AEON REIT Investment Corporation
https://www.aeon-jreit.co.jp/en/index.html
22nd
Period
Semi-Annual Report
For the fiscal period ended January 31, 2024
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 Ueda Shopping Center
Contents
AEON REIT Characteristics | 2 | Financial Section (Audited) | |
Special Feature: 10th Anniversary of Listing | 4 | Balance Sheets | 54 |
Financial Highlights | 7 | Statements of Income | 56 |
To Our Unitholders | 8 | Statements of Changes in Net Assets | 57 |
Environmental Certification and Assessment | 11 | Statements of Cash Distributions | 58 |
Financial Strategy / Risk Management | 12 | Statements of Cash Flows | 59 |
Growth Strategy | 14 | Additional Information | 60 |
AEON REIT's Portfolio | 17 | Notes to Financial Statements | 61 |
Strong Fundamentals | 18 | Supplemental Schedules | 84 |
Effective and Effiicient Financial Management.... | 18 | Independent Auditor's Report | 97 |
HighlyTransparent Management Structure | 20 | Structure and Formation of Investment | 100 |
Investment Policy / Distribution Policy | 24 | Corporation / Profiile of the Asset Manager | |
101 | |||
Management's Discussion and Analysis | 40 | Investor Information | |
1
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
93.4%
(As of January 31, 2024)
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
¥9.1 trillion
AEON Group employees
Approx. 570,000 (As of February 28, 2023)
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
(Stable)
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 20 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.
2
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
- 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.
- 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.
- 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.
- Observe and conform to environmental-related laws and regulations, etc., and endeavor to prevent environmental pollution.
2. Cooperation with Stakeholders
- 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.
- 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.
- 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.
- 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.
- 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.
We have set KPIs for priority themes, and we are working to promote measures to achieve them.
PriorityThemes
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.
3
Special Feature: 10th Anniversary of Listing
AEON REIT Investment Corporation
AEON REIT Investment Corporation marked the Since we were first listed, we have invested in "community infrastructure assets" that support
Changes in Asset Size and Distribution
Distribution per unit (yen) | 3,019 | 2,926 | 3,029 | 2,956 | |||
Assets acquired during | 2,724 | 2,790 | |||||
current period | |||||||
2,461 | 2,473 | ||||||
Previously | |||||||
acquired assets | |||||||
(billion yen) |
1,450 |
Kumamoto Earthquake
686 | Due to earthquake damage, distributions in |
excess of earnings were made | |
Starting from the following period, |
earthquake insurance was purchased for the entire domestic portfolio
36
properties
40
properties
November 2013 | 31 | |||||||||
Listed onTokyo | 28 | |||||||||
Stock Exchange | properties | |||||||||
properties | ||||||||||
23 | ||||||||||
16 | 17 | properties | ||||||||
properties | properties | |||||||||
158.3 | 158.3 | 158.9 | 158.9 | 194.3 | 194.3 | 249.2 | 268.5 | 330.6 | 355.1 | 355.3 |
Time of | 2nd Period | 3rd Period | 4th Period | 5th Period | 6th Period | 7th Period | 8th Period | 9th Period | 10th Period | 11th Period |
listing | Results | Results | Results | Results | Results | Results | Results | Results | Results | Results |
First Acquisition of Overseas Property by J-REIT | Promoting Diversification of Owned Assets |
Acquired AEON Taman Universiti Shopping Centre, located in Malaysia
Acquired properties with a range of uses and sizes, including Daiei-Kawasaki Process Center, which is a logistics facility, and AEON Chigasaki-Chuo Shopping Center, which is a community retail facility
4
- History Since Listing
10th anniversary of its listing on November 22, 2023.
the lifestyles of people in various communities and achieved steady growth over the 10 years.
