Securities Code: 3468

August 21, 2018
Real Estate Investment Trust Securities Issuer
Star Asia Investment Corporation
Representative: Atsushi Kato, Executive Officer(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

Supplementary Material on Press Releases（Acquisition of Properties through Public Offering）Announced as of Today＜Press Releases Announced as of Today＞
・Notice Concerning Issuance of New Investment Units and Secondary Offering of Investment Units
・Notice Concerning Acquisition and Lease Contract with New Tenants, and Transfer of Real Estate Beneficiary Interests in Trust・Notice Concerning Revision to Forecasts for Operating Results for the 6th Fiscal Period Ending January 31, 2019 and Forecasts for Operating Results andDistribution for the 7th Fiscal Period Ending July 31, 2019
・Notice Concerning Debt Financing
・Notice Concerning Partial Amendment to the Management Guidelines of the Asset Manager
・Notice Concerning Execution of Agreements on Preferential Negotiation Rights to secure Acquisition Pipeline for Future Growth・Notice Concerning Determination of the Planned Acquisition Date and Change of the Funds for Acquisition

Realizing Gain on Sales upon Asset Replacement
as Part of Active Management Strategy
Expected to realize and distribute JPY 440mn on average per fiscal period of gainon sales (Note 1) to unitholders from the 2nd fiscal period to the 7th fiscal period
The first asset
replacement

The second asset
replacement

The third asset
replacement (E)The fourth asset
replacement (E)Gain on sale:
JPY 150mn

Gain on sale:
JPY1.51bn

Gain on sale:
JPY820mn

Gain on sale:
JPY170mn<Asset Replacement Policy>

（JPY）
5,000
Adjusted Distribution per Unit (DPU) (Note 5)

4,500

Impact of Transient Factors

1,799

Average DPU
sincebeing Listed (Note 2):

4,000

Forecast

3,500

1,313
834

569

448

JPY3,190

The following three points are comprehensively considered on
conducting Asset Replacement:①Future revenue contribution of assets subject to replacement(Strengthening the portfolio)②Real estate market conditions by asset type③Level of the investment unit price of SAR（JPY）

History of SAR Investment Unit Price and TSE REIT Index (Note 6)

120,000

SAR本投資法人投資口価格(closing investment unit price)

3,000
2,500Portfolio Total
Unrealized Gain (Note 3):

SAR considers implementing asset replacement, in accordance withthe policy, as a part of continuous consideration or implementation on
active management for the maximization of unitholders’ value

Tokyo
Stock Exchange REIT Index
東証REIT指数(closing value)
110,000

2,000

JPY6,687mn

2,664

2,624

2,764

2,848

2,746

2,831

1,500

100,000

1,000500968

90,000-780

1st FP actual(FP2016 Jul.)

2nd FP actual(FP2017 Jan.)

3rd FP actual(FP2017 Jul.)

4th FP actual(FP2018 Jan.)

5th FP forecast(FP2018 Jul.)

6th FP forecast(FP2019 Jan.)

7th FP forecast(FP2019 Jul.)DPU

968yen3,112yen

4,423yen

4,077yen

2,770yen

3,580yen

3,400yen

Accumulated
DPU (Note 4)

968yen4,080yen

8,503yen 12,580yen 15,350yen 18,930yen 22,330yen

Adjusted
DPU (Note 5)

968yen2,664yen

2,624yen-500

80,0002,764yen

2,848yen

2,746yen

0
70,0002,831yen1Expect to Exceed an Asset Size of JPY100bn by Acquiring Assets with Funds throughPublic Offerings
Pursue Further External Growth Supported by the Growing Star Asia GroupThe current Initiatives

Amusement
Media Gakuin
HonkanHigashi Kobe
Center Building

Hotel WBF
Fukuoka Tenjin
Minami

GLANSITAKIHABARABest WesternTokyo Nishikasai
GrandeHotel WBFArt Stay Namba

Hakata-eki Higashi
113 Building

Assets to be Transferred

Assets to be Acquired

33 properties
JPY101.3bn

29 properties
23 properties
18 properties

18 properties

JPY 61.4bn

JPY 61.4bn

Urban Park
Shin-Yokohama(anticipated)

