AEON REIT Investment Corporation

Securities Code:3292

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JAPANESE

Growth Strategy

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AEON REIT Investment Corporation is a REIT investing in properties forming local communities' retail business infrastructure.

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

Under our portfolio composition policy below, we aim to ensure stable income in the medium to long term and steady portfolio growth by investing in retail and related properties that contribute to betterment of individual lives and local communities.

Growth Strategy Based on a Mutually Beneficial Relationship Between AEON REIT Investment Corporation and Aeon Group

Aeon Group has the ability to collectively develop and operate large-scale and other types of retail and other similar properties. Our growth strategy is to grow our portfolio by fully utilizing Aeon Group's collective strengths in the medium to long term.

イオンリートとイオングループのウィン-ウィン(WIN-WIN)の関係に基づくGrowth Strategy

We build a mutually beneficial relationship with Aeon Group that creates a virtuous cycle for both entities, as discussed above, and thus aim to maximize unitholder value.

External Growth Strategies

Leverage support from Aeon Group

We and our Asset Manager, AEON Reit Management Co., Ltd., have entered into the sponsor support agreement or pipeline support agreements and shopping center management agreements or logistics facilities management agreement with Aeon Group companies and have entered into the memorandums of understanding on investments in properties in Malaysia with AEON CO. (M) BHD. and AEON BIG (M) SDN. BHD.
Furthermore, we have entered into a trademark license agreement with AEON CO., LTD. Under such agreement, AEON CO., LTD. has granted to us respective licenses to use trademarks owned by AEON CO., LTD. without payment of royalties in order for us and the Asset Manager to promote business.

Execute our unique external growth strategy

The Asset Manager will utilize its officers' and employees' unique experiences and networks obtained during their time at Aeon Group with respect to retail property development, operation and acquisition in order to procure property information and retail property and other high-quality asset acquisition opportunities from external sources.
Moreover, the Asset Manager will independently consider acquisition of properties operated outside of Aeon Group, and should such an opportunity arise, seek to improve the property's competitiveness and asset value by bringing it under the operation of Aeon Group.

Internal Growth Strategies

Create stable cash flow over the medium to long term - policy of leasing to Aeon Group

With respect to our acquisition of each of the retail properties operated by Aeon Group, our policy is to enter into a master lease agreement, which leases the entire property, with the applicable Aeon Group company as the tenant (the master lessee).
By entering into such master lease agreements, we attempt to stabilize the cash flow from operations over the medium to long term and minimize risks of vacancy and rent decline.
The master lease agreements shall have the following basic terms and be concluded within a scope pursuant to these terms.

Lease structure

<リースストラクチャー>

Master lease agreements
  Basic terms of master lease agreements
Type of agreement Based on a general building lease agreement.
Lessees Aeon Group companies
Leasing period The standard term is 20 years.
(The standard term of the property located in Malaysia is 10 years.)
Termination The master lease cannot be terminated during the leasing period; however, individual agreements may explicitly permit termination by the master lessee on the date immediately following the expiry of a certain number of years. A master lessee who terminates a lease under this exception must pay an early termination fee in the amount of six month's rent. Moreover, the master lessee is required to provide written notice of early termination to us (the master lessor) at least 12 months prior to the early termination date.
Rent Rent consists of the total of a fixed base amount and an additional variable amount that is updated annually to equal the property and urban planning taxes applicable to the property.
Amendment We (the master lessor) will not consider renegotiating the terms of the agreement during the first period in which the agreement cannot be terminated, except in a case where we (the master lessor) have made an additional investment in connection with large-scale renovations or increases in floor space, upon discussions with the master lessee.
Outside of such period, we will renegotiate the terms of the agreement in good faith if there have been changes in taxes or public dues, economic prospects or other compelling, extenuating circumstances.
Security deposit The standard security deposit is equal to six months' rent, which includes the fixed base amount and the additional variable amount determined at the start of the lease.
Other
  • The master lessee may sublease the property to any third party under responsibility of the master lessee.
  • The master lessee must maintain and manage the property with a good manager's duty of care.
  • If we (the master lessor) intend to transfer any of our leased properties to a third party or if we as the trustee approve the transfer of any trust beneficiary interests in a trust that holds any of our leased properties, the master lessee will have a preferential negotiating right to purchase the property over the third party if it matches or exceeds the price written in the prior notice by us.

AEON Group's active involvement as an operator

We believe that the retail and related properties we target have characteristics that make their value heavily dependent on whether they are operated effectively. Therefore, by entering into a shopping center management agreement and a logistics facilities management agreement with Aeon Group, which has vast experience and knowledge, we intend to establish a structure in the possession and management of our retail and related properties that allows us to actively utilize Aeon Group's information and knowledge.

Seek to enhance property value through effective maintenance work

We will maintain each of our properties with the goal of sustaining and enhancing their value over the medium to long term. We believe that maximizing the cash flow of the master lessee is critical for achieving this goal, benefitting both us and the master lessees. We will therefore closely communicate with each master lessee to maximize sales and profitability of tenants and plan for repairs and capital expenditures. We believe that the shopping center management agreement and the logistics facilities management agreement will enable us to properly operate our retail and related properties for the purpose of our property maintenance strategy.

Seek attractive end tenant referrals from Aeon Group to achieve stable revenue

In order to achieve stable revenue from our portfolio, for retail properties that we hold or consider to acquire, pursuant to pipeline support agreements, we and our Asset Manager can make a request to Aeon Group companies to consider becoming our tenant or provide leasing support. In such case, Aeon Group companies are required to consider, in good faith, opening a store or providing leasing support, or these companies are required to have certain additional group companies consider opening a store or providing leasing support.

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