Newly acquired property G Bldg. Ginza Chuo dori 01 JAPAN RETAIL FUND. NAREIT presentation. June 7-9, 2016 US ADR(OTC): JNRFY.

Transcription

1 Newly acquired property Ginza Chuo dori 01 JAPAN RETAIL FUND NAREIT presentation June 7-9, 2016 US ADR(OTC): JNRFY 8953 Security Code

2 JAPAN RETAIL FUND Contents 1. Features of JRF 2. JRF s Growth Strategy 3. Sustainability Management 4. Appendix P. 2 P. 9 P. 21 P. 24 1

3 JAPAN RETAIL FUND 1. Features of JRF 2. JRF s Growth Strategy 3. Sustainability Management 4. Appendix mozo wonder city 2

4 1. Features of JRF Features of Our Portfolio Assets We specialize in investing in a wide variety of retail properties varying from large scale retail properties to road side stores and specialty buildings in favorable locations SM 11 mozo wonder city (Nagoya shi, Aichi) Suburban area SM 7 Narupark (Nagoya shi, Aichi) SM 5Higashi totsuka Aurora City (Yokohama shi, Kanagawa) A 57.9% 96properties 42.1% B 20properties (42.2%) Large scale retail properties, the largest class in the relevant area Retail properties in densely populated areas 28properties (15.7%) Portfolio assets 23 properties (as of the end of Mar. 2016) (22.9%) C Retail properties in favorable locations adjacent to major stations 25properties (19.2%) Retail properties in prime urban shopping districts D UM 20 KAWASAKI Le FRONT (Kawasaki shi, Kanagawa) US 21 DFS T GALLERIA OKINAWA (Naha shi, Okinawa) Urban area UM 29 Giinza Chuo dori 01 (Chuo ku, Tokyo) (Note) Based on appraisal value. SS 43 m city Toyonaka (Toyonaka shi, Osaka) UM 21 Omotesando 02 (Shibuya ku, Tokyo) UM 8GYRE (Shibuya ku, Tokyo) 3

5 1. Features of JRF Portfolio Map (based on 96 properties as of the end of Mar. 2016) Own a wide variety of retail properties across Japan Saitama Other major cities By region (based on appraisal value) 11.8% Hokkaido Tokyo US 28 Kichijoji 02 Kanagawa Chiba UM 29 Ginza Chuo dori 01 Osaka, Nagoya and surrounding areas 39.0% Greater Tokyo metropolitan area 49.2% Miyagi US 27 Sendai Ichibancho 01 Greater Tokyo metropolitan area: 49 properties Tochigi UM 28 Kyoto Kawaramachi 01 Hiroshima Kyoto Fukuoka Greater Tokyo metropolitan area Hyogo Shiga Aichi Nagasaki Osaka, Nagoya and surrounding areas Okinawa Urban multi tenant retail properties Urban single tenant retail properties Osaka Nara UM 27 Shinsaibashi 04 (Bldg. B) Suburban multi tenant retail properties Other major cities: 12 properties Suburban single tenant retail properties Osaka, Nagoya and surrounding areas: 35properties (Note) Based on the assumption that all deals which have been announced as of today are duly completed. 4

6 1. Features of JRF Solid Financial Base Solid financial base by long term liability, fixed interest and diversified debt maturity Financial Indicators (as of the end of Mar. 2016) Status of lenders (as of the end of Mar ) Long term debt rating AA-(Stable) Rating and Investment Information, Inc. (R&I) LTV Ratio 48.5% Long term liability ratio 99.8% Fixed interest ratio 99.8% Average maturity 4.7years Average debt cost 1.31% 5

7 1. Features of JRF A 14 year Track Record since Listing Continuous expansion of asset size since our listing Asset size (based on total acquisition price) ( are Non core assets Note1, 2 ) Number of properties 3 rd PO 4 th PO th PO Merger th PO th PO 81 9 th PO th PO 11 th PO (billion JPY) IPO nd PO th PO (Note 1) Non core assets means office and residential properties acquired through merger with the LaSalle Japan REIT Inc. (LJR). (Note 2) Non core assets (18 properties) were all sold on September 3, 2010 for 33.2 billion JPY. (Note 3) Asset size is truncated to the nearest 100 million JPY. Distributions per unit and occupancy rate Occupancy rate (at the end of each fiscal period) (%) Distributions per unit (JPY) (Note 1) On March 1, 2010, we effected a four to one unit split. Distributions from the 1 st fiscal period to the 16 th fiscal period are divided by four. (Note 2) Occupancy rate is rounded to the first decimal place. (Note 3) Occupancy rate for the 17 th fiscal period ended August 31, 2010, excludes non core assets. 6

