AEON REIT Investment : Uploaded "Sustainability Report 2022".

Sustainability Report

2022

Contents

Introduction to AEON REIT

Sustainability foundations

Sustainability activity report Corporate data

AEON REIT Investment Corporation Sustainability Report 2022		Introduction to AEON REIT Sustainability foundations Sustainability activity report Corporate data

Investing in community infrastructure assets

AEON REIT Investment Corporation (AEON REIT or the Investment Corporation) primarily invests in community infrastructure assets that form the backbone of local communities, namely retail and logistics facilities operated by the Aeon Group, thereby supporting people's everyday lives. Aeon Co., Ltd., one of Japan's leading retailers, serves as our sponsor company. Based on this mission, we will enter into master lease agreements that leverage the Aeon Group's network and aim to ensure stable operations and profitability through a fixed rent system and long-term lease agreements.

Note: Community infrastructure assets refer to retail and related properties that form an integral part of the communities in which they are located.

Contents	2
Contents
Introduction to AEON REIT
Overview	2
Introduction to AEON REIT	3
Message from management	4
Strengths and features 1
Business synergy with	6
the Aeon Group
Strengths and features 2
Unique financial and	7
financing strategies

Facilities vital to local citizens that serve as a hub for community building

"Balloon shelters" are used as evacuation locations in a disaster

Food courts, cinemas and other specialty stores cater to diverse needs

Supporting everyday living with a wide range of tenants

Various events are held that encourage community participation

Solar panels installed on the rooftop and walls help reduce the environmental burden

Facilities that respond effectively to changing lifestyle needs and the environment will win out over the long term

A drive-through service allows shoppers to pick up supermarket items they ordered online

EV charging stations

Sustainability foundations
Sustainability system and policy	8
Materiality	9
Sustainability activity report
Environment	11
Social	15
Governance	18
Sustainability finance	22
Corporate data
ESG Data	23
Data on sustainability finance	24
GRI Standards Index	26

Public services on offer include a post office and nursery

AEON REIT Investment Corporation Sustainability Report 2022

Introduction to AEON REIT Sustainability foundations Sustainability activity report Corporate data

Contents3

Introduction to AEON REIT

Corporate philosophy

AEON REIT positions retail properties and other real estate as community infrastructure assets and invests in those properties to enrich the lives of people living there.

AEON REIT implements stable asset management from a medium- to long-term perspective

with the aim of creating environments that ensure comfortable and fulfilling lifestyles and enhance the local community through our investment activities.

Corporate policy

AEON REIT carries out a growth strategy based on the policy of maintaining a mutually beneficial relationship with the Aeon Group, thereby aiming to maximize value for unitholders.

(iii) Increase distribution	(i) Acquire retail	(i) Sell retail	(ii) Make growth investments
and improve	properties from	properties to	by leveraging funds
the Aeon Group	the REIT
unitholder value	obtained from property sales

(ii) Expand asset size, make asset management	(iii) Increase revenues and
more stable and improve financing capabilities	enhance corporate value

Corporate history

Since its listing in 2013, the Investment Corporation has acquired mainly large-scale shopping malls and logistics facilities operated by the Aeon Group and now boasts a portfolio of 47 properties in Japan and overseas with total assets now amounting to ¥447 billion.

In addition, we have acquired third-party certification for over 80% of our owned assets (based on leasable floor area) in line with our objective of managing properties that contribute to the realization of a sustainable society.

November 27, 2012 Notification concerning the establishment of the Investment Corporation based on Article 69 of the Act on Investment Trusts and Investment Corporations of Japan (the Investment Trusts Act) by the organizer (AEON Reit Management Co., Ltd.)