JPY 86.0bn

JPY 75.3bn

Whenlisted
The 第1期末
end of 1st FP
The 第3期末
end of 4th FP The 第5期末
end of 5th FP
After our上場時
本取組み後(Apr.2016年
20, 2016)(Jul.2016年31, 2016)(Jan.
31, 2018)(Jul.2018年
31, 2018)
Initiatives
2018年
1月期
7月期
4月
7月期
Asset size expansion by acquiring assets with funds secured through follow-on public offerings
since Initial Public Offering

When listed(Apr. 20, 2016)
Number of properties
Number of tenants(Note 7)

Total (anticipated) acquisition(Note 8)
price
Average appraisal(Note 9)
NOI yield
Total number ofinvestment units issued

Anticipated results ofexpanding asset size throughthese follow-on offerings
Improved stability through portfolio
diversification

Reduced fixed cost ratio througheconomies of scaleGrowth in market capImproved liquidity in the investment
unit market

Diversifying investor base

Greater likelihood of being included inindices

Supports from the growing Star Asia Group
Secured pipelines for future growth by concluding
right of preferential negotiation agreements for three properties
Acquired preferential
negotiation rights (Note 11)

After our Initiatives

18 properties

33 properties

390643

JPY 61.4bn

JPY 101.3bn(anticipated)

5.2％

5.1％

332,900 units

540,824 units

Aiming for
further growth inthe asset size(Note 10)

Aims to supply
20,000 beds forpurpose-built student
accommodation
HAKUSAN HOUSE Shimotakaido Project

Nishi-Sugamo
Project (Note 12)

Properties developed by Star
Asia Sogo Kaihatsu Co., LtdAmusement
Media Gakuin
ShinkanContinuously
engaging indevelopment
projects

Continues toconduct
investment
activities

2Expected Results from the Asset Size Expansion through Public Offerings
SAR has been steadily growing its asset size since the listing, and pursues further asset size expansion throughcontinuous Active Management Strategy.
As a result of the asset size expansion, liquidity increase in the investment unit market, increase in the likelihoodof being included in indices or etc. are expected.
Asset size (Note 13)（JPY billion）

Expected results from the asset size
expansion through public offerings
Improved stability through portfolio diversification

Reduced fixed cost ratio through economies of scaleGrowth in market capImproved liquidity in the investment unit market

Diversifying investor base

Greater likelihood of being included in indices

1933

XYR

2436

SPA

45

TSR

4047

CREHCM

5057

SKR50

IHR61
Being listedSAR

80

ONE

7081

86
FP
End of 5thSAR

SRR

87

SPR

10198102

MTH

100

After current
SAR
Initiatives

113

150



JPY 100bn(anticipated)

146

153

165

182

188

192

193

198

200

202

207

212

220223225250246261263

270

270

274

300

●

NHI

MRR

MEL

MFL

MRI

HRR

HRI

HFR

GOR

●

LLR

FRC

KDR

IOR

CRR

●

NRT

KRR

●

IOJ

●

●

TRE

●

●

JRH●

●

PIC

●

●

MID

TSE REIT Core

●

HLC

●

JEI

FTSE EPRA

JLF

IIF0(Note 14)3<Notes>
Note 1

Calculated by dividing the sum of the actual gain on sales from the 1st and the 2nd asset replacement and estimated gain on sales from the 3rd and 4th asset replacement by six.

Note 2Calculated by dividing the sum of actual DPUs from the 1st to 4th fiscal periods and forecasted DPUs from the 5th to 7th fiscal periods by seven.

Note 3

Portfolio total unrealized gain is calculated by subtracting two assets to be transferred from, and adding six assets acquired during the 5th fiscal period and six assets to be acquired
through current Initiatives from/to the total unrealized gain of the properties owned as of the end of the 4th fiscal period.
Unrealized gains for six assets acquired during the 5th fiscal period refer to the difference between acquisition price and appraisal value as of November 1, 2017, and for six assets tobe acquired through current Initiatives refer to the difference between anticipated acquisition price and appraisal value as of July 1, 2018. Portfolio total unrealized gain is only a proforma figure calculated based on information available as of August 21, 2018 and subject to change depending on the future appraisal value of the properties. Realization of such gain
is not guaranteed.

