February 26, 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 Asset (Silent Partnership Equity Interest)
Star Asia Investment Management Co., Ltd. (the “Asset Manager”), to which Star Asia Investment Corporation(“SAR”) entrusts the management of its assets, announces today its decision on the following acquisition of anasset (Silent partnership equity interest) (the “Acquisition”).
1. Overview of acquisition
Silent partnership equity interest that has beneficiary right of trust
placing real estate in trust as asset under management(2) Name of asset to be acquired: Silent partnership equity interest in Godo Kaisya SAPR7OHA Building(3) Real estate in trust:(Hereinafter, referred to as “the Property.”)
100 million yen (18.9% of the total amount of equity investment(4) Equity investment amount::in silent partnership (Silent partnership equity interest)) (Note 1)(5) Planned agreement conclusion date: : February 26, 2019(6) Planned acquisition date:: February 28, 2019(7) Acquisition funds:: Cash on hand
(Note 1) The amount is rounded to the first decimal place. Note that “total amount of equity investment in silent
partnership” refers to the total of silent partnership equity interest. For details, please refer to “3. Outline of
to-be-acquired asset (1) Overview of the silent partnership, the target of equity investment.”(1)

Type of asset to be acquired:

2. Reason for acquisition
SAR has been continually executing active management strategies that are unconventional such as its four asset
replacements in pursuit of maximizing unitholders’ value. The Acquisition was determined according to this aim
with the following points being the main factors.
(1) Obtaining stable revenues- Regarding the Acquisition, the asset under management, which is real estate in trust as a beneficiary rightof the silent partnership equity interest, is an office building property (please see features indicatedbelow) for which stable revenue is expected, and SAR has deemed the properties will be able to realize
stable revenue.
(2) Effective use of cash on hand
- The Acquisition will be made through the cash on hand of SAR, and SAR has deemed that a boost in
distributable profits can be expected.
(3) Securing opportunities for future external growth in collaboration with the sponsor group- Together with the Acquisition, SAR plans to receive a pledge for the granting of preferential negotiationrights (see “3. Outline of to-be-acquired asset (1) Overview of the silent partnership, the target of equity
1investment” below) from GK SAPR7 the silent partnership operator, and SAR has deemed that theAcquisition will contribute to securing opportunities for future growth.
- The Acquisition was realized in collaboration with the sponsor group, and the sponsor group has alsodecided to invest in the silent partnership equity interest. As such, SAR considers it is an investment
utilizing sponsor support.
In determining the Acquisition, SAR assessed the following points for the Property, the asset under management
in relation to the silent partnership equity interest.
<OHA Building>
OHA Building is an office building located an approximate 9-minute walk from Tachikawa Station on the JR
Chuo Line near Showa Kinen Park in a green and excellent environment.
Tachikawa City where the Property is situated is a core city in Tokyo’s Santama area. Furthermore, thedevelopment of a new district (“(tentative name) Tachihi Midori District Project”; name of the district:“(tentative name) GREEN SPRINGS”) is underway to the north of Tachikawa Station, the station nearest theproperty, in an extensive lot of approximately 39,000 m2, and is scheduled to be launched in the spring of
2020. This is a large-scale complex development project comprising a hotel, retail facilities, offices, etc. and is
expected to lead to an increase in the appeal of the area around Tachikawa Station. Furthermore, Tachikawa
is positioned as one of the core cities in the Basic Plan for Base Development in Tama, which is expected tolead to further development. The area is therefore deemed to be competitive.
The Property is an office building with a certain presence, being enveloped with a curtain wall which gives
the exterior a heavy feel. The standard floor is spacious with approximately 170 tsubos of floor space, while
the ceiling height is 2,700 mm. The building is equipped with facilities such as OA floors, individual air
conditioning and mechanical security, and thus is deemed to appeal to potential tenants.
3. Outline of to-be-acquired asset(1) Overview of the silent partnership, the target of equity investment
Operator name
Godo Kaisya SAPR7
Effective period ofsilent partnership Till February 28, 2019agreement
Total amount ofequity investment
530 million yen
in silent
partnership, etc.
Overview of silent
The following is an overview of silent partnershippartnership
Godo Kaisya SAPR7
Non-recourse loan
1,322 million yen
Silent partnership equity interest
Sponsor group
SAR
430 million yen
100 million yen
Star Asia Finance, LLC the sponsor group, will acquire 430 million yen out of
the silent partnership equity interest in collaboration with SAR as part ofsponsor support (joint investment).
Real estate trust
beneficiary right,
etc.
1,665 million yen

Calculation period:
The six-month periods every year from December 1 to the last day of May,
from June 1 to the last day of Nobember, in the following year. However,the first calculation period shall be from and include February 27, 2019 to(and including) the last day of February 2019. The second calculation period2shall be from and include March 1, 2019 to (and including) the last day of
May 2019.
Distribution of earnings (losses):In the event that earnings are recorded in the respective calculation period,
the operator shall distribute the entire amount of said earnings to the silent
partnership members and the operator in the following order:①

If there are losses remaining that have been distributed to theoperator prior to the calculation period, the earnings shall be
distributed to the operator until said losses are eliminated.

