Execution of Merger Agreementby and between MIRAI Corporation and
Sakura Sogo REIT Investment Corporation- Supplementary Material for the Press Release
Dated August 5, 2019 MIRAI Corporation
Security Code:3476
AM Company: Mitsui Bussan & IDERA Partners Co., Ltd.
http://3476.jp/en

August 5, 2019

Sakura Sogo REIT Investment Corporation
Security Code:3473
AM Company: Sakura Real Estate Funds Management, Inc.
http://sakurasogoreit.com/en

To Unitholders in MIRAI Corporation and Sakura Sogo REIT Investment Corporation

1

 MIRAI Corporation (hereinafter, “MIRAI”) and Sakura Sogo REIT Investment Corporation (hereinafter,“SAKURA” and collectively referred to as “Investment Corporations”, “We”) have completed due diligence,negotiated in good faith key factors such as strategy after the merger, merger ratio and DPU growth andanticipate that merging the Investment Corporations together will generate various synergies that will
benefit all unitholders (hereinafter, “Merger”). A merger agreement has been executed today based on themutual understanding that this Merger is the best solution to maximize value for all unitholders of MIRAIand SAKURA.
 MIRAI and SAKURA believe that this Merger represents a catalyst leading to improved governance in theentire J-REIT industry and is therefore a positive step for sector overall. This Merger is a tangible
alternative to the unilateral proposal from Star Asia Group which entails uncertainty.
 We believe this Merger is the best solution to maximize the unitholders’ value of MIRAI and SAKURA.
Therefore we would like all unitholders to support the Merger by exercising your voting rights.

Message from Executive Director of MIRAI and SAKURA
Dear Investors of MIRAI and SAKURA

Dear Investors of SAKURA and MIRAI

We would like to express our gratitude to our unitholders for their support.

We would like to express our gratitude to our unitholders for your continuous support since listing
SAKURA.

Since its listing date on the stock exchange in December 2016, MIRAI Corporation, where I serve as
an executive officer, has worked to maximize unitholders' value through aggressive corporate actions,
including the replacement of property, acquisition of new type assets, formulation and implementationof a medium-term management plan, and public offering for the second consecutive year. As a resultof the continuous implementation of these measures, we have recovered our P/NAV ratio of 1.0x forunit price, which had been in a slump immediately after our listing, and are ready to take the next
step.
Through this Merger, we would like to propose to all unitholders of SAKURA that we work together
toward the next "MIRAI".
The Merger of the two investment corporations not only increases the asset size and market
capitalization, but also increases the possibility of entering the “Global Index” and the acquisition of“AA - Rating” at the time of the review in early 2020. We believe that the Merger will improve thevaluation of the unit price. Also, we would like to ask to agree to the Merger, as we propose themerger ratio in which the amount of DPU is increased for unitholders of both investment corporations.
The unitholders of SAKURA are requested to calmly and objectively compare the proposed Merger withother proposals, and the investors of MIRAI are requested to support and approve the Merger, basedon the firm evaluation of the growth after the Merger.
We would like to thank you, the investors of MIRA, for your continued support and approval of the
Merger.
Michio Suganuma
Executive Officer
MIRAI Corporation

SAKURA has implemented various initiatives in these three years to achieve organic growth. We haveworked on not only maintaining high occupancy rate for each of the properties in the portfolio, but also
improving profitability of the entire portfolio through replacing with better properties and uplifting
rents particularly for the office portfolio.
However, like many smaller scale J-REIT ‘s, external growth has been challenging particularly given
the very competitive Japanese real estate market. We have continued to explore the best way toachieve our growth targets to satisfy unitholder expectations, and have now identified an attractive
business opportunity which we believe is the best solution.
The opportunity is the proposed merger with MIRAI, which delivers clear benefits, certainty, andensures consistency with SAKURA’s philosophy since listing; “Concurrent pursuit of growth andstability” for the unitholders of SAKURA through expanded size of AUM, reduction in cost of capital anddiversification of funding source due to strong credit rating. One of the key advantages of this Merger
is that the attractive portfolio characteristics of SAKURA, particularly our strong Tokyo office weighting
will not be diluted as a result of the Merger. While disappointing that Sakura Real Estate Funds
Management will not continue as your asset manager post the Merger we have confidence in, andtrust that Mitsui & Co. and IDERA Partners who will be the manager of MIRAI after the merger will
maximize value for SAKURA unitholders.
We are confident that this merger is also beneficial for the unitholders of MIRAI given that SAKURA’s
stable and profitable properties are sure to contribute to financial performance of the new MIRAI. We
would like you to value and support this proposition given the further growth in performanceprospected thanks to this merger.
Makoto Muranaka
Executive Officer
Sakura Sogo REIT Investment Corporation