3,315 | 3,274 | 3,283 | 3,350 | 3,350 | ||||||
3,066 | 3,047 | 3,074 | 3,178 | 3,184 | 3,200 | |||||
COVID-19 pandemic
Amid a challenging environment, we maintained 100% rental revenue and achieved stable growth potential by leveraging our long-term,fxed-based master lease structure
47 | 49 | |||||||||
properties | ||||||||||
properties | ||||||||||
41 | 42 | 43 | ||||||||
properties | properties | |||||||||
properties | ||||||||||
362.4 | 362.4 | 380.5 | 390.1 | 395.5 | 396.7 | 447.0 | 447.0 | 447.0 | 468.3 | 468.3 |
12th Period | 13th Period | 14th Period | 15th Period | 16th Period | 17th Period | 18th Period | 19th Period | 20th Period | 21st Period | 22nd Period |
Results | Results | Results | Results | Results | Results | Results | Results | Results | Results | Results |
External Growth Leveraging Group's Collective Capability
Based on an abundant pipeline that leverages the Group's collective capability, we acquired 4 properties for a total of 50.2 billion yen, bringing our asset size to over 400 billion yen
Balancing stability and
growth potential to
achieve steady growth of both distributions and asset size
Special Feature: 10th Anniversary of Listing
AEON REIT Investment Corporation
- History Since Listing | ||
Compiled Data | ||
Asset Size and No. of Properties | ||
End of 2nd FP | End of 22nd FP | |
16 properties | 49 properties | |
¥158.3 billion | ¥468.3 billion |
Unitholder Value
Distribution per unit
End of 2nd FP | End of 22nd FP |
¥686 | ¥3,350 |
NAV per unit (Note 1) | |
End of 2nd FP | End of 22nd FP (Note 2) |
¥110,456 | ¥152,786 |
Unrealized gain |
Portfolio Value
Asset type diversification
4.2%6.6%
17.6% | 6.0% |
End of | End of |
2nd FP | 22nd FP |
82.4% | 83.2% |
- Super regional shopping centers (SRSC)
- Regional shopping centers (RSC)
■ Community shopping centers (CSC) | ■ Logistics facilities (L) |
Regional diversification
End of 2nd FP | End of 22nd FP |
+¥8.5 billion | +¥84.6 billion |
Financial Indicators
7.6% | ||
16.0% | ||
21.7% | End of | 38.8% |
2nd FP | ||
4.6% | 11.3% | |
1.3% | 6.7% | |
11.1% | ||
7.3% | ||
End of | 35.6% | |
23.8% | 22nd FP | |
14.1% |
Fundraising costs
End of 2nd FP | End of 22nd FP |
0.92 % | 0.86 % |
Long-term issuer credit rating (JCR)
End of 2nd FP | End of 22nd FP |
AA- | AA |
■ Hokkaido and Tohoku | ■ Kanto | ■ Tokai, Hokuriku and Chubu | |
■ Kinki | ■ Chugoku and Shikoku | ■ Kyushu | ■ Malaysia |
External evaluation
Obtained highest rating for 4 consecutive years
GRESB Real Estate Assessment
Obtained five stars
Third-party certification acquisition rate
Acquisition rate of more than 80% during six years
since acquiring first certification in 2017
4★ or higher | 3★ or higher |
82.5 % | 86.8 % |
6
Financial Highlights
AEON REIT Investment Corporation
As of January 31, 2024
22nd FP | 23rd FP | 24th FP | ||
forecast distribution per unit | forecast distribution per unit | |||
distribution per unit | ||||
(including distribution in excess of earnings) | (including distribution in excess of earnings) | |||
¥3,350 | ¥3,335 | ¥3,335 | ||||||
(as of March 18, 2024) | (as of March 18, 2024) | |||||||
21st Period Results | 22nd Period Results | 23rd Period Forecast | 24th Period Forecast | |||||
February 1, 2023 to | August 1, 2023 to | February 1, 2024 to | August 1, 2024 to | |||||
July 31, 2023 | January 31, 2024 | July 31, 2024 | January 31, 2025 | |||||
(Millions of yen) | (Millions of yen) | (Millions of yen) | (Millions of yen) | |||||
Operating Revenue | 21,008 | 21,054 | 21,009 | 21,017 | ||||
Net Income | 7,047 | 6,990 | 6,705 | 6,894 | ||||
Total Assets | 452,485 | 454,258 | - | - | ||||
Net Assets | 247,392 | 247,267 | - | - | ||||
Net Assets per Unit (Yen) | 116,477 | 116,418 | - | - | ||||
Distribution per Unit (Yen) | 3,350 | 3,350 | 3,335 | 3,335 | ||||
Distribution in excess of | - | - | 61 | 90 | ||||
retained earnings per unit (Yen) |
Investment Properties
49 properties
Total Acquisition Price (Note 4)
¥468.3 billion
Appraisal Value (Note 2, 6)
¥500.1 billion
Occupancy Rate Based on
Master Lease Agreements 100
%
Average Building Age (Note 3)
18.5 years
Average Remaining Lease Term (Note 5)
12.8 years
Unrealized Gain or Loss (Note 2, 7)
(Appraisal Value minus Book Value)
+¥84.6 billion +¥3.6 billion
(from the previous period)
Notes: 1. NAV per unit = (Unitholders' capital, net + Unrealized gain) ÷ Total number of investment units issued and outstanding.