8 1. Features of JRF Recent Business Results Steady increase in unitholder value (DPU and NAV per unite) Asset size Rent NOI (excluding profit of sales) 0 0 Distributions per unit (Note) NAV per unit 0 0 (Note) Distribution per unit (estimate) is calculated as Net income plus appropriated reserves divided by the number of outstanding units as of the end of each fiscal period. Unrealized profits and losses (billion JPY) Period end NAV: NAV as of the end of Mar. 2016: (Net asset value + unrealized profits and losses of the properties in our portfolio, as of the end of each fiscal period)/ the number of units outstanding as of the end of each fiscal period (Net asset value as of the end of Feb period + unrealized profits and losses of the property in our portfolio, as of the end of Feb unrealized profits and losses of 3 newly acquired properties in Mar. 2016) /the number of units outstanding as of the end of Mar

9 1. Features of JRF Features of JRF Stable cash flow supported by large sized and diversified portfolio > The largest listed J REIT that specializes in retail properties, and the third largest among all J REITs by asset size based on total acquisition price (as of the end of Mar. 2016) > Large asset size reduces the effect of volatility of individual properties and enables more stable asset management > Diversification by region, location and types of retail properties ensures stable rental revenues and captures growth prospects > Integration of tenants and retail formats suited to a broad range of consumers needs Proactive SC Management > Our track record of proactive management and operations of retail properties about 14 years with 96 properties and about 1,000 various type of tenants (as of the end of Mar. 2016) 3. Solid financial base and diversified lenders > AA (Stable) rating (Note ) and stable financing strategy focusing on long term borrowings (Note) Issuer rating by Rating and Investment Information, Inc. (R&I) as of the end of Mar Sponsor support from Mitsubishi Corporation group and UBS AG > Mitsubishi Corporation group's development capability and extensive network in real estate and retail sectors > UBS's network developed through its platform that combines a leading financial institution and real estate asset management operations 8

10 JAPAN RETAIL FUND 1. Features of JRF 2. JRF s Growth Strategy 3. Sustainability Management 4. Appendix Newly acquired property Kichijyoji 02 9

11 2. JRF s Growth Strategy Portfolio Evolution Portfolio metrics constantly improving through our persistent efforts Portfolio evolution Feb period (22 nd ) Feb period (28 th ) After the completion of the contracted transactions (Note 2) Increase in % share of urban properties (based on the appraisal value) Urban 23.9% Suburban 76.1% Urban 41.4% Suburban 58.6% 都市型 Urban 40.2% 郊外型 43.0% Suburban 59.8% 57.0% Increase in % share of growth type properties Decrease % share of major tenants (based on annual rent) Growth type 28.7% (Other) 21.5% Income type (AEON ML(Note 3)) 40.7% (Ito Yokado ML(Note 3)) 9.1% Growth type 35.9% (Other) 29.6% Income type (AEON ML) 26.8% (Ito Yokado ML) 7.7% Growth type 35.9% (Other) 30.8% Income type (AEON ML) 25.6% (Ito Yokado ML) 7.7% Increase in new style lease contract ratio (based on annual rent) Direct Lease 28.1% New type lease contract 49.0% Old type lease contract 51.0% Master Lease 71.9% Direct Lease 44.5% New type lease contract 57.8% Old type lease contract 42.2% Master Lease 55.5% Direct Lease 45.8% New type lease contract 58.4% Old type lease contract 41.6% Master Lease 54.2% Improvement in NOI Yield (after depreciation) 3.6 % 3.7 % 3.7 % Increase in unrealized profit and losses (3.9) billion JPY billion JPY billion JPY (Note 1) Based on 94 properties as of Feb. 29, (Note 2) Based on 96 properties after the completion of contracted transactions. Excluding AEON Mall Kashiihama (to be disposed on Aug. 31, 2016 and Sep. 30, 2016) and including Kyoto Kawaramachi 01 (acquired on Mar. 18, 2016), Shinsaibashi 04 (Bldg. B) (acquired on Mar. 31, 2016), Ginza Chuo dori 01 ( 27.5% acquired on Mar. 1, 2016 and 22.5% to be acquired on Apr. 28, 2016) and Sendai Ichibancho 01 (to be acquired on Sep. 30, 2016). (Note 3) AEON ML refers to the total annual rent of AEON Retail, AEON MALL, AEON Kyushu, AEON Ryukyu and AEON TOWN, which are master lease tenants of income type properties. "Ito Yokado ML" refers to the total annual rent of Ito Yokado, which are master lease tenants of income type properties. 10

