Securities Code 3468

Seventh Asset Replacement
Acquisition： Urban Park Mitsuike Koen（Residence）／Disposition： Funabashi Nishiura Logistics 1（Logistics）

Supplementary Explanatory MaterialRegarding November 30, 2020 Press Release

November 30, 2020
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: Akiko Kanno, Director and CFO
TEL: +81-3-5425-1340

Seventh Asset Replacement
Acquisition： Urban Park Mitsuike Koen（Residence）／Disposition： Funabashi Nishiura Logistics1（Logistics）

Execution of 7th Asset Replacement➢Acquire a family-type residence in the Tokyo area
which is believed to be a highly stable defensive asset,
as part of enhancement of the portfolio through asset
replacements which SAR has continuouslyimplemented.

➢Disposal of the logistics facility which is expected toincur increased future life cycle costs, and at the sametime, resolve income reduction factors due to thevacation of a tenant in the 11th period.

Asset to be Acquired

Asset to be Transferred＜ Urban Park Mitsuike Koen ＞＜ Funabashi Nishiura Logistics ＞

Planned acquisition
priceAppraised value

3,330 mm (note 1）

Planned acquisition
priceAppraised value

5.5 ％ (note 2）

Appraised cap rate

3,160 mmAppraised cap rate

AgeThe Approach to this Asset Replacement➢

In the recent real estate market, the market for logistics
facilities is relatively a sellers’ market.

➢Even under COVID-19, occupancy rates of family-type
residences in the large metropolitan area have been
maintained at high levels and revenues are stable.

Age28.7 years (note 3）

3,030 mm3,020 mm(note 1）

5.1 ％(note 2）35.2 years(note 3）✓ The current tenant is expected to vacate theproperty at the end of January 2021, andincome is expected to decrease in the period
ending July 2021 also due to new tenantleasing costs.

✓ Use of Preferential Negotiation Rights✓ In 2016, the common-use areas and exclusive
areas have been fully renovated, and theproperty is highly competitive.
✓ The property has maintained a high occupancy
rate even amid COVID-19, and income stability
is expected to remain at a high level, and it isbelieved that it will contribute to enhancementof the portfolio.

✓ Searched for a buyer for the property for which
an increase in life cycle costs (repair costs,capital expenditures) is expected, utilizing thebroad network of Star Asia Investment
Management.

■ For Funabashi Nishiura Logistics I, conducted early leasing activities and disposition activities at the same time.
2020

Implementation Policy for Asset Replacement

Jul

1.Future revenue contribution of the asset to bereplaced (strengthen SAR’s portfolio)

Leasing activities

AugSep

Disposition activities

2021
OctNovDecJan•
Feb

Tenant expected to vacate the property
at the end of January
Sign assignment agreementon November 30.

2.Real estate market conditions by asset type
3.Level of the investment unit price of SAR※Please refer to ”Supplementary Material Concerning Acquisition
and Transfer (Asset Replacement) of Real Estate BeneficiaryInterests in Trust” announced on July 23, 2018

➢ Eliminate income reduction factors for the period ending July 2021.
➢ Consider degree of contribution to income in the mid- to long-term.
➢ Existence of a replacement asset (for acquisition) which has stableincome.

•Conducted leasing activities aiming for
reduction of down time and leasing theproperty at an early stage
At the same time, began searching forpotential buyers that would consider
acquisition, even under the situation
where a successor tenant has notbeen determined.

To Asset Replacement(Note 1) The appraisal value states the appraisal value as of October 31, 2020 (for Urban Park Mitsuike Koen) and as of July 31, 2020 (for Funabashi Nishiura Logistics 1) as stated in the appraisal reports obtained by SAR. (Note 2) (Note 2) Appraisal NOI Yield iscalculated by dividing the Net Operating Income (NOI) stated in each appraisal report by the expected acquisition price with respect to the asset to be acquired, and by the acquired price with respect to asset to be assigned, respectively.
(Note 3) For the years since completion, the number of years lapsed as of November 30, 2020 from construction completion is stated.

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The Portfolio after the 6th / 7th Asset Replacement■Consecutive asset replacements focusing on enhancement of the portfolio.
■Achieve the strategy (disposal of suburban type commercial retail facilities) upheld from before the merger + secure stability of theportfolio.

＜Effect of Consecutive Asset Replacement＞
1. Towards a portfolio which will secure stability of income.

Continue to implement active management to maximize unitholders’ value evenafter the merger.
Acquisition＜ Urban Park Mitsuike Koen ＞＜ Urban Park Tokiwadai Koen＞➢ The ratio of residences within the portfolio to increase byincorporating family-type residences in the Tokyo area which
are believed to have high stability of income.

2. Eliminate short-term income reduction factors, and increase
current net income.
➢ By selling the logistics facility which is an income reduction factor for theperiod ending July 2021, and acquiring the 2 highly profitable residential
properties, net income per investment unit for the same period isexpected to increase by approximately 60 yen (estimate).

Total number of housing units：213＜Occupancy rate status＞
100.0%
99.0%
98.0%

Total number of housing units：157

99.5%•98.1%•97.0%
96.0%＜The Portfolio after the 6th & 7th Asset Replacement＞
Hotel
12.3%

Office
40.8%
Other
27.0%

Logistics
18.2%

Residence
19.5%

TokyoArea
73.0%•95.0%
2020/6 2020/7 2020/8 2020/9 2020/10
UP Tokiwadai
UP常盤台公園
UP三ツ池公園
UP Mitsuike

For both properties, utilized the preferential
negotiation rights held by SAR.
Both properties are family-type residences,
and all housing units are of 66㎡ (2LDK or 3LDK).
Both properties have maintained market
competitiveness through full renovation andrepairs including the exclusive areas in 2016.

➢ Acquire 2 family-type residential properties with stable occupancy rate, in
anticipation of market changes and post COVID-19.
➢ Acquire the 2 properties for an average price of ▲6.1％compared toappraisal values, by utilizing the bridge fund established in November 2018.
Disposition＜Suroy Mall Nagamine＞＜Funabashi Nishiura Logistics 1>

Retail9.2%➢ Asset Size ： 166.7 bn➢ Number of properties ：53➢ Average acquisition price：
3.14 bn➢ Average appraised NOI yield：
4.9 ％※The above stated ratio has been calculated based on the asset size of JPY166.7 billion (purchase price basis) afterexecution of the 7th asset replacement and the sale of 60% quasi-co-ownership interest in Alphabet Seven.

Dispose of suburban-type commercial
retail facility in rural area.

Possibility of cost increase evenin the mid-term.

2Disclaimer
This document has been prepared to provide information, and not for soliciting and inviting investments in or recommending transaction ofcertain products. SAR does not guarantee the accuracy or completeness of the information provided in this document although effort has
been made to provide correct information based on information available to SAR. Moreover, please note that the contents of this document
are subject to change or removal without prior notice. Duplication and reproduction, etc. of the contents contained in this document without
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