2

Key Benefits of Merger
13

Provide MIRAI and SAKURA unitholders a tangible option to maximize unitholder value
 SAKURA unitholders will have a tangible option by MIRAI making a “counter offer” to Star Asia while all MIRAI unitholders post-merger
will enjoy additional growth opportunities
 The Merger is expected to deliver enhanced earnings and distributions per unit for all unitholders

2

Strong support from dual sponsors, Mitsui & Co. and IDERA Capital. Experienced management focused on
maximizing unitholders’ value Post-Merger, Mitsui & Co. and IDERA Partners will be the sole managers of MIRAI. SAKURA Real Estate Funds Management Ltd.
(hereinafter, “SREFM”), and Galileo Group, a sponsor of SAKURA will withdraw from those roles
 Achieve medium and long-term improvement in unitholders’ value based on a strong financial base and governance aligned tomaximize benefits to unitholders

3

A quality, diversified REIT focusing on the strong office sector in the Tokyo area
 A portfolio with stability and growth potential, comprised largely of office buildings in the Tokyo area with stable demand, low vacancy
and attractive short to medium term rental growth potential
 The ratio of offices in Tokyo area is expected to be 47.3% (Note 1) after the Merger
 Enhanced diversification by asset and tenant type4

Note 1:
Note 2:

Enhanced market presence by increasing scale and liquidity
 AUM after the Merger is expected to be 204.0 billion yen (Note 1), enhancing the presence in the REIT market
 Market capitalization after the Merger is anticipated to be 122.2 billion yen (Note 2) which should result in enhanced liquidity, potential
inclusion in Global index and increased demand from institutional investors
 These factors should result in a lower cost of capital and enhanced growth prospects for MIRAI post Merger

Since assets of SAKURA is expected to be acquired at the market value by MIRAI through the Purchase method, AUM (based on the acquisition price) and the ratio, etc. after the Merger is calculated by the sum of acquisition price of assets of MIRAI as of July 31, 2019, acquisition priceof assets of SAKURA as of December 31, 2018 and appraisal value of assets of SAKURA acquired during fiscal period ended June 2019. The same applies on the asset size (acquisition price base), ratios, etc. of the portfolios of the Investment Corporations after the Merger hereinafter.
Simple aggregation of market capitalization of MIRAI and SAKURA as of August 2, 2019. The same applies hereinafterIssues Resolved by the Merger – Greater value to unitholders than the proposal by Star Asia Group
Sakura supports the merger with MIRAI having identified a broad range of alternative proposals. All of Lion Partner(Star Asia)s’ concerns are resolved by the proposed merger and both SAKURA and MIRAI believe that it is the best
way to maximize value for all unitholders. Lion Partners proposal is considered to be far less attractive and only
acting on behalf of Star Asia, therefore is already irrelevant to Sakura unitholders.
Issues raised by Lion Partners (Star Asia)
1

Distributions to unitholders

2

Scale and growth in AUM

3

Cost Operations

Effect of the Merger (merger with MIRAI)1

 11.5% increase from 2,427 yen ,which is forecasted DPU before theMerger (Note 3)2

 The assets of MIRAI have increased by 44.3 billion yen in 2.4 years
since its listing (16/12), pre-merger with SAKURA.

3

1
DPU growth 11.5%

 Growth target against 2,427 yen of SAKURA’s forecast DPU is +100
yen (Note 4)

2

204.0

Pursuit of cost efficiency

 A reduction of ¥43 million (Note 6) in the case of the average borrowing
rate of MIRAI is set at 0.53%
 Aiming for “AA-” rate at the next review with Mitsui Group credit.
 MIRAI-standardized management with high efficient expenses for thelease business and general administration

DPU increase / stabilization

 Aiming for DPU increase by efficient management with size expansion,
control cost reduction etc.