November 30, 2012 Registration of the establishment of the Investment Corporation based on Article 166 of the Investment Trusts Act, and the establishment of the Investment Corporation

December 4, 2012 Application for registration of the Investment Corporation based on Article 188 of the Investment Trusts Act

December 20, 2012 Implementation of the registration of the Investment Corporation by the Prime Minister based on Article 189 of the Investment Trusts Act (Kanto Local Finance Bureau Director-General Registration No. 80)

November 22, 2013 Listed on the Tokyo Stock Exchange November 22, 2013 Commencement of asset management

Editorial policy

This Report aims to increase understanding of the initiatives being undertaken to realize a sustainable society by AEON REIT and AEON Reit Management Co., Ltd. (the Asset Management Company). It has been positioned as an important tool for facilitating constructive dialogue with our stakeholders and has been edited to ensure ease of understanding. The Report has been prepared with reference to GRI Standards.

Scope of reporting AEON REIT and AEON Reit Management Co., Ltd. (Includes certain information regarding AEON Co., Ltd., sponsor of the Asset Management Company, and Aeon Group companies (may be referred to as the Aeon Group) such as AEON MALL Co., Ltd.)

Corporate overview

Name	AEON REIT Investment Corporation
Representative	Nobuaki Seki, Executive Director
Address	1-14-10 Uchikanda, Chiyoda-ku, Tokyo
Established	November 30, 2012
Listed	November 22, 2013
Listing market	Real Estate Investment Trust Securities
	Market of Tokyo Stock Exchange

Securities	Securities identification code: 3292
codes	International Securities Identification
	Number (ISIN): JP3047650001
Fiscal period	January and July
Contact	AEON Reit Management Co., Ltd.
	TEL: [phone]

Reporting period	Fiscal 2021 (March 1, 2021 to February 28, 2022)
	Notes:
	1. The report includes some information from before and after this period.
	2. The report covers the fiscal period of the Asset Management Company, but also includes some information
	pertaining to the fiscal periods of the Investment Corporation (ending January 31 and July 31).
Issued	March 2023 (Japanese version: January 2023)
Inquiries	Investor Relation and Planning Group, Finance and Planning Department,
	AEON Reit Management Co., Ltd.
	TEL: [phone]

Disclaimer

Third-party certification and international initiatives

This Report contains forward-looking statements regarding the plans, forecasts and strategies of the Investment Corporation and the Asset Management Company. These forward-looking statements are based on the current assumptions and beliefs of the Investment Corporation and the Asset Management Company in light of the information currently available to them. These forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from such statements. Accordingly, we advise against placing undue reliance on such forward-looking statements. The Investment Corporation and the Asset Management Company assume no responsibility for the accuracy, completeness, adequacy or fairness of the information in this Report. Note that the information contained herein may be revised or retracted without prior notice. The Investment Corporation and the Asset Management Company undertake no obligation to publicly update the content of this Report (including forward-looking statements).

AEON REIT Investment Corporation Sustainability Report 2022		Introduction to AEON REIT Sustainability foundations Sustainability activity report Corporate data

Message from management

Investments in community infrastructure assets

Nobuaki Seki

Executive Director, AEON REIT Investment Corporation

Representative Director and President,

AEON Reit Management Co., Ltd.

Contents4

Emphasize sustainable management and enhance unitholder value

The external environment surrounding asset management has changed significantly. In addition to the lingering impact of the COVID-19 pandemic, there are concerns over increasing utility and other operating costs as well as the increasing cost of financing alongside rising interest rates. We are also witnessing growing demand for corporations to respond to ever-more serious environmental issues and social and economic challenges over the medium to long term. Topics related to the United Nations Sustainable Development Goals (SDGs) and environmental, social and governance (ESG) issues are more prevalent in the news now than ever before. Against this

backdrop, it is becoming increasingly important to build an investment and management framework and practice corporate management with the aim of realizing a sustainable society.

We seek to be a corporate group that is vital to customers and society by consistently acting based on the mission of the Aeon Basic Principle of "pursuing peace, respecting humanity, and contributing to local communities, always with the customer's point of view as its core," irrespective of circumstances. AEON REIT Investment Corporation (AEON REIT or the Investment Corporation) is positioned as a REIT that invests in community infrastructure assets with these principles firmly in mind.