12 2. JRF s Growth Strategy Implementation of initiatives for further growth Steadily executing initiatives aimed at growing unitholder value in the medium to long term Initiatives for further growth and recent actions External growth strategy External growth strategy Internal growth strategy Asset size expansion Asset replacements Asset value enhancement initiatives Newly acquired properties by capital raising through public offering Disposition of 5 suburban GMS properties Acquisition of 5 urban properties Action plans for improving facility competitiveness AEON Omiya Disposition Estimated gain approx.2.9 billion JPY Asset Replacement Acquisition Completed project : 1 Ongoing projects : 5 Total investment: (Note 3) approx.11.1 billion JPY Renewal opening of mozo wonder city Number of properties 8 Minami Aoyama 01 (Bldg. B) (Note 1) Total acquisition price 42.1 billion JPY Average NOI yield (after depreciation) 3.9% Strategically allocated the three periods of gain on sale to offset the temporary expenses related to renewals and decline in rental revenue due to the sale and retained part of the sales proceeds as reserve for dividend. (Note 2) Number of properties 5 Total disposition Price 68.5 billion JPY Average NOI yield (after depreciation) 3.3% Kyoto Kawaramachi 01 Number of properties 5 Acquisition price 37.9 billion JPY Ginza Chuo dori 01 Average NOI yield (after depreciation) 3.3% Large scale renewal project targeted at strengthening competitiveness Renewal opening on Sep. 18, 2015 (Note ( 注 4) 4) (Note 5) (Note 1) Ueno 01, which was acquired on Jul. 28, 2015, is included in (1) number of properties, (2) total acquisition price and (3) average NOI yield (after depreciation) (Note 2) 193 million yen, which was a part of gain on sale, was accounted as reserve for dividend in the fiscal period ended Feb (Note 3) Total investment is expected total expenditure of following renewal projects: one completed project at mozo wondercity and five projects currently taking place at G bldg. Jiyugaoka 01 (Bldg. B), BicCamera Tachikawa, Nara Family, Ito Yokado Yotsukaido and Kamishin plaza. 11

13 2. JRF s Growth Strategy Asset expansion through consecutive acquisition Increased profitability and stability based on consecutive acquisition Since IPO Acquisition track record by asset category (billion JPY) Yearly average 70 billion JPY Including merger (55.6 billion JPY) A B Suburban Properties Large scale retail properties, the largest class in the relevant area Retail properties in densely populated areas C D Urban Properties Retail properties in favorable locations adjacent major stations Retail properties in prime urban shopping districts (Note) Fiscal year based on JRF s fiscal year end (March to February). Excludes property extension and non core assets. Unrealized profits and losses (billion JPY) (Note) Fiscal year end appraisal value book value. Excludes non core assets (Fiscal year base) 67.6 billion JPY Feb (12 th period) Bankruptcy of Lehman Brothers (Sep.2008) 42.1billion JPY Feb (16 th period) The Great East Japan Earthquake(Mar. 2011) 91.5billion JPY Feb.2016 (28 th period) (Fiscal year base) 5.5% Track record for portfolio NOI yield (after depreciation) 5.0% 4.5% 4.0% 3.5% 5.4% Aug (3 rd period) 3.4% Aug (19 th period) 3.7% Feb (28 th period) (Note) (NOI after depreciation) / (Acquisition price) 3.0% 2.5% (Fiscal year base) 12

14 2. JRF s Growth Strategy Asset replacement Asset replacement for the purpose of improving portfolio quality Concept of asset replacement 目的 Objectives Re allocation of portfolio to adapt to a changing consumption structure in Japan Aiming for acquisition of urban type properties Acquisitions of prime properties Acquisition Asset replacement Disposition Property disposition at optimum timing Real estate market Present situation Increase in acquisition opportunities for prime urban retail properties on the back of strong real estate market Cap rate compression for sub urban single tenant properties Latest asset replacement Oct. 2015~(After FP ended Feb. 2016) Disposition Acquisition AEON Mall Yachiyo Midorigaoka AEON Ueda AEON Nishi Otsu AEON Omiya AEON Mall Kashiihama 5 properties 68.5 billon JPY Avg. NOI yield (after depreciation) 5 properties 37.9 billon JPY Avg. NOI yield (after depreciation) 3.3% 3.3% Shinsaibashi 04 (Bldg. A&B) Sendai Ichibancho 01 Kyoto Kawaramachi 01 Kichijoji 02 Ginza Chuo Dori 01 Profit management through splitting the timing of disposition for next 3 fiscal period Sendai Ichbancho 01 Aeon mall Kashiihama Kichijoji 02 13