- For AEON MALL Kahoku and AEON MALL Shinkomatsu, since the detailed survey on the impact of the 2024 Noto Peninsula Earthquake has not been completed as of January 31, 2024, and documents on repairs and maintenance necessary to determine the impact on price are unavailable, the "real estate appraisal value" represents the survey price that does not take into consideration such factors.
- The weighted average fgures based on acquisition price, with January 31, 2024 set as the reference date, are indicated.
- Total acquisition price indicates the amount (the purchase prices, etc. stated in the sales agreements, etc.) excluding miscellaneous costs (brokerage commissions, taxes and dues, etc.) that were required for the acquisition of the portfolio properties.
- Average remaining lease term indicates the weighted average fgure using the acquisition price, based on the lease agreements for each property effective as of January 31, 2024.
- The fgure uses the appraisal value indicated in the respective appraisal reports with January 31, 2024 as the appraisal date, or survey price indicated in the respective survey reports of properties.
- Unrealized gain or loss = Appraisal value at end of each fscal period - book value at end of each fscal period. For AEON MALL SEREMBAN 2, however, the fair value is used for appraisal.
- The calculation of each fgure (excluding 7. above) includes AEON MALL SEREMBAN 2, which AEON REIT owns through an overseas real estate holding corporation.
7
To Our Unitholders
N o b u a k i S e k i
Representative Director and President
AEON Reit Management Co., Ltd.
Introduction
We would like to express our deepest condolences to the bereaved families of those who lost their lives in the 2024 Noto Peninsula Earthquake. We also offer our heartfelt sympathy to everyone in the region who was impacted by the disaster.
Among the properties owned by AEON Investment Corporation, AEON Mall Kahoku and AEON Mall New Komatsu suffered damaged due to the earthquake, but except for certain sections, both properties resumed operation on January 4. We
hope that life will return to normal for everyone in the region as soon as possible.
On another note, during the current fscal period, AEON Investment Corporation marked the 10th anniversary of its listing.
We are sincerely grateful to all our unitholders and other stakeholders for their valuable understanding and support and will keep striving to be highly evaluated by them.
Q1 | Can you give us an overview of the fiscal period ended January 2024 |
(August 1, 2023, to January 31, 2024)? |
The asset management environment remained challenging due to factors such as entrenched
AEON Ueda Shopping Center
infation and further interest rate hikes, but we engaged in initiatives aimed at achieving the medium -term targets we announced in September 2022.
In terms of specifc details, one example is internal growth associated with the revitalization investment at AEON Ueda Shopping Center.
We acquired this property in October 2020 with the condition that work would be carried out to further enhance its future competitiveness.
After that, we carried out exterior wall painting and extensive store interior renovations. A portion
8
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AEON REIT Investment Corporation published this content on 24 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 24 May 2024 06:11:04 UTC.