②

If there are losses remaining that have been distributed to the silent
partnership members prior to the calculation period, earnings
remaining after the distribution in ① above shall be distributed tothe silent partnership members according to investment ratio until
said losses are eliminated.

③

The earnings remaining after distribution of ② above shall be
distributed to the silent partnership members according toinvestment ratio.

In the event that lesses are recorded in the respective calculation period,
the operator shall distribute the entire amount of said lesses to the silent
partnership members and the operator in the following order:① The earnings will be distributed to silent partnership members according
to the investment ratio. Moreover, the amount of losses to be
distributed shall be deducted first from the amount of reserve in cash
distribution at that time (the difference when the cumulative amountof profits distributed to silent partnership members exceeds the
cumulative amount of cash distributed to silent partnership members)
followed by the balance of the amount invested in silent partnership.
However, the balance of the amount invested in silent partnership after
the said deduction shall not fall below 1 yen (losses exceeding suchamount are hereinafter referred to as “excess losses”).
② Excess losses will be distributed to the operator.
Overview ofpreferential
negotiation rights

Period:From February 28, 2019 to August 31, 2020 (the “Preferential Negotiation
Period”)
Outline of preferential negotiation rights:
SAR plan to receive a pledge for the granting of preferential negotiationrights in which it is granted the right for exclusive preferential negotiations
over third parties with regards to the transaction of the property with theoperator during the preferential negotiation period.
Furthermore, should SAR request the acquisition of the property, thedecision shall be made through negotiations based on the preferential
negotiation prices below. Moreover, the operator shall not conduct any
sales activities whatsoever including the provision of information regarding
the property to third parties other than the Asset Manager and SAR during
the above period.
Preferential negotiation price:
1,750 million yen
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(consumption tax, local consumption tax not included)(Note)

Other:① A decision on acquisition of the property shall be made afternecessary due diligence, including appraisal of the property value, as
well as due procedures implemented by the Asset Manager② SAR’s plan to acquire preferential negotiation rights regarding theproperty does obligate SAR to acquire the property; therefore, SAR may
decide not to acquire the property. Please note that SAR does not pay
any consideration to the operator in connection with the acquisition ofpreferential negotiation rights.
③ The operator is not obligated to sell the property to SAR; therefore, it
is possible that it may decide not to sell the property to SAR.
Composition costs, reserve money and such are included in real estate trust beneficiaryright, etc.

(2) Overview of operator of silent partnership in which equity investment is to be madeName
Godo Kaisya SAPR7
Location
5-1-4 Toranomon, Minato-ku, Tokyo
Representative
Representative partner: Ippanshadanhoujin SAPR Holding7
Operational executor: Takaaki Fukunaga
Main lines of
1. Acquisition, ownership, and disposition of beneficiary interest in trust
businessof real estate
2. Acquisition, ownership and disposition of loan claims
3. Acquisition, ownership and disposition of corporate bonds, silent
partnership interest and other securities
4. Sales, leasing, management, acquisition, ownership, disposition anduse of real estate
5. All business incidental to the above
Capital300,000 yen
Established
October 5, 2018
Net asset
The information is undisclosed as consent to disclosure has not beenobtained from the operator.
Total asset
The information is undisclosed as consent to disclosure has not beenobtained from the operator.
Silent partnership
Undisclosed as consent has not been obtained from other silent
equity investor
partnership equity investors
Relationship with SAR or the Asset Manager
CapitalThere is no capital relationship to report
relationship
Personnel
There is no personnel relationship to report
relationship
Business
There is no business relationship to report.
relationship
Related party
The operator does not fall under the category of related party of either SAR
or the Asset Manager. Moreover, the operator does not fall under the
category of interested person, etc. as provided in the Act on Investment
Trusts and Investment Corporations. (Act No. 198 of 1951, as amended)(“the Investment Trust Law” hereinafter.)