15 2. JRF s Growth Strategy External growth strategy (1) Selectively acquired prime properties mainly in urban area using our abundant deal sources Additional closing Urban Newly acquired properties after Sep (13 properties, JPY79.2 billion) (Note) DFS T Gallaria (A part of land with leasehold interest) PO in 2015 (Excluded G bldg. Ueno 01 closed in Jul 2015) 7 properties 38.8 billion JPY Asset replacement 5 properties 37.9 billion JPY Suburban Urban Urban Urban mozo wonder city (20% co ownership interest) Umeda 01 Urban Urban Urban Urban Urban Ginza Chuo dori 01 (50% co ownership interest) Kichijoji 02 Urban Urban Urban Minami Aoyama 01 (Bldg. B) Abeno 01 Takadanobaba (Land with leasehold interest) (60% co ownership interest) Akihabara 01 Akihabara 02 Kyoto Kawaramachi 01 Sendai Ichibancho 01 (Note) This figure includes Ginza Chuo dori 01 (22.5%) and Sendai Ichibancho01 (Building with leasehold interest) to be closed on Apr. 28, 2016 and on Sep. 30, 2016 respectively in addition to the properties as of Apr. 15, 2016 Shinsaibashi 04 (Bldg. A&B) 14

16 2. JRF s Growth Strategy External growth strategy (2) Continued acquisitions of urban type properties in prime locations and accumulated expertise in retail asset management Holds a series of properties in one of the most prominent commercial areas in Tokyo Omotesando/ Harajuku / Aoyama area (14 properties) Cute Cube Harajuku Jingumae 03 Harajuku Station Harajuku Takeshita St. GYRE Cute Cube Harajuku Omotesando 01 Omotesando 02 Omotesando 02 Jingumae 01 Omotesando 01 Jingumae 06 GYRE Jingumae 02 Jingumae 01 Jingumae 02 Jingumae 03 Jingumae 06 Meiji St. Cat St. Urban Terrace Jingumae Kita Aoyama 01 Minami Aoyama 01 Kita Aoyama 01 Shibuya 01 NEW Urban Terrace Jingumae La Porte Aoyama Shibuya 01 La Porte Aoyama Minami Aoyama 02 Minami Aoyama 02 Minami Aoyama 01 (Bldg. B) 15

17 2. JRF s Growth Strategy External growth strategy (3) Acquired properties with high rarity facing main street in prime retail locations JRF s portfolio Ginza in Tokyo/ Kawaramachi in Kyoto / Shinsaibashi in Osaka Ginza 銀座エリア area (3(3 properties) 物件 ) Shisanibashi area (5 properties) NEW Shinsaibashi Osaka Shinsaibashi Bldg. Shinsaibashi 03 Shinsaibashi 02 Ginza 01 Cheers Ginza Ginza Chuo dori 01 Shinsaibashi 03 Kyoto Kawaramachi area (3 properties) NEW 8953 Osaka Shinsaibashi Bldg. Shinsaibashi 01 NEW Shinsaibashi 01 Round1 Kyoto Kawaramachi Kawaramachi OPA Kyoto Kawaramachi 01 Shinsaibashi 02 Shinsaibashi 04 16