AUM expansion (billion yen)

 AUM after the Merger is expected to be more than 200 billion yen andmarket presence. Possibility of inclusion in global indexes in terms ofmarket capitalization

Governance

Proposal of Star Asia Group (merger with SAR (Note 1))

Growth of DPU for SAKURA unitholders

 DPU of Post-Merger (Note 2) will be 1,600 yen (fiscal period ending April2020) / 1,640 yen (fiscal period ending October 2020) ）4

AUM expansion (billion yen)

 Expansion of AUM and progress of portfolio diversification, leading tostabilization of profit and DPU

vs The assets of SAR have increased by 40.8 billion yen in 2.8 years
since the listing (16/4)

3

DPU growth 4.1%

163.2 (Note 5)

Reduction of operation cost

 Finance cost (average interest rate) of SAR: 0.63% (Note 4)

Savings in cost of capital andgeneral and administrative
expenses (Note 6)

 Reduction of Rate of AM fee (▲25%)

Cost reduction mainly fromreducing asset management fee

 Expect lower equity costs

4

Governance structure for maximization of unitholders interest

 MIP will be AM of MIRAI (SREFM will leave the management)
 MIP have continued the unitholder-centered operation,
including clear disclosure of AM fees.
Note 1:
Note 2:
Note 3:Note 4:Note 5:Note 6:

Strict governanceof Mitsui & Co. Group4

Maximization of unitholders interest

 Based on the level of unit price, pursue maximization of unitholders
interest by consider and exercise zero-based, flexible and widevariety effort.

Only a conceptual claim

SAR is abbreviation of Star Asia Real Estate Investment Corporation. Each estimated figures for proposal of Star Asia Group are calculated by the Investment Corporations based on the SAR’s disclosure materials.
For details of the forecast operating results and distributions after the Merger in this document, please refer to the "Notice Concerning the Forecast of Operating Results and Distributions Subsequent to the Merger of MIRAI Corporation and SAKURA Sogo REIT Investment
Corporation for the Fiscal Periods Ending April 30, 2020 and October 31, 2020" announced on August 5, 2019. The same applies hereinafter. Also refer to slide 13,
Calculated based on the forecast DPU of after the Merger of ¥1,600 (fiscal period ending April 2020) and ¥1,640 (fiscal period ending October 2020) divided by 2 × 1.67 (merger ratio) and the estimated DPU of ¥2,427 for SAKURA for fiscal period ending December 2019.
Star Asia Investment Corporation “Supplementary Explanatory Material Regarding Today’s Timely Disclosure (1) ” released on May 10, 2019.
Calculated by the sum of the total acquisition value of SAR's assets as of the end of January 2019, the total appraisal value of SAKURA's assets as of the end of December 2018 and the appraisal value of SAKURA's asset acquired during the fiscal period ending June 2019. SAR
does not include other assets under management (Mezzanine loan fixed income investments and equity investments in anonymous associations) and the acquisition price of the Amusement Media Gakuin Shinkan (the acquisition price of ¥1,020 million), which was completed on
February 1, 2019.
SAKURA's interest-bearing debt outstanding as of the end of July 2019 × (Average borrowing rate of SAKURA - the average borrowing rate of MIRAI) ÷ 2.

4

Indicative Timetable for Merger Implementation

5

On August 30, 2019, two general meetings of unitholders are scheduled to be held relating to SAKURA. A meeting convened
by SAKURA will consider the merger proposal with MIRAI. A separate meeting convened by a minority unitholder (Lion
Partners) will consider a change in executive officer and Asset Manager. MIRAI will hold its own general meeting to consider
the merger on September 10, 2019.
Aug 5, 2019

Execute Definitive Merger Agreement of MIRAI and SAKURA

1

General Meeting of SAKURA Unitholders (convened by Lion Partners)
Resolutions by SAKURA②

Appoint Mr. Hagino as executive officer (from Mitsui &Co., AssetManagement Holdings Ltd.)④

Conclude new asset management agreement with Mitsui Bussan &IDERA Partners Co., Ltd.