4. Transaction with interested person, etc.
The Acquisition is not a transaction with an interested person, etc. as provided in the Investment Trust Law, nordoes the operator fall under the category of interested party prescribed in the “Rules on Transactions with4

Interested Parties” set forth by the Asset Manager voluntarily to prevent conflict of interests regarding its
management of SAR’s assets. However, since Star Asia Finance, LLC the sponsor group, shall execute an equity
investment in silent partnership equity interest in the same line as SAR, deliberation and resolution inaccordance with the voluntary rules have been performed conforming to a transaction with an interested party.
5. Settlement method
SAR will pay the equity investment amount of the silent partnership to the operator in lump sum using cash on
hand.
6. Schedule for the transaction
February 26, 2019:
February 26, 2019:
February 27, 2019:

Decision on acquisition
Conclusion of silent partnership agreement (scheduled)
Equity investment in silent partnership (scheduled)

7. Future outlook
Since the impact of the Acquisition on the forecast for operating results for the fiscal period ending July 2019
(February 1, 2019 to July 31, 2019) announced in “Financial Report for Fiscal Period Ended July 31, 2018 (REIT)”
dated September 13, 2018 is minimal, there are no changes to the forecast.
8. Content of the Property
Type of specified asset
Property nameAcquisition date
Trustee
Trust expiration date
Location (indication of residential
address)
Location
Type of ownership
Site areaLand
Use district
Building coverage
ratio/Floor area ratio
Type of ownership
Total floor area
Use
Building
Construction
completion
Structure and floors
Property management company
Master lease company
Status of master lease
Appraisal firm
Appraisal value
PML
Security
Status of leasing
Total leasable area
Total leased area
Change in occupancy

Beneficiary interest in trust
OHA Building
February 28, 2019
Mizuho Trust & Banking Co., Ltd.
The end of February, 2029
1-22-17 Akebono-cho, Tachikawa-shi, Tokyo
10-2, Akebono-cho, Tachikawa-shi, Tokyo
Proprietary ownership
964.80 m2
Commercial district
80%/500%
Proprietary ownership
4,659.20 m2
Office / Retail / Parking
May 30, 1990
Steel-framed reinforced concrete structure / Steel-framed
structure; 1 floor below ground / 6 floors above ground
Japan Property Solutions Co., Ltd. (scheduled)

Godo Kaisya SAPR7
Pass-throughDaiwa Real Estate Appraisal Co., Ltd.,
1,900,000,000 yen
12.2%
A pledge with the lender to the operator of non-recourse loan as thefirst pledgee has been established for the trust beneficiary right.
3,346.11 m2
3,346.11 m2
October November
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DecemberJanuary

Februaryrate
Total number oftenants
Monthly rent(including common
area maintenance fee)
Security andguarantee deposits
Special notation2018
100.0%

2018
100.0%

3
10,304 thousand yen

61,824,600 yen
Not applicable

6

2018
100.0%

2019
100.0%

2019
100.0%

Please refer to Table (1) – Table (2) above for the respective overview of real estate that are the real estate in trustof the beneficiary interest in trust. For the terms used in the tables, please refer to below.
・ "Location" column: The postal address. If postal address is not available, registered address of theproperty (if there are two or more, one is selected) is shown.
"Land" column:(i)“Type of ownership" column: The type of right(s) held by respective trustee of thereal estate in trust.
(ii)"Site area" column: The land area as recorded in registry, unless otherwise noted.
For this reason, it may not be equal to the actual figure.
(iii)"Use district" column: The type of use in accordance with Item 1, Paragraph 1,
Article 8 of the Urban Planning Act (Act No. 100 of 1968; as amended) (“Urban
Planning Act”).
(iv)"Building coverage ratio/Floor area ratio" column: The pertinent figure in eachcolumn in accordance with the relevant laws and regulations (the BuildingStandards Act, the Urban Planning Act, etc.).
"Building" column:(i)"Type of ownership" column: The type of right(s) held by respective trustees of thereal estate in trust.
(ii)"Total floor area" column: The sum total of floor areas as recorded in registry,
unless otherwise noted. For this reason, it possibly might not be equal to the actual
figure.
(iii)"Use" column: The registered use or, if multiple uses are registered therepresentative use from what are recorded in registry, it is likely not equal to theactual use.
(iv)
"Construction completion" column: Date of completion of the representativebuilding when newly built as recorded in registry.
(v)"Structure and floors" column: The structure of the representative building, etc. as
recorded in registry. It may not be equal to the actual structure.
・
・
・