18 2. JRF s Growth Strategy Internal growth strategy (1) Implement internal growth strategy by leveraging our SC management capability Internal growth programs Completed mozo wonder city (1st project) Re Opened in Sep Awarded a fighting sprits award in Best developer of the year (#18) hosted by Senken Shinbun, a newspaper company specializing in fashion / apparel. Moving towards a high grade urban SC through a large scale renewal project Expected upside from floor expansion Nara Family Sequentially starting the renewal construction Re opening in Fall 2016 Kyoto Family <Spring 2016> Leasing contracts (fixed term) for nearly 50 blocks to be terminated and implemented a tenant replacement program around Kyo Marche in 1 st floor Ito Yokado Yotsukaido Replacing the anchor tenant through large scale renewal project aimed at improving property competitiveness * Future plans have not yet confirmed as of Apr and are subject to change. Kishiwada CanCan Bayside Mall Reconstructing the merchandise composition in accordance with the replacement of anchor tenant to reactive the whole facilities Sequentially start reopening in Fall 2016 Oyama Yuen Harvest Walk (2nd project) <Autumn 2017> Leasing contracts (fixed term) for nearly 30 blocks to be terminated mozo wonder city (2nd project) <Scheduled in 2018> Abiko Shopping Plaza Restructure tenant mix upon the leasing contracts termination <Spring 2018> Currently working on the basic plan Completed renewal project Expenditure 2.13 billion yen Sales Customers +16.2% (Note) +4.2% (Note) Seek for improvement of ability to attract customers with renewal of main floor KAMISHIN PLAZA Part of basement floor is soft opened Re opening in Jun 2016 Upside potential after anti seismic reinforcement Developed new annex and invited a commercial bank as a tenant Enhanced profitability and commercial integrity Bic Camera Tachikawa Seismic reinforcement work in progress New leasing contract already signed with the tenant KAWASAKI Le FRONT <Date to be decided> Renewal leveraging its overwhelming potential as retail property Currently working on the basic plan Redevelopment on own balance sheet due to aging of the property Jiyugaoka 01 (Bldg.B ) New leasing contract subject to the completion already signed with the global fashion bland as a tenant To be completed in Autumn 2016 GYRE <After 2017> Targeting at upside from termination of fixed term leasing contract 2015 Present 2016 After 2017 (Note) These figures are calculated based on the actual figures between Sep.18, 2015 to Mar.17, 2016 compared to the same period of previous year. 17

19 2. JRF s Growth Strategy Internal growth strategy (2) Implement internal growth strategies to enhance property competitiveness and profitability Completed 2 properties, Ongoing plans 5 properties, estimated total expenditure approx.12.5 billion JPY Status Property Objective Completed Oyama Yuen Harvest Walk (1st project) mozo wonder city (1st project) Successfully improved competitiveness as retail property and achieved profitability improvement A large scale renewal project to establish a stronger market position (Estimated) Expenditure 1.32 billion JPY 2.13 billion JPY (Note 1) (Estimated) (Note 2) NOI increase / Investment amount 10.7% 10.9% Jiyugaoka 01 (Bldg. B) Redevelopment on own balance sheet due to aging of the property 589 million JPY 6.4% Big Camera Tachikawa Upside potential after anti seismic reinforcement 2.92 billion JPY 15.3% Ongoing plans Nara Family Moving towards a high grade urban SC through a large scale renewal project 5.1 billion JPY 8.2% 4.2% (Note 3) Ito Yokado Yotsukaido Build the Extension on a part of the premise returned by the master lease tenant 154 million JPY 10.4% KAMISHIN PLAZA Seek for improved attractiveness for customers through floor renewal 299 million yen 15.5% (Note 1) Approximate estimate amount is used for the projects when total investment amount for the project is not fixed. (Note 2) NOI increase = (NOI after renewal project) (NOI before renewal project). For NOI after renewal project, actual result is used if the property is operating at normalized base otherwise annual NOI estimate is used. (note 3) Calculation based on the estimated NOI increase that made from difference between an estimated annual NOI for FY2017 after renewal project (normalized base) and an estimated annual NOI for FY2017 without renewal project. 18

20 2. JRF s Growth Strategy Recent Trend in JRF s Properties Signs of rent increase for urban retail properties in prime location, while sales performance for suburban retail properties remain flat Leasing market Tenant sales trend Rent increase observed at the time of lease renewal for properties in urban prime location, especially the ground floor High occupancy rate for urban properties Clear benefits from inbound demand seen among some of tenants in urban properties Sales performance for suburban retail properties remains flat GMS still struggling to improve their performance Continued trend of bi polarization in tenant sales performance Average occupancy rate of urban retail properties Sales performance of suburban retail properties (YoY%) Sales trends GYRE mozo wonder city (Note 1) (Note 2) Sales of suburban retail properties is based on interview by asset management company. (excluding tax) Current Survey of Commerce s large scale retail store sales value (existing stores) by type of business on year on year basis is used as a benchmark. However, the sales figure include consumption tax therefore data after April 2014 to Mar reflects the consumption tax hike (+3%). 19

