January 24, 2019
For Immediate Release
Real Estate Investment Trust Securities Issuer
Star Asia Investment Corporation
Representative: Atsushi Kato, Executive Director(Code: 3468)
Asset Management Company
Star Asia Investment Management Co., Ltd.
Representative: Atsushi Kato
President and CEO
Contact: Toru Sugihara
Director and CFO
TEL: +81-3-5425-1340

Notice Concerning Acquisition of Mezzanine Loan Debt
Star Asia Mezzanine Loan Debt Investment Series 4 (Subordinate Loan Claims)

Star Asia Investment Corporation (“SAR”) announces that Star Asia Investment Management Co., Ltd. (the “AssetManager”), to which SAR entrusts the management of its assets, has decided today to invest in mezzanine loan
debt (the acquisition of mezzanine loan debt is hereinafter referred to as the “Acquisition”). Details are as
follows.
The Acquisition is SAR’s fourth mezzanine loan debt investment and SAR regards the continued diversification ofrevenue-generating opportunities such as these as a differentiation strategy in pursuit of maximization ofunitholder value. Going forward, SAR will continue to discuss measures to create new investment opportunities
corresponding to the state of the real estate market, without being bound by previous examples.
1. Overview of the Acquisition(1) Asset to be acquired(2) Name of asset to be acquired(3) Loan term of the Subordinate
Loan Claims(4) Collateral asset for loan claims(non-recourse loan)(5) Amount of the Subordinate Loan
Claims(6) Planned acquisition price of theSubordinate Loan Claims(7) Planned interest rate (Note 2)(8) LTV of loan claims (non-recourse
loan)(9) Contract date of Subordinate Loan
Claims transfer agreement(10) Planned acquisition date of theSubordinate Loan Claims(11) Interest payment date for the
Subordinate Loan Claims

Subordinate part of nonrecourse loan (the “Subordinate Loan Claims”)
to GK DS Kaigan (the “GK”), whose collateral asset shall be thebeneficiary interest in trust with Premier Kaigan Building as the main
asset in trust (the “Collateral Asset”) (Note 1).
Star Asia Mezzanine Loan Debt Investment Series 4
From January 30, 2019 to January 30, 2025
Collateral Asset: The beneficiary interest in trust with Premier Kaigan
Building as the main asset in trust
300,000,000 yen
300,000,000 yen (excluding acquisition expenses, etc.)
Base rate (Note 3) +5%
Approximately 63.6% (Note 4)
The appraisal value of the Collateral Asset, which is used as thedenominator for calculating LTV, is 5,750 million yen.
January 28, 2019
January 30, 2019
Last day of January, April, July and October (Four times a year)(The first interest payment date is April 26, 2019.)1

(12) Final repayment date(13) Acquisition financing(14) Settlement method(15) Seller(16) Overview of the Subordinate
Loan Claims

January 30, 2025 (Note 5)
Cash on handLump-sum settlement upon acquisition of the Subordinate Loan Claims
Undisclosed (Undisclosed due to the request from the seller (the“Seller”).
Operator: GK
GK

Collateral Asset
Premier Kaigan
Building
Appraisal Value
5,750 million
yen(Senior loan)
3,354.3 million yen
Lender A (*)(Mezzanine Loan)
300 million yen(Subordinate Loan
Claims)
300 million yen

Lender B (*)

SAR(Equity)
Silent partnership,
investment, etc.

(*) Undisclosed due to the request from the Lender.
1. Loan (non-recourse loan) of 3,654.3 million yen in total will be
executed by Lender A and Lender B to the GK on January 30, 2019.
2. SAR plans to acquire the Subordinate Loan Claims from Lender A
on the same day. (The GK plans to acquire the Collateral Assetusing the payment for silent partnership investment, etc. and theborrowing (non-recourse loan) from Lender A and Lender B on thesame day.)
3. The Subordinate Loan Claims are subordinated to senior loans but
are prioritized over “equity (silent partnership investment, etc.)”of the GK in terms of interest payment and repayment of principal.
As to repayment of principal, even when the value of the
Collateral Asset should fall, “equity (silent partnership investment,etc.)” of the GK is the first to incur loss, and after all “equities(silent partnership investment, etc.)” have incurred loss, then theprincipal of the Subordinate Loan Claims incurs loss.
4. Repayment for a portion of senior loans is planned once the GK
receives consumption tax refund.
(17) Relationship between SAR/theAsset Manager and the GK* Based on information as ofJanuary 24, 2019.

