April 26, 2023
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:
Akiko Kanno
Director and CFO
TEL: +81-3-5425-1340

Notice Concerning Signing of Construction Contract for Building Extension(Funabashi Hi-tech Park Factory I)
Star Asia Investment Management Co., Ltd. (the “Asset Manager”) to which Star Asia Investment Corporation(“SAR”) entrusts the management of its assets announces today that, concerning “Funabashi Hi-tech Park FactoryI” (the Property”) which is an asset managed by SAR, it has been decided to sign a construction contract for thebuilding extension of the Property (the “Building Extension”). Details are stated below.
1. The Purpose and Reason for the Building Extension
As a part of active management aiming to maximize unitholders’ interests and with the aim to improve
profitability of the portfolio, SAR is considering multiple options for each of the assets held such asredevelopment, building extension, and asset replacement etc.
As announced on March 16, 2023 in the press release “Notice Concerning Signing of Building Lease Option
Agreement Presupposing Extension of the Building (Funabashi Hi-tech Park Factory I)”, concerning the Property,
while possibilities for internal growth by utilizing unused floor are were being considered and verified, the arequest was received from the current tenant to extend the building in order to enhance capacity. The AssetManager confirmed the current tenant’s specific request for the building extension and calculated the cost forbuilding extension based on such request, negotiated post-extension lease conditions with the current tenant,and considered the profitability of the property after the building extension, and was able to confirm that theprofitability of the Property would be improved by effectively utilizing unused floor area by implementing thebuilding extension, and signed the “Building Lease Amendment (Option) Agreement” (hereinafter referred toas the “Lease Option Agreement”) which presupposed the Building Extension and acquisition of the extended
portion of the Building Extension.
Now it has been decided to sign the “Construction Contract” for the Building Extension. Details are asfollows.
The key points of the Building Extension are as follows.
【Key Points of the Building Extension】
Revenue improvement measure for a long-term span
Contribute to increase in revenues, as rents will arise for the extended building portion. Also, by(1)
providing for a non-cancellable period for the 10-year ordinary lease will contribute to long-term
stable revenues.

1(2)Effective use of unused floor area under floor area ratio restrictions
Increase NOI and significant increase of appraisal value by effective use of unused floor area.

(3)

Rent revenues will continue to be received during the construction period
During the construction period, the current lease agreement will continue to be in effect, andthere is no downtime for rent revenues.

2. General Description of the Building Extension
Property

LGC-09No.

The Property

The Property(before extension)(after extension)(Note 1)Name of specified asset

Funabashi Hi-tech Park Factory I

Type of specified asset

Trust beneficial interest

Trustee

Mitsubishi UFJ Trust and Banking Corporation

Location

606-11 Suzumi-cho, Funabashi-shi, Chiba and others

Date acquired (expected)

August 1, 2020

December 28, 2023

Form of(expected)

Proprietary ownershipownership
Site area

13,420.44 ㎡

Use district

Industrial district

BuildingLandcoverage ratio

32.72% (60%)

34.88% (60%)

62.16% (200%)

66.03% (200%)(designated)
Floor area
ratio
(designated)
Form of

Proprietary ownershipownership
Total floor
area

Building

Use
Timing ofconstruction
Structure/
no. of stories

8,340.98 ㎡ (Note 2)

8,868.22 ㎡

Factory

Factory
Construction works expected to begin

May 19, 2003

in June 2023 (expected)Steel construction, galvanized steel roof, 2-stories highPM Company

Tokyo Capital Management Co., Ltd.

Master lease company

SAR

Type of master lease

Pass-throughSecurity

UnsecuredSpecial notations

None
Toyo Construction Co. Ltd. First Class

Designer

Architect OfficeContractor(Note 3)

Toyo Construction Co. Ltd.

JFE CONFORM Co. Ltd.
JFE CONFORM Co. Ltd.

(Note 1) Stated based on the plan assumed by the Asset Manager based on the Lease Option Agreement, theconstruction confirmation application drawings etc., and the construction contract, etc, as of today. As oftoday, an appraisal report related to the appraisal value after the Building Extension and the seismic risk
evaluation report regarding earthquake resistance have not been obtained. Such appraisal report and seismic
risk evaluation report regarding earthquake resistance are planned to be obtained after the construction is2

completed.
(Note 2)

Total floor space indicates the leasable floor space in the building lease agreement before the extension.

(Note 3)

The total floor area is the area of the entire building as indicated in the application for confirmation(building) for the building extension.