21 2. JRF s Growth Strategy Examples of rent increase Achieved rent increase by leveraging our SC management capabilities Urban properties subject to lease renewal (fixed term) due to lease termination through Sep and Feb Rent increased in 10, stayed same in 16, and reduced in 3 out of the signed 29 blocks (Note 1) Examples of rent increase Blocks at expiry of fixed term lease contract (urban properties) Ginza 01 Omotesando 02 Agreed on upward rent revision with existing tenants at expiry of lease contract Located in Ginza, a central commercial place, especially for luxurious brand Agreed on upward rent revision with the existing tenants, following careful selection among various potential tenants (Note 2) Floor area (Note 3) (Note 4) Rent growth Total of the asset 487tsubo +21.3% Example of rent increase in Omotesando where the overseas luxurious brand are concentrated Located in Omotesando where the retailers gets benefit from increased inbound demand Agreed on upward rent revision with the existing tenants, following careful selection among various potential tenants Aim to improve profitability and stability by strengthening property competitiveness using SC management capabilities Aug period (29 th ) Feb period (30 th ) Properties subject to lease renewal 7properties 11 properties Major properties # of blocks subject to lease renewal (# of signed lease contract) KAWASAKI Le FRONT Umeda blocks (7 blocks) etc. KAWASAKI Le FRONT Shinsaibashi 02 Minami Ikebukuro 01 etc. 30 blocks (0 blocks) Area subject to lease renewal approx. 1,300 tsubo approx. 3,400 tsubo %share of annual portfolio revenue 0.7% 1.6% Floor area (Note 4) Rent growth Expiration of lease contract (1 tenant) 52 tsubo +21.4% (Note 1) Figures are based on lease contracts signed as of Apr. 5, 2016, excluding certain blocks whose rent level cannot be compared before and after lease renewal. (Note 2) Figures represent the total of all relevant assets given limited disclose agreements obtained from the tenants. (Note 3) 1 tsubo is approximately 3.3 m 2 (Note 4) Rent growth is a comparison of rental conditions before and after tenant replacement (a total of monthly rent and common area charges). 20

22 JAPAN RETAIL FUND 1. Features of JRF 2. JRF s Growth Strategy 3. Sustainability Management 4. Appendix Awarded 4 stars in DBJ Green Building Certification program Narupark 21

23 3. Sustainability Management Sustainability Proactively engage in various measures towards sustainability of whole society and environment Basic policy JRF shares the same concept of sustainability with the Asset Manager and implement various measures together. We established new policies and measures for sustainability in June 2013 and signed declarations adopting the following two principles. United Nation's Principles for Responsible Investment (PRI) The Principles for Financial Action towards a Sustainable Society endorsed by Japanese Ministry of Environment (Principles for Financial Action for the 21st Century) Also, the Asset Manager has become the first J REIT asset manager to sign Montreal Carbon Pledge (Note) in September (Note) Montreal Carbon Pledge was launched on September 25, 2014 at PRI in Person in Montreal, and is supported by the Principles for Responsible Investment (PRI) and the United Nations Environment Programme Finance Initiative (UNEP FI). The Montreal Carbon Pledge commits investors to measure, disclose and reduce their carbon footprints. DBJ Green Bbuilding Certifications Awarded DBJ Green Building Certification in 2015 with 3 new properties. mozo woder city was ranked up to 5stars (2015 ), which is the highest of the five evaluation ranks, from 4stars (2014 ), and GYRE was ranked up to 3stars (2015 ) from 2stars (2014 ) Certification Rank Properties with the best class environmental & social awareness Property name mozo wonder city (Rank Up) Properties with exceptionally high environmental & social awareness Nara Family Abiko Shopping Plaza Narupark (New) Properties with excellent environmental & social awareness Oyama Yuen Harvest Walk KAWASAKI Le FRONT GYRE (Rank Up) Kyoto Family (New) DFS T Galleria (New) CASBEE for Building Certifications Awarded CASBEE for Building certifications in 2 properties in Feb in addition to 4 properties in Feb Rank S Certification Rank GRESB Green Star Property name AEON Mall Sapporo Hassam (Note) AEON Mall Tobata Shopping Center ( 注 ) イオンモール札幌発寒は イオン (Note) 北海道と共同で認証取得しました Awarded Jointly with AEON Hokkaido JRF received "Green Star" the highest ranking of the four categories in the GRESB (Global Real Estate Sustainability Benchmark) Survey in