Capital relationship
Personnel
relationship

Business relationship

Related party status

2

There is no capital relationship to report
between SAR/the Asset Manager and the GK.
There is no personnel relationship to report
between SAR/the Asset Manager and the GK.
Furthermore, there is no personnel
relationship to report between associatedpersons and associated companies of SAR/theAsset Manager and associated persons andassociated companies of the GK.
There is no business relationship to report
between SAR/the Asset Manager and the GK.
Furthermore, there is no business relationshipto report between associated persons andassociated companies of SAR/the AssetManager and associated persons andassociated companies of the GK.
There is no related party status to report
between SAR/the Asset Manager and the GK.

(Note 1) For an overview of the Collateral Asset, please refer to 2. Reason for the Acquisition <Overview of the
Collateral Asset>.
(Note 2) SAR is scheduled to receive an up-front fee upon the acquisition of the Subordinate Loan Claims
separately from the interest payment.
(Note 3) Base rate is JBA 3-month JPY TIBOR. The Japanese yen TIBOR by JBA can be confirmed on the websiteof the JBA TIBOR Administration (http://www.jbatibor.or.jp/english/rate/). For each interest
calculation period, the rate announced at 11 a.m. (Tokyo time) two business days prior to the last dayof the previous calculation period of the relevant calculation period (the first date is two businessdays prior to the drawdown date) will be applied as the base rate.
(Note 4) The figure indicates the ratio of (a) amount procured from the GK’s loans through a loan claim(non-recourse loan), including the Subordinate Loan Claims (3,654.3 million yen) to (b) the appraisal
value indicated in the appraisal report obtained by the GK regarding the Collateral Asset (5,750
million yen), rounded to one decimal place.
(Note 5) The final repayment date of the Subordinate Loan Claims is January 30, 2025. However, theSubordinate Loan Claims may be repaid earlier due to the sale of the Collateral Asset and otherreasons.
2. Reason for the Acquisition
The Acquisition will not only realize diversification of investment targets, but also likely boost distributableprofits since it will be conducted with cash on hand held by SAR, allowing SAR to receive interest income(planned interest rate: more than 5%) from effective use of own funds. Therefore, SAR has decided on the
Acquisition judging that such will contribute to maximization of unitholder value. The Asset Manager
recognized the following points upon deciding the acquisition of the Subordinate Loan Claims.
① The appraisal value of the Collateral Asset SAR has acquired is 5,750 million yen, and LTV
against the amount of the Subordinate Loan Claims and senior debts (3,654.3 million yen)calculated based on this figure is 63.6%. Therefore, risk of loss while holding the Subordinate
Loan Claims is judged to be low.
② The Collateral Asset is an office building that falls under the category of “middle-sized assets in
the Tokyo area (Note)” defined by SAR and is believed to have strong liquidity. In addition, since
the loan can be fully repaid at 63.6% of the appraisal value as explained in ① above, thecertainty of repayment of the Subordinate Loan Claims through sale of the Collateral Asset or
refinancing is judged to be high.
③ The certainty of interest payment for the Subordinate Loan Claims is assessed to be high since
its rent income is highly stable as shown in the evaluation of the Collateral Asset below.
④ As planned, the interest rate of the Subordinate Loan Claims is “base rate + 5%” (please refer to
1. Overview of the Acquisition above), securement of profits that surpass theafter-amortization yield of real estate portfolio can be expected. The certainty of interest
payment is judged to be high, even if capital expenditures and repair costs arise more than
expected.
(Note) Refers to real estate, etc. with an acquisition price lower than 10 billion yen.

3

Overview of Collateral Asset and Evaluation of Collateral Asset by the Asset Manager are as follows.
<Overview of Collateral Asset>
Asset type
Real estate beneficiary interest in trust
Property name

Premier Kaigan Building

Planned acquisition date

January 30, 2019

Planned buyer

GK DS Kaigan

Location

2-2-6 Kaigan Minato-ku, Tokyo

Use (Note 1)
Structure (Note 2)
Land (Note 3)
Building
Area(Total floor area)(Note 4)Land
Type ofownership
Building(Note 5)Construction completion
Earthquake PML (Note 6)

Office/Residence/Parking lot
Steel-framed reinforced concrete structure, 12F aboveground
1,670.99 m2
8,476.92 m2
Proprietary ownership
Proprietary ownership
January 29, 1993
4.5%

Appraisal value 5,750 million yen
Appraisal NOI
223,390,000 yen
Appraisal obtained (Note 8)
by the GK (Note 7)
Appraisal date November 30, 2018
Appraiser
Total number of end tenants (Note 9)