・
・
・

"Property management company" column: The name of the property management company (“PMCompany”), to which property management operation is (planned to be) entrusted as of today.
"Master lease company" column: The name of the master lease company, to which master lease
operation is (planned to be) entrusted, as of today.
“Status of master lease” column: The main type of master lease agreement concluded or scheduled tobe concluded as of today, where “Pass-through” is a master lease agreement in which the master lease
company shall pay the same amount of rent as the rent payable by end tenants to the master lease
company and “Rent guaranteed” is a master lease agreement in which the master lease company shall
pay a fixed amount of rent.
“Appraisal firm” column: The firm to which preparation of an appraisal report with November 1, 2018as the effective date of appraisal was requested as acquisition by SAR.
“Appraisal value” column: The appraisal value stated in the appraisal report.
“PML” column: The PML (Probable Maximum Loss) calculated in the evaluation of seismic risk analysis
conducted by Deloitte Tohmatsu Property Risk Solution Co., Ltd., which was entrusted by SAPR7 as partof due diligence on acquisition of trust beneficiary right. Furthermore, “Probable Maximum Loss” means
the probable maximum loss that may result from an earthquake and, herein, refers to the extent ofdamage that may be suffered due to an earthquake of the assumed maximum scale (earthquake with aprobability of occurring once in 475 years = earthquake with a probability of occurrence in 50 years ofmore than 10%) in the scheduled use period (50 years = useful life of a general building), expressed as
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・
・

・

・

・

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.
“Security” column: Whether collateral or no collateral is scheduled to be established after acquisition of
the real estate trust beneficiary right by SAPR7.
“Status of leasing” column: Based on the figures and information provided by the previous owner or thereal estate in trust, etc. regarding the content, etc. of the lease agreement, etc. that is valid as ofFebruary 28, 2019, unless otherwise stated.
"Total leasable area" column: The sum total of leasable floor areas of buildings of the real estate in trust(when common space is also leased, the area of that space is included in the total). The figure does notinclude the area of the land lots leasable for parking and other purposes. Leasable area is counted notfrom registry data but from area data as described in lease agreements or from area data as calculated
by using the architectural drawings of the buildings, so it possibly might not be equal to the total floorarea as recorded in registry. Please note that the source data for the column represent what were
provided by the current owner(s) of the real estate in trust as of February 28, 2019 (scheduled).
"Total leased area" column: The sum total of the floor areas to be leased as described in lease agreement
for each of the real estate in trust as of February 28, 2019 (scheduled) out of the leasable area. The
figure does not include the area of the land lots to be leased for parking and other purposes. Please
note that the source data for the column represent what were provided by the current owner(s) of thereal estate in trust as of February 28, 2019 (scheduled).
"Change in occupancy rate" column: The percentage of total leased floor area over total leasable floorarea of the real estate in trust as of the end of each month between October 2018 and February 2019,
after rounding to the first decimal place. Please note that the source data for the column represents thatprovided by the current owner(s) of the real estate in trust as of February 28, 2019 (scheduled).

・“Number of leasable units” column: The total number of leasable units in the building of the real estatein trust. With regards to the real estate in trust, the information indicated is based on that provided by
the current owner of the real estate in trust as of February 28, 2019 (scheduled).

・“Number of leased units” column: The number of units from among the number of leasable units which
are actually being leased to tenants based on lease agreements effective as of February 28,
2019 (scheduled). With regards to the real estate in trust, the information indicated is based on thatprovided by the current owner of the real estate in trust as of February 28, 2019 (scheduled).

・"Total number of tenants" column: The total number of tenants as confirmed with the respective leaseagreements of real estate that are real estate in trust as of the end of February 28, 2019 (scheduled).
When a specific tenant uses two or more rooms of a real estate in trust, such tenant is counted only
once for the asset. Moreover, in case a specific tenant signs lease agreements for rooms in two or more
real estate in trust, the tenant shall be counted separately for each real estate in trust. When a passthrough master lease agreement is executed for any of the assets to be acquired, the total number ofactual (end) tenants under the master lease agreement for the asset is shown herein.

・"Monthly rent (including common area maintenance fee)" column: The total of rent amounts as
described in lease agreements with respective tenants effective as of February 28, 2019 (scheduled).
(limited to room rents; excluding the charges for warehouses, sign boards and parking lots; but including
the common service expenses; and free rent cases as of the same date are not considered), after・rounding to the nearest thousand yen.
"Security and guarantee deposits" column: The sum total of refundable deposits as required in
respective lease agreements effective as of February 28, 2019 (scheduled). (only for the tenants who
were actually in the respective rooms at the time) of the real estate in trust. When a master lease8

・

agreement is executed for any of the real estate in trust, the sum total of refundable deposits in themaster lease agreements with respective (end) tenants is calculated to be shown in the column.
“Special notation” column: A description not only on the items considered material in relation to theinvolved rights and assumed uses but also on impact for the appraisal value, profitability, disposability
and other items considered material in relation to the real estate in trust.
* Star Asia Investment Corporation website: http://starasia-reit.com/en/

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<Reference Material >Location map/photo of exterior of property

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