24 3. Sustainability Management E (Environment), S (Social), G (Governance) improvement Strategies to enhance corporate governance Improvement in Corporate Governance Investment Committee (Updated) External specialist as a standing member of the committee Invited outside real estate appraiser as a standing member of the investment committee Improved internal controls by setting up Internal Control Office in accordance with the growth of the asset management company: MCUBS Effective as of Dec. 1, 2015, Internal Control Office was established. Management committee was also established as an advisory body for the President. Management structure Compliance Committee (Newly established) Compliance Committee was newly established, that includes external lawyer as a standing member of the committee, instead of the Stakeholder Transactions Review Committee. Formerly, of the transactions subject to examination by the Investment Committee, the Asset Manager has required resolution of the Stakeholder Transactions Review Committee(STRC) for interested party transactions involving both shareholders of the Asset Manager, with the aim of confirming that such transactions will not harm the funds which the Asset Manager manages. To enhance the role of STRC, the Asset Manager has decided to abolish STRC and establish (New) the Compliance Committee, whose standing members include the outside lawyers. Risk Management Committee (Newly established) Risk management committee was newly established, which takes the role of the risk management from the (former) compliance committee The role of former compliance committee is now undertaken by the Risk Management Committee. As the Asset Manager, meetings of (Former) the Compliance Committee, comprising the President, Deputy President, Head of Division, Deputy Head of Division, Head of Private Fund Management Department and Head of Compliance Office as standing committee members, had previously been held quarterly in principle, to ascertain and review risks involving matters other than those under control of the Investment Committee on a timely basis to draw up necessary measures and management policies. However, the Internal Control Office was established effective December 1, 2015, with the aim of planning and developing the risk management framework of the Asset Manager from a company wide standpoint, independent of other divisions, departments and offices, and oversee operations to verify/improve the status of development and operation of such risk management framework. Accordingly, the Asset Manager has decided to abolish (Former) the Compliance Committee and newly establish the Risk Management Committee, which will take on the risk management related functions which (Former) the Compliance Committee served previously. (Note) As of May.1,

25 JAPAN RETAIL FUND 1. Features of JRF 2. JRF s Growth Strategy 3. Sustainability Management 4. Appendix Awarded 3 stars in DBJ Green Building Certification program Kyoto Family 24

26 4. Appendix Investor Analysis (1) Top 20 unitholders as of the end of February 2016 Rank Name As of the end of Feb Number of units held Ownership ratio As of the end of Aug Number of units held Ownership ratio 1 Japan Trustee Services Bank, Ltd. (Trust Account) 450, % 384, % 2 The Master Trust Bank of Japan, Ltd. (Trust Account) 196, % 190, % 3 Trust & Custody Services Bank, Ltd. (Securities Investment Trust Account) 172, % 170, % 4 The Nomura Trust and Banking Co., Ltd. (Investment Trust Account) 100, % 96, % 5 NOMURA BANK (LUXEMBOURG) S.A. 84, % 87, % 6 THE BANK OF NEW YORK MELLON SA/NV 10 70, % 75, % 7 STATE STREET BANK WEST CLIENT TREATY , % 47, % 8 STATE STREET BANK WEST PENSION FUND CLIENTS EXEMPT , % 41, % 9 JP MORGAN CHASE BANK , % 10 STATE STREET BANK AND TRUST COMPANY , % 33, % 11 THE BANK OF NEW YORK, NON TREATY JASDEC ACCOUNT 34, % 3, % 12 Nomura Securities Co., Ltd. (Proprietary Account) 29, % 13 SIX SIS FOR SWISS NATIONAL BANK 26, % 24, % 14 MELLON BANK, N.A. AS AGENT FOR ITS CLIENT MELLON OMNIBUS US PENSION 26, % 30, % 15 Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. 25, % 34, % 16 Mizuho Securities Co., Ltd. 24, % 42, % 17 Mitsubishi Corporation 20, % 20, % 18 STATE STREET BANK AND TRUST COMPANY 19, % 26, % 19 STATE STREET BANK AND TRUST COMPANY , % 22, % 20 CBLDN STICHTING PENSIOENFONDS METAAL ENTECHNIEK 19, % 5, % Total 1,499, % 1,339, % (Note) Units issued outstanding Feb. 2016(28 th ) Period : 2,552,198 units Aug. 2015(27 th ) Period : 2,430,198 units 25

27 4. Appendix Investor Analysis (2) Ownership ratio by investor type Number of unitholders by investor type (Note 1) Excludes individuals investors and others (Note 2) The figures in parentheses represent the total number of unitholders including retail and other investors 26