3. Effect of the Building Extension
Before extension
Total rentable area

After extension

Increase/Decrease
478.67 ㎡(+5.7%)

8,340.98 ㎡

8,819.65 ㎡

62.16 %/ 200 %66.03% /200%(+3.87 %)

1,710 million yen

2,070 million yen

360 (+21.1%)

110 million yen(Note 3)134 million yen(Note 4)24 million yen(+21.8 %)(Note 1)

Floor area usage ratio(Note 2)(Current / Designated)
Appraisal value(Survey value)
Annual NOI(Note 1) 0.1% of the total leasable area of the assets held as of the end of the fiscal period ended January 31, 2023.
(Note 2) Gross floor area (area subject to floor area ratio restrictions) ÷ site area × 100(Note 3) The figures stated are 2 times the actual figures recorded for the fiscal period ended January 31, 2023.
(Note 4) This is the annual estimate figure, based on the rents stated in the Lease Option Agreement, and after
excluding special factors of the year of construction completion.

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4.

General Description of the Survey Report(Unit: JPY)
General Description of the Survey Report

Property Name

Funabashi Hi-tech Park Factory IAppraisal value (survey value)2,070,000,000 yen

Appraisal institution

Japan Real Estate Institute

Date of valuation

March 13, 2023
Items

Value indicated by income approach
Value by Direct Capitalization MethodDetails

General Description etc.

2,070,000,000
2,100,000,000(1) Operating revenues (A－B)

147,897,000

A. Potential total revenue

147,897,000

B. Losses from vacancies etc.
(2) Operating expenses
Maintenance and operation costs

PM Fee13,401,000
204,000

Non-life insurance premiums

Not recorded, as under the lease agreements, utility charges are borne by thelessees.
Recorded by reference to actual recorded costs, and also by taking into
account the expense levels at similar real estate properties and the repair andrenewal costs in the ER.
Recorded by referring to contract conditions as well as levels at similar realestate properties.
Considering that the lease agreement is a long-term lease for a whole building,this is covered in the capitalization rate.
Recorded taking into account tax and dues related documents, replacement
value of the extended building, and tax amounts etc. of similar real estate
properties.
Appraised taking into account insurance premiums and the building insurance
premiums etc. of similar buildings.

561,000
1,800,000
0
10,587,000
249,000

Other expenses(3) Net Operating Income(NOI＝ (1) － (2) )(4) Investment income oftemporary funds

Recorded the master lease fees and bank fees.

0Tenant solicitation costs etc.
Taxes and public dues

Appraised rent and common-area fees etc. which can be stably earned in themid- to long-term based on the option agreement.
Losses from vacancies etc. not booked, as it is determined that vacancy risk is
considered within the capitalization rate.

0Utility charges
Repair costs

Calculated by linking the value by direct capitalization method and the value by
the DCF method.

0None

134,496,000
1,137,000

Investment yield assessed at 1.0%.

(5) Capital expenditures

1,348,000

Appraised taking into account the level of capital expenditures of similar realestate properties, number of years since construction completion, and repair
and renewal costs in the ER.

(6) Net income(NCF＝(3) + (4)－(5) )134,285,000(7) Capitalization Rate
Value by DCF methodAppraised taking into account the competitiveness of the subject real estate
property and transaction yield etc. of similar real estate properties.

6.4%
2,040,000,000

Discount ratio

6.3%

Terminal Cap Rate

6.7%

Value indicated by cost approach-Land ratio
Building ratio

Appraised by comprehensively taking into account the individual features etc.
of the subject real estate property.
Appraised by comprehensively taking into account future trends, risks
pertaining to the subject real estate property, and market risks etc.
----

Matters considered upon adjusting the preliminary calculation valueand upon determining the appraisal value.

As the value indicated by the cost approach is not confirmed, the value indicatedby income approach was adopted.

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5.

The timing and amounts of payment of the total project cost for the Building Extension
The total project cost of the Building Extension is estimated to be approximately 244 million yen (excludingtaxes) (Note 1). Such construction costs are expected to be paid in installments in accordance with the progressof construction works, and will be recorded as assets in the construction-in-progress account for each perioddepending on the timing of payments. The payments are planned to be made by appropriating own funds.
The schedule of payments are as follows:
Amount expected to be paid in fiscal period
ending July 31, 2023 (15th fiscal period)
Amount expected to be paid in fiscal period
ending January 31, 2024 (16th fiscal period)
Total

36 million yen (estimated amount)
208 million yen (estimated amount)
244 million yen (estimatedamount)（Note）Includes design supervision fee, survey costs etc.

6.