Resolutions by Lion Partners① Exonerate Mr. Muranaka (SREFM)② Appoint Mr. Sugihara (Representative Director of Lion Partners / ex Star
Asia AM CFO)
③ Terminate AM agreement with SREFM④ Conclude AM agreement with Star Asia Investment

・ Approval requires a majority vote in favor by unitholders at the meeting: Deemed approval is not applicable to resolution ② and ④

Aug 30, 2019

・ Resolution ① requires the attendance of unitholders who hold a majority of the voting rights

2 General Meeting of SAKURA Unitholders (convened by SAKURA)
Resolutions by SAKURA① Approve merger agreement with MIRAI② Cancellation of the AM agreement with SAKURA due to the Merger

Resolutions by Lion Partners① Amend part of the Article of Incorporation (AOI) of SAKURA (to prevent
SAKURA unitholders voting on the Merger proposal with MIRAI)・ Approval of the merger agreement and amendment of AOI requires the attendance of unitholders who hold a majority of the voting rights andapproval by at least 2/3 in favor by unitholders at the meeting: This may be subject to the deemed approval・ Approval of the cancellation of the AM agreement requires a majority vote in favor by unitholders at the meeting

Sep. 10, 2019

General Meeting of MIRAI Unitholders (about the Merger with SAKURA）
Subject to approval of MIRAI and SAKURA resolutions relating to the Merger
Anticipated Effective Date of Merger - Nov 1, 2019

Note: The above timeline and described propositions at the general meetings of unitholders scheduled on August 30, 2019 are tentative as of the date of this presentation and subject to change. For further details of the general meetings of unitholders, please refer to the convocation notice andreference materials issued for the respective general meetings of unitholders.

Merger Scheme

6Merger Ratio

Merger Scheme (Investment Corporation)

MergermethodAbsorption-type merger with MIRAI
being the surviving entity and SAKURA
being the absorbed entity after the
MergerVoting/Approval

The merger is subject to approval byunitholders of each investment
corporation (Note)

MIRAI : SAKURA = 1 : 1.67

Overview of the Merger
After the Merger

Sponsor(Wholly-owned subsidiaryof Mitsui & Co.)

(Wholly-owned subsidiaryof Mitsui & Co.)

Sponsors’ support

Sponsors’ support

Sponsors’ support

Asset management agreement

Asset management agreement

Asset management agreement

Asset
manager

Note:

Absorptiontype
mergerInvestment
corporation

Approval based an extraordinary resolution and requires the attendance of unitholders holding a majority of the outstanding investment units at the general meeting of unitholders and a two thirds (2/3) or more affirmative votes of the voting rights held by such unitholders in attendance.
In the case of there are no counter proposals, the deemed approval applies.

Historical Unit Price

7

The unit prices of both MIRAI and SAKURA have performed well since the announcement of the proposed Merger. SAKURA’s
unit price has only traded above 95,000 yen since possible merger with MIRAI was announced
(Yen)

(Yen)

July 19, 2019
Execution of MOU (Note 2) regarding the Merger with SAKURAMIRAI: 57,100 yen

60,00060,00057,50057,500

May 10, 2019
Proposal to replace SAKURA’s
executive director and asset
manager by Lion Partners GK
SAKURA: 86,500 yen

June 21, 2019
SAKURA: 92,100 yen

May 17, 2019
Response to noticereceived from Star Asia
SAKURA: 92,500 yen

55,00055,000101,325

July 4, 2019MIRAI: 54,100 yen

Implied unit price that
SAKURA unitholders receive
56,800 yen（Note 3）×1.67=94,856 yen

105,500

97,15052,50052,50092,97550,00050,00088,80047,50047,500

May 10, 2019MIRAI: 48,650 yen
45,00045,0002019/5/10
2019/5/10

2019/5/17
2019/5/16

June 21, 2019
May 17, 2019
Announcement of disposition of MIUMIU Kobe
MIRAI: 49,550 yen MIRAI: 49,000 yen
2019/5/24
2019/5/22

