The basic financial policy that Hankyu REIT, Inc. uses in maximizing unitholder value by securing stable income and generating steady growth from its portfolio properties is to develop and execute a stable and efficient financial strategy.
Hankyu REIT may use funds procured from borrowings or the issuance of corporate bonds (including short-term corporate bonds) for the purposes of funds to acquire specified assets, payment of construction fees relating to real estate properties that are trust properties related to trust beneficiary interests or leased real estate, repayment of security deposits, payment of distribution, payment for the expenses of Hankyu REIT, repayment of liability including the redemption of borrowings and corporate bonds, and operating funds. Concerning the use of (or the intention to use) funds procured from the issuance of short-term corporate bonds, Hankyu REIT will limit its action to within the scope allowed for by laws and regulations. Moreover, the maximum aggregate amount of borrowings and corporate bonds issuing shall not exceed one trillion yen each, and inclusive sum of borrowings and issuance of corporate bonds shall not exceed one trillion yen either.
If Hankyu REIT makes borrowings or issues corporate bonds, it shall select a stable and efficient method of funding from the perspectives of loan period and type of interest, such as fixed and variable rates, among other factors. It will do this by giving comprehensive consideration to capital market and interest rate trends, the capital structure of Hankyu REIT, or the potential effects on existing unitholders, and forecasting changes in the economic and social situations.
With respect to the calculation of the loan-to-value (LTV), Hankyu REIT uses the following formula with a 60% cap. However, LTV may temporarily exceed 60% because of property acquisition or changes in appraisal value.
(Note 1) When corporate bonds have been issued, the amount of outstanding debts shall include the amount of outstanding bonds.
(Note 2) Deposit or security money refers to that accepted by Hankyu REIT (and assets that are subject to Hankyu REIT's trust beneficiary interests).
(Note 3) Matched money refers to cash or deposits reserved in the trust account to guarantee the deposit or security money for the assets owned by Hankyu REIT as the object of the trust beneficiary interests.
(Note 4) The total amount of assets refers to the amount in the assets section of the most recent balance sheet at the time of calculating the LTV ratio. With respect to tangible fixed assets, the difference between appraisal value and book value at the end of the fiscal period shall be added to or subtracted from the book value of the tangible fixed assets at the end of the fiscal period. Appraisal value denotes the appraisal value for the fiscal period, made by real estate appraisers and acquired in accordance with Hankyu REIT's Articles of Incorporation and Ordinance on Accounting for Investment Corporation
Debt financing strategy
Equity financing strategy
Hankyu REIT may make a flexible additional issue of units to seek long-term and stable growth of portfolio properties by accurately assessing the market situation and taking into consideration dilution of existing unitholders (a decrease of the percentage of ownership among existing unitholders by additionally issuing new units).