General Description of the Contractor(1) Construction Contract (expected)
Name

JFE CONFORM Co. Ltd. (Note)

Location

Keihin Building 7th Floor
1-1 Minami-wataridacho, Kawasaki-ku, Kawasaki-shi, Kanagawa

Representative

CapitalRepresentative Director and President, Akira Kido
1. Contract and consulting work for the design, supervision, and implementation ofcivil engineering and construction works.
2. Contract and consulting work for the design, supervision, and implementation ofextension, renovation, remodeling, repair, refurbishment works of residences,office buildings, factories and other buildings and ancillary facilities. Real estateappraisal work.
3. Design, supervision, and construction of exteriors and landscapes accompanying
the preceding item and related consulting work. Consulting related to personalproperty.
4. Manufacturing, sale, and construction implementation of lighting, air conditioning,plumbing facilities, furniture, interior decorations etc. related to each of thepreceding items.
5. Various demolition works.
6. All businesses incidental to or related to each of the above items.
300 million yen

Established

August 31, 1972

Net asset

Not disclosed, as consent for such disclosure has not been obtained from the company.

Main BusinessTotal asset
Major shareholders and

JFE Civil Engineering & Construction Corp.

100%

shareholding ratio
Relationship with SAR and the Asset Manager
Capital relationship

There is no capital relationship to report.

Personnel relationship

There is no personnel relationship to report.

Business relationship

There is no business relationship to report, other than the signing of the construction
contruct for the Building Extension.

Related party or not

The company is not a related party of SAR or the Asset Manager.

（Note）The contract counterparty is not a related party of SAR or the Asset Manager.

5(2)Construction Management Agreement

Name

SHIN Design Office Co. (Note)

Location

4-5-4 Kamezawa, Sumida-ku, Tokyo Plume Bldg. 5F

Representative

CapitalRepresentative Director Akira Ageba
1. design of buildings
2. Supervision of construction of buildings
3. direction and supervision of building construction
4. investigation or appraisal of buildings
5. All business incidental to each of the preceding items
15million yen

Established

November 8, 1984

Main BusinessNet asset
Total asset

Not disclosed, as consent for disclosure has not been obtained from the company.

Major shareholders andshareholding ratio
Relationship with SAR and the Asset Manager
Capital relationship

There is no capital relationship to report.

Personnel elationship

There is no personnel relationship to report.

Business relationship

There is no business relationship to report, other than the signing of the construction
management agreement for the Building Extension.

Related party or not

The company is not a related party of SAR or the Asset Manager.

（Note）The contract counterparty is not a related party of SAR or the Asset Manager.

7. Details of the Lease Option Agreement (Note1)
Contract counterparty
Current tenant (Number of tenants: 1) (Note 2)
Name of Property
Funabashi Hi-tech Park Factory I
Net rentable area
8,819.65 ㎡
Leased area
8,819.65 ㎡
Rent
Not disclosed (Note 3)
Deposit and Guarantee Money Not disclosed (Note 3)
Signing date of building lease
March 16, 2023
option agreement
Type of lease contract
Ordinary building lease contract
Term of lease contract
10 years from the delivery date, with provision for automatic renewal
every 3 years.
Revision of RentsRevision possible at the time of contract renewal.
Early termination
Not allowed for 10 years.
(Note 1)

The above is described based on the Option Lease Agreement signed on March 16, 2023.

(Note 2)The contract counterparty is not a related party of SAR or the Asset Manager.

(Note 3)

“Rent” and “Deposit and Guarantee Money” are not disclosed, as consent for disclosure has not beenobtained from the current tenant.

8.

Building Extension Time Schedule
April 28, 2023
Around June 2023
Around December 2023
Around January 2024

Sign construction contract
Commence building extension construction works (expected)
Complete building extension construction works (expected)
Begin operations of the extended building (expected)

69.

Future Outlook
The Building Extension is included in the assumptions underlying management status forecast announced in
the “Financial Report for Fiscal Period Ended January 31, 2023” dated March 16, 2023, and thus there are norevisions to the management status forecasts for the fiscal period ending July 31, 2023 (February 1, 2023 toJuly 31, 2023) and for the fiscal period ending January 31, 2024 (August 1, 2023 to January 31, 2024).

10. Other matters necessary for investors to appropriately understand the relevant information and makedecisionsConcerning the risks related to the Building Extension, there are no changes to the contents described in“Part I: Fund Information / Section 1 - Status of the Fund / 3. Investment Risks” of the Securities Reportsubmitted on October 28, 2022.

*Star Asia Investment Corporation website address:

https://starasia-reit.com/en/

This is an English translation of the announcement in Japanese dated April 26, 2023. However, no assurance orwarranties are given for the completeness or accuracy of this English translation.

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<Appendix>
Reference document: Image drawing of building extension of Funabashi Hi-tech Park Factory I(Note) The above image of the exterior of the building is based on the plan under consideration as of today, andmay differ from the actual completed building.

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