28 4. Appendix Historical Performance of Investment Unit Price Unit price and trading volume trends since IPO Recent trends (Mar. 12, 2002 ~ May 31, 2016) (Mar. 3, 2014 ~ May 31, 2016) 128% 127% 115% (Note 1) Closing price basis (Note 2) Since a four for one investment unit split was carried out on March 1, 2010, the post split unit price is shown (Source) Bloomberg (Note 1) Closing price basis (Note 2) Left axis describes relative unit price trends that is closing price on Mar. 3, 2014 to be assumed as 100 (Source) Bloomberg 27

29 4. Appendix List of Indices JRF is a constituent of following indices MSCI World Index MSCI World Index is an index created and published by Morgan Stanley Capital International (MSCI). It covers large and middle capital stocks which are listed in 23 developed countries and can be invested. Approximately 1,650 stock from 23 developed countries are accepted and this covers approximately 85% of developed markets. This index is a basis for other indices,including MSCIEAFE, and is used by investors from all over the world. A various investment products related to this index are provided. FTSE EPRA/ NAREIT Global Real Estate Index FTSE EPRA/ NAREIT Global Real Estate Index series is developed by EPRA, NAREIT and FTSE, and is widely used as a benchmark for international real estate investment. JRF is incorporated into a number of indices in this series, including FTSE EPRA/NAREIT Global Index, FTSE EPRA/NAREIT Asia Pacific Index. GPR 250 Index/ GPR 250 REIT Index This is an index created and published by Global Property Research (GPR). GPR Index consists of representative and highly liquid 250 stocks out of all stocks that satisfy criterion set forth by GPR among all listed real estate companies (including REITs). GPR 250 REIT Index is an index that consists of only REITs out of 250 constituents of GPR 250 Index. Thomson Reuters/GPR/APREA Investable 100 Index This is an index created and published jointly by Thomson Reuters, Global Property Research (GPR) and Asia Pacific Real Estate Association (APREA) which cover representative 100 real estate stocks (including REITs) in Asia Pacifica region. JRF is incorporated into Thomson Reuters/GPR/APREA Investable 100 Index. S&P Global REIT Index/ S&P Developed REIT Index This is an index created and published by Standard & Poor's (S&P). S&P Global REIT Index consists of real estate investment trusts (REIT) out of more than 800 real estate companies from 41 countries contained in S&P Global Property index. S&P Developed REIT Index consists of REITs in developed market as defined by S&P Dow Jones Indices out of all REITs in S&P Global REIT Index. Russell Global Index This is an index created and published by Russel Investment Group. Russell Global Index covers 98% of global, investable capital markets and consists of over 10,000 stocks. 28

30 4. Appendix Mitsubishi Corp. UBS Realty Inc. Group Mitsubishi Corp. UBS Realty Inc. Group has managed 3 J REITs Mitsubishi Corp. UBS Realty Inc. Group % in total issue % in total issue 51.0% 49.0% Asset Management Company No. of Employees:115(excluding part-time directors and employees) <Qualification holders> Real estate transaction specialists ARES certified master First class architects Real estate appraisers CMA Tax accountants MBA Asset Management Agreement Subsidiary / holding 65%of shares 60% Asset Management Company No. of Employees:22(excluding part-time directors and employees) Asset Management Agreement (Note) as of Apr. 1,

31 Disclaimer The contents of this document, including summary notes, quotes, data and other information, are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell, any specific products. Please be aware that matters described herein may change or cease to exist without prior notice of any kind. This document contains forward-looking statements and anticipations of future results, based on current assumptions and beliefs in light of currently available information and resources. Risks and uncertainties, both known and unknown, including those relating to the future performance of the retail market in Japan, interest rate fluctuations, competitive scenarios, and changing regulations or taxations, may cause performance to be materially different from those explicitly or implicitly expressed in this document. With respect to any and all terms herein, including without limitation, this document, the information provided is intended to be thorough. However, no absolute assurance or warranties are given with respect to the accuracy or completeness thereof. Unless otherwise specified, this document was created based on Japanese accounting system. Neither JRF nor Mitsubishi Corp.-UBS Realty Inc. (MCUBSR) shall be liable for any errors, inaccuracies, loss or damage, or for any actions taken in reliance thereon, or undertake any obligation to publicly update the information contained in this document after the date of this document. Asset Management Company: Mitsubishi Corp. UBS Realty Inc. (Financial Instrument Firm under License No. 403 of the Director of Kanto Local Finance Bureau)