Astro Japan Property : AJA Half Year Results – Media Release and Presentation

ASX/Media Release

22 February 2017

Please find attached the following documents relating to Astro Japan Property Group's Half Year Results to 31 December 2016:

1. Media Release

2. Investor Presentation

AJA will present its half year results this morning at 11.00am (Sydney time). The results presentation will be hosted by Mr Eric Lucas, Senior Advisor to AJA. Dial-in details for participation in the conference call are located on the AJA website, www.astrojapanproperty.com.

Eric Lucas John Pettigrew

Senior Advisor Chief Financial Officer

Phone: +61 2 8987 3900 (Australia) Phone: +61 2 8987 3902

+81 3 3238 1671 (Japan)

Astro Japan Property Group is a listed property group which invests in the Japan real estate market. It currently holds interests in a portfolio comprising 27 retail, office, residential and hotel properties. Asset management services in Japan are generally undertaken by Spring Investment Co., Ltd.

AJA is a stapled entity comprising Astro Japan Property Trust (ARSN 112 799 854) and Astro Japan Property Group Limited (ABN 25 135 381 663). For further information please visit our website: www.astrojapanproperty.com.

ASX/Media Release

22 February 2017

• Underlying profit after tax is up 6.4% on the prior corresponding period to A$18.3 million primarily as a result of strengthening of the Japanese Yen on average during the half year (¥79.82:A$1) compared to the prior corresponding period (¥88.08:A$1)

• Statutory net loss after tax was A$22.4 million for the half year compared to a profit of A$54.2 million in the prior corresponding period

• Following upward revaluations and despite the sale of smaller assets, the value of the property portfolio increased to ¥84.5 billion (A$1.0 billion), from ¥83.0 billion at 30 June 2016

• Distribution of 21 cents per security for the half year is 16.7% higher than the previous corresponding period

• NTA is down 7% to A$7.68 per security at the close of the half year, primarily as a result of Yen weakness vs A$ at 31 December 2016 compared to 30 June 2016

Astro Japan Property Group (ASX: AJA) today announced an underlying profit after tax of A$18.3 million for the half year ended 31 December 2016, 6.4% higher than the prior corresponding period. This was largely the result of an approximately 9% strengthening of the Japanese Yen against the Australian dollar which more than compensated for a decline in net property income following the sale of several small properties. Underlying profit after tax is a measure which the Directors believe accurately and consistently reflects the underlying business performance of AJA.

Net property income actually declined from ¥2.33 billion in December 2015 to ¥2.19 billion in the current half year following asset sales of ¥5.4 billion (Sun Ace Tokugawa and Yamashitacho in February 2016, Sapporo Co-op in March 2016, FT Nihombashi in May 2016 and Sun No 5 in September 2016), with income contribution from the two hotel acquisitions only commencing from their purchase in late August 2016. On a like for like portfolio basis and excluding currency movements, net property income decreased by 1.2%. With over A$45 million of available cash, further leveraged property acquisitions will enhance future net property income.

Statutory net loss after tax of A$22.4 million was reported for the half year, compared to a statutory profit after tax of A$54.2 million in the prior corresponding period. This substantial decrease in the statutory result is almost solely due to a non-cash foreign exchange rate translation loss of A$42 million compared to an exchange rate translation gain of A$24 million in the prior corresponding period. Following a significant fall in value during the period from ¥76.67:A$1 at 30 June 2016 to ¥84.44:A$1 at 31 December 2016, the Yen appears to have stabilised around ¥85-87:A$1, but such movements have a major impact on AJA's financial results.

Distribution for the six months ended 31 December 2016 of 21 cents per security is to be paid on or about 28 February 2017. The distribution of 21 cents per security is less than underlying profit after tax of 30.1 cents per security, with the balance used for capex maintenance and reserves, loan amortisation and capital management.

AJA's total property portfolio carrying value has increased to ¥84.5 billion as at 31 December 2016 from ¥83.0 billion as at 30 June 2016, due to an increase in fair value of approximately ¥0.4 billion for the half year and the purchase of two hotels for ¥1.5 billion in August 2016, partially offset by the sale of Sun No.5, valued at ¥467 million in September 2016. In Australian dollar terms, the value of the portfolio decreased by less 8% over the six months, from A$1.08 billion at 30 June 2016 to A$1.00 billion at 31 December 2016.

Portfolio occupancy by area continues to remain high at 98.7% as at 31 December 2016 compared to 99.1% as at 30 June 2016.

Mr Eric Lucas, Senior Advisor to AJA, said "We are pleased that asset values continue to show a positive trend, with six of the nine properties revalued showing increases. Occupancy levels continue to remain strong, with fewer lease cancellations, increased rents for new leases and stable rents on renewal."

As at 31 December 2016, NTA was down 7% to A$7.68 per security compared to A$8.26 per security as at 30 June 2016 primarily as a result of a 10% weakening of the Japanese Yen against the Australian dollar at 31 December 2016 (¥84.44:A$1) compared to 30 June 2016(¥76.67:A$1).

There were no re-financings during the half year with the two hotels purchased last year remaining free of debt at this time. Including proceeds from the sale of Round One Amagasaki announced on 31 January, AJA holds excess cash the equivalent of approximately A$45 million at ¥85:A$1 (almost all is held in Yen), equal to approximately 10% of AJA's current NTA. This amount is after setting aside funding for the half year distribution.

Mr Eric Lucas, Senior Advisor to AJA, said "Our focus is now on deploying available cash for the acquisition of properties which are younger and have stronger long-term leveraged cash flows than those which have been sold over recent periods".

Whilst the underlying operating performance of AJA's portfolio continues to be strong and AJA securities have far outperformed the A-REIT index on a total return basis over the short, medium and long term, AJA securities continue to trade at a price below NTA. The Board and Senior Advisor are well aware of the goal to narrow the gap between the market price of AJA securities and NTA, and anticipate that continued leveraged investment of currently available cash will generate increased earnings and distributable cash which should contribute to that goal.

Guidance for FY2017 underlying profit after tax remains unchanged at between 56 and 58 cents per security (A$34 million and A$35 million), assuming an average foreign exchange rate of ¥85:A$1 for the second half, no material performance fee payable to the Japan Asset Manager and no property acquisitions or disposals.

With distribution for HY2017 at 21 cents per security and guidance for H2 FY2017 at 21 cents per security (subject to the assumptions above), full year distribution is expected to be 42 cents per security, an increase of 16.7% on FY2016.

Eric Lucas John Pettigrew

Senior Advisor Chief Financial Officer

Phone: +81 3 3238 1671 (Japan) Phone: +61 2 8987 3902

Astro Japan Property Group is a listed property group which invests in the Japan real estate market. It currently holds interests in a portfolio comprising 27 retail, office, residential and hotel properties. Asset management services in Japan are generally undertaken by Spring Investment Co., Ltd.

AJA is a stapled entity comprising Astro Japan Property Trust (ARSN 112 799 854) and Astro Japan Property Group Limited (ABN 25 135 381 663). For further information please visit our website: www.astrojapanproperty.com.