Land Coordinating Research Inc.
20

Occupancy rate
August 2018 September 2018 October 2018 November 2018 December 2018
98.3％
98.3％
98.3％
100.0％
100.0％
Special notation
Not applicable.
(Note 1) “Use” indicates the use stated in the real estate registry, and may differ from the present state.
(Note 2) ”Structure” indicates the structure stated in the real estate registry of the building.
(Note 3) “Land” is the entire land area of Premier Kaigan Building stated in the real estate registry and may
differ from the present state.
(Note 4) “Building (Total floor area)” is the total floor area of Premier Kaigan Building stated in the realestate registry and may differ from the present state.
(Note 5) “Type of ownership” is the type of right held by the trustee of Premier Kaigan Building.
(Note 6) The PML (probable maximum loss) calculated in the evaluation of seismic risk analysis conductedby City Evolution Co., Ltd., which was entrusted by the GK upon acquisition of the Collateral Assetas part of efforts to grasp the appropriate price of the real estate is indicated. “Probable Maximum
Loss” means the probable maximum loss that may result from an earthquake and, herein, refers to
the extent of damage that may be suffered due to an earthquake of the assumed maximum scale(earthquake with a probability of occurring once in 475 years = earthquake with a probability ofoccurrence in 50 years of more than 10%) in the scheduled use period (50 years = useful life of ageneral building), expressed as the estimated cost of restoring such damage (physical loss
corresponding to a probability of more than 90% in the event of occurrence of such earthquake)as a percentage (%) of the replacement cost.
(Note 7) Items other than the indicated above that are stated in the real estate appraisal report the GK has
obtained for grasping the appropriate price of the real estate at the time of its acquisition of the
Collateral Asset are not disclosed as consent has not been obtained from the planned buyer of the
Collateral Asset.
(Note 8) “Appraisal NOI” indicates the amount of net operating income (NOI) obtained through the direct
capitalization method, stated in the real estate appraisal report.
(Note 9) The total number of end tenants is as of December 31, 20184

<Evaluation of the Collateral Asset by the Asset Manager>
Premier Kaigan Building, the Collateral Asset, is an office building with an apartment constructedunder permission of the comprehensive design system, located approximately a 3-minute walk from
Hinode Station on the Tokyo Waterfront New Transit Waterfront Line (Yurikamome) and approximately
a 12-minute walk from Hamamatsucho Station on the JR Yamanote Line, etc. From Hamamatsucho
Station, excellent access to other commercial/business districts, Haneda Airport, etc. is secured byusing the JR lines and Tokyo Monorail.
The Collateral Asset is highly versatile since the office space is regular-shaped with no pillars and aceiling height of 2,600 mm, allowing for flexible layouts. In addition, it is equipped with raised floors(70 mm) and individual air-conditioning system, and its common areas, etc. were renovated in 2014.
With such features, it has strong appeal for tenants.
The upper floors (10th to 12th floors) of the building are made as an apartment with an open feelingcreated by the superb views of Tokyo Bay and Odaiba. With each unit having ample space of over 100
m2, the Asset Manager believes it has substantial appeal to those who seek affluent life on thewaterfront surrounded by abundant greenery while living in central Tokyo.
3. Seller profile
The Seller of the Subordinate Loan Claims is a domestic financial institution. However, details are undisclosed
as consent for disclosure has not been obtained from the Seller. There is no capital or personnel relationship toreport between SAR/the Asset Manager and the Seller as of today, but SAR has debt financed by the Seller.
In addition, the Seller does not fall under the category of a related party of SAR or the Asset Manager.
4. Transaction with interested person, etc.
The acquisition of the Subordinate Loan Claims is not a transaction with an interested person, etc. under the
Act on Investment Trusts and Investment Corporations (Act No. 198 of 1951）or interested person, etc. definedin the “Rules on Transactions with Interested Parties” set forth by the Asset Manager.
5. Schedule for the Acquisition
Decision date of the Acquisition
January 24, 2019
Contract date of the Subordinate Loan Claims transfer agreement January 28, 2019
Date of drawdown from Lender A and Lender B to the GK
January 30, 2019
Planned acquisition date of the Subordinate Loan Claims
January 30, 2019
(Note) The Acquisition will be conducted on the assumption that the GK acquires the Collateral Asset on
January 30, 2019 using the borrowings from Lender A and Lender B and payment for silent partnershipinvestment, etc.
6. Settlement method
The Acquisition is planned to be settled through lump-sum payment of the acquisition price on the planned
acquisition date.
7. Future outlook
Since the impact of the acquisition of the Subordinate Loan Claims on the forecast for operating results for the
6th fiscal period ending January 31, 2019 (August 1, 2018 to January 31, 2019) and the 7th fiscal period ending
July 31, 2019 (February 1, 2019 to July 31, 2019) announced on September 13, 2018 is minimal, there is nochange to the forecast.

* Star Asia Investment Corporation website address: http://starasia-reit.com/en/

5