Fixed and Variable Percentages of Operating Revenue, Operating Costs, SG&A Expenses, and Percentage of Operating Income

The majority of “income from real estate lease” within ÆON MALL operating revenue comes from “income from fixed rent” and “income from percentage rent,” the latter being determined in accordance with sales achieved by mall tenants. Consequently, when tenant sales increase, so too does the operating revenue for ÆON MALL. In many cases, ÆON MALL sets the minimum sales for each tenant on a monthly or yearly basis; therefore, despite their designation, percentage rents comprise an extra fixed rent component. The result is that ÆON MALL is not immediately impacted by lower tenant sales. Operating costs are costs directly related to mall management, comprised of personnel costs for employees stationed onsite for mall management and operating expenses related to mall facilities. Operating expenses are mainly comprised of facility maintenance expenses, water, lighting and heating expenses, rents paid to owners of mall land and buildings, and depreciation of mall facilities.