sources of energy.
2. Promote peaceful coexistence with the natural environment by paying consideration to the conservation of ecosystems, and through tree planting activities and other real estate management initiatives.
3. In order to achieve sustainable use of resources, work towards conservation and recycling of resources through the promotion of water saving and the 3Rs (Reduce, Reuse, Recycle) with regard to the use of resources.
4. Observe and conform to environmental-related laws and regulations, etc., and endeavor to prevent environmental pollution.

2. Cooperation with Stakeholders

1. By carrying out education and training with regard to environmental issues, endeavor to raise the environmental awareness of our corporate offcers and to pay care and attention to the diversity and work-life balance of our employees.
2. By utilizing the total, comprehensive power of the AEON Group, endeavor to provide comfortable work environments to the employees of end tenants/associates as well as those of other partner companies, and work to build a sound and healthy cooperative relationships.
3. In order to facilitate the advancement of ESG initiatives across the entire supply chain for our real estate operations, endeavor to implement a green procurement strategy.
4. Provide support for volunteer activities and places/opportunities for people from local communities to gather for educational and information exchanges, and endeavor to cooperate with communities as a hub for reconstruction efforts in times of disasters.
5. Proactively disclose information regarding ESG issues to investors and endeavor to communicate openly with them, and work continuously towards obtaining Green Building certifcation.

Establishment of Materiality (Key Issues)

AEON REIT has identifed 14 topics as its materiality (key issues) regarding sustainability issues, and selected 8 of them as priority themes.

Focus will be placed on the priority themes going forward to investigate specifc measures and setting of KPIs.

Priority themes

	Environment				Social				Governance
Opportunities in green buildings			Local community engagement and		Corporate governance
					sustainable development
Climate change			Safety and security of owned properties		Compliance and risk management
Biodiversity and land use			Human capital development

TCFD qualitative analysis disclosure

In August 2022, we add a climate change page to our website, where we disclosed our qualitative analysis in line with the TCFD recommendations.

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