Note 4The sum of actual DPUs from the 1st to 4th fiscal periods and forecasted DPUs from the 5th to 7th fiscal periods.

Note 5Adjusted DPU is purely a simulation calculated by excluding the matters considered by SAR as transient factors and are neither a forecast nor prospect relating to SAR’s DPU for agiven fiscal period. Accordingly, there is no guarantee that the Adjusted DPU will ever be realized for any future, and SAR is not obligated to revise any of the Adjusted DPU regardlessof any changes in circumstances that may affect the above simulation.
Transient factors refer to the following:① Gain on sales of real estate properties② Equivalent of fixed property taxes, etc. that are not expensed due to being included in the acquisition cost of real estate, etc.
③ Of the expenses related to funding, arrangement fees for investment unit issuance expenses and borrowings from syndicates of lenders④ Expenditures such as asset management fees and taxes and public charges (non-deductible consumption tax, etc.) which fluctuates as a result of ① through ③⑤ Tax expenses for internal reserves as well as income tax that increase with internal reserves⑥ Reversal of internal reserves, etc.

Note 6Change in the closing value of the TSE REIT Index on the Tokyo Stock Exchange from April 20, 2016 to August 10, 2018 is relativized based on the assumption that closing value(1,887.75) of the TSE REIT Index on April 20, 2016 is the same as the closing investment unit price of SAR of ¥98,300 on the same date.

Note 7

The number of tenants after our Initiatives is based on effective lease contracts of 33 assets (to be) acquired excluding assets (to be) transferred as of the end of May 2018.

Note 8

Total (anticipated) acquisition price after our Initiatives is calculated by subtracting the acquisition price of assets (to be) transferred from the total (anticipated) acquisition price ofassets (to be) acquired.

Note 9Appraisal NOI yield is based on the NOI found in the indication of value by the direct capitalization method in each real estate appraisal report and expressed as a percentage of(anticipated) acquisition price, rounded to the first decimal place.
Regarding “When listed (Apr. 20, 2016)”, the valuation date is as of October 1, 2015 for 11 assets (3 office properties, 3 residential properties, 3 logistics properties and 2 hotelproperties) held before being listed and as of November 1, 2015 for 7 assets (5 office properties and 2 residential properties) acquired when listed (April 2016).
Regarding “After our Initiatives”, the valuation date is as of January 31, 2018 except that six properties acquired during the 5th fiscal period are as of November 1, 2017 and assets tobe acquired are as of July 1, 2018.

Note 10

Using the estimated total number of investment units after the offering assuming investment units for the third-party allotment (3,343 units) are fully issued.

Note 11

As of the date of this document, the above properties are not included in SAR’s portfolio. SAR has not decided to acquire them, and there is no guarantee that they will be included inSAR’s portfolio at any time in the future.

Note 12

Nishi-Sugamo Project is only the portion indicated by red line. Further, the image for the Nishi-Sugamo Project depicts how the building will appear upon completion based on design
drawings – the actual completed building may differ in appearance.

Note 13

Listed J-REITs with the asset size (based on acquisition price) less than JPY 300bn as of May 31, 2018, rounded down to the nearest decimal place.
Status of inclusion in each index is as of April 20, 2018.

Note 14

Prepared by the Asset Manager based on various disclosures.

4■Disclaimer
This document has been prepared to provide information, and not for soliciting and inviting investments in orrecommending transaction of certain products. SAR does not guarantee the accuracy or completeness of theinformation 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 prior consent is prohibited.
This document includes graphs, data, etc. publicly disclosed by third-parties.
Furthermore, the document also includes analysis, judgment and other opinions by Star Asia Investment
Management, Co., Ltd. Concerning such information. This document discusses future expectations, identifies
strategies, contains projections of our results operations or financial condition, or states other forward-looking
information based on certain assumptions, estimates and projections, known and unknown risks, uncertainties
and other factors could cause our actual results, performance or achievements to differ materially from thosecontained or implies in any forward-looking statement. We cannot give any assurances that the expectations
expressed in these forward-looking statements will turn out to be correct.

5