The basic philosophy of AEON REIT is to contribute to the enrichment of people's lives and local communities through investment in retail facilities and related properties. We seek to

maximize unitholder value by realizing stable asset management through investment in these community infrastructure assets. To achieve this, it is essential to contribute to the resolution of environmental, social, and economic issues with a view to realizing a sustainable society. We therefore work closely with Aeon Group companies in practicing sustainable management.

Further promote sustainability based on new medium-term targets

AEON REIT announced new medium-term targets when it released its financial results for the 19th period ended July 31, 2022. We aim to enhance stabilized distribution per unit (DPU) and will continue to promote stable management based on

AEON REIT Investment Corporation Sustainability Report 2022

Introduction to AEON REIT Sustainability foundations Sustainability activity report Corporate data

Contents5

Message from management

master lease agreements predicated on achieving asset scale and financial targets.

In addition to these goals, we have set and announced medium-term targets in consideration of external assessments and certification with the aim of being ranked among the top J-REITs in the sustainability field.

In terms of external assessments, we are looking to gain an "A" in the MSCI ESG rating and the highest level of 5 Stars in the GRESB Real Estate Assessment. We will regularly disclose the results of ongoing efforts to our stakeholders. We will also take social demands into full consideration and examine potential responses and their feasibility before embarking on new ESG-related initiatives.

Our objective is to have at least 80% of our properties rated as four stars or higher and at least 85% rated as three stars or higher in third-party certification such as the Development Bank of Japan (DBJ) Green Building Certification, Comprehensive Assessment System for Built Environment Efficiency (CASBEE) Certification for Buildings, and Building-HousingEnergy-efficiency Labeling System (BELS) Certification. As of

GRESB Real Estate Assessment

	Attained highest rating of 5 Stars for
(Rating)	3 consecutive years

5	5	5	5	5
	Stars	Stars	Stars	Stars

4

3 3 3 3 3

Stars Stars Stars Stars

2

1

2016 2017 2018 2019 2020 2021 2022 Medium-term

target

July 31, 2022, 80.4% of our properties were certified with at least four stars and 84.9% were certified with at least three stars. It is important that we maintain these high ratios going forward. We will continue to conduct investment, management and sustainability-related initiatives as required based on the premise that evaluation standards and social demands are constantly evolving.

We also announced qualitative targets for the reduction of CO2 emissions. Aeon has established the Aeon Decarbonization Vision with the aim of reducing total emissions of CO2 and other greenhouse gases from its stores to zero by 2040. Efforts are being made to reduce energy consumption and switch to renewable energy at stores throughout the Group in promoting decarbonization. AEON REIT will carefully examine how it can make a comprehensive contribution to this initiative within master lease agreements and work closely with Aeon Group companies to achieve our goals.

Contribute to the realization of a sustainable society through investment in community infrastructure assets

Although we recently set medium-term targets for sustainability based around external assessments and certification, we do not merely view improved ratings and numerical indicators and newly gained certifications as the only important factors to consider. In line with the basic principles mentioned earlier, we also recognize the importance of continuing to promote necessary and effective initiatives to properly execute sustainable management.

The investment environment has changed dramatically in the past few years. Nowadays, hardly a day goes by without hearing the terms sustainability, SDGs and ESG in dialogue with investors, Group companies and other stakeholders. Many of the inquiries we receive about the Investment Corporation concern our philosophy on sustainable management. I believe

that concrete numerical targets and initiatives for ESG, which include contribution to the SDGs, should form an integral part of management policy. Also, sustainable management ought to be viewed from a medium- to long-term perspective with the understanding that it may take some time to produce tangible results. We will share the goals we expect all employees to aim for and implement a plan-do-check-act (PDCA) cycle for this process.

To achieve sustainability in corporate management, it is important to both produce results from non-financial initiatives and to ensure stability and make consistent improvements from a financial standpoint. AEON REIT will return to the roots of its philosophy and aim to maximize unitholder value while contributing to the betterment of individual lives and local communities by focusing on investment in community infrastructure assets. By doing so, we will look to drive steady corporate growth and support the realization of a sustainable society.

I would like to ask all stakeholders for your continued support and guidance of Aeon and AEON REIT as we forge ahead.