2019/5/31
2019/6/7
2019/6/14
2019/6/21
2019/5/28
2019/6/3
2019/6/9
2019/6/15
2019/6/21

投資法人みらい（左軸）
MIRAI
(LHS)
Note 1:
Note 2:
Note 3:

July 4, 2019
Announcement of possibility offriendly merger with MIRAISAKURA: 95,300 yen

84,62580,4502019/6/28
2019/6/27

さくら総合リート（右軸）
SAKURA(RHS)

As of August 2, 2019. Relative performance of TSE REIT Index is calculated based on the closing price of MIRAI as of May 10, 2019.
Memorandum of Understanding
The closing price of MIRAI as of August 2, 2019.

July 19, 2019
Execution of MOU (Note 2)
regarding the Merger with MIRAISAKURA: 95,200 yen

2019/7/5
2019/7/3

2019/7/12
2019/7/19
2019/7/26
2019/8/2
2019/7/9
2019/7/15
2019/7/21
2019/7/27
2019/8/2

東証REIT指数
TSE REIT Index

Implied Value from the Merger

8

The implied value (the unit price of MIRAI x 1.67) SAKURA unitholders will receive is 94,856 yen (Note 1), which represents apremium over 1 month/3 months/6 months average unit price of SAKURA (Note 2), the day before July 4 of +3.8% / +5.6% /+9.0%, respectively. In addition, SAKURA unitholders will benefit from an attractive increase in DPU (11.5%), potential capitalgain, and stronger growth potential resulting from a lower cost of capital for the new merged entity.
July 4, 2019
Announce proposal topursue merger with MIRAI(Yen)
105,000

100,000

Implied ValueMIRAIx1.67=94,856

95,0001m average: 91,355
3m average: 89,854

90,0006m average: 87,011
85,00080,00075,00070,0002018/8/3

2018/9/3

2018/10/3

2018/11/3

2018/12/3

2019/1/3

2019/2/3

2019/3/3

2019/4/3

2019/5/3

2019/6/3

さくら総合リート投資口価格
SAKURA unit priceNote 1：
Note 2:

Calculated by multiplying the closing price (¥56,800) of MIRAI as of August 2, 2019 by the merger ratio.
Average unit price for SAKURA for 1 month / 3 months / 6 months based on average closing price, from June 4, 2019 to July 3, 2019, from April 4, 2019 to July 3, 2019, and from January 4, 2019 to July 3, 2019, respectively.

2019/7/3

2019/8/2

Overview of Investment Corporation after Merger
MIRAI (Note 1)

SAKURA (Note 1)

MIRAI (after the Merger)(million yen)
(Based on acquisition price)

143,12957,580204,030

Number of properties

29

18

47

152,493

61,643214,137

5.0

5.1

5.0

20.5

22.6

21.2

99.5

97.9

99.3

74,70029,200103,900

A+ (Positive) (JCR)
A (Stable) (R&I)-

A+ (Positive) (JCR) / A (Stable) (R&I)

47,92097,40550,048

1,560

1,453

1,600

2,605

2,427

2,672

AUM

Total assets
Portfolio(million yen)
As of the end of fiscal period

Appraisal NOI yield (%)(Note 2)Average property age(years)Occupancy rate (Note 3)(%)

Financials

Interest-bearing debt
(million yen)

Credit Rating
NAV per unit (Note 4)

Unitholder Value
Note 1:
Note 2:
Note 3:Note 4:Note 5:9(yen)

Forecast DPU (Note 5)(yen)(based on MIRAI DPU)

Adjusted
forecast DPU (Note 5)(yen)(based on SAKURA DPU)

Figures for the fiscal period ended April 2019 and as of June 28, 2019 of MIRAI and the fiscal period ended December 2018 and as of June 28, 2019 of SAKURA are presented, respectively.
Appraisal NOI yield of MIRAI (after the Merger) is calculated based on a weighted average of acquisition prices.
As of the end of June 2019.
NAV per unit=(Unitholders’ capital + Unrealized gain)÷Total number of investment units.
Forecast DPU of MIRAI for 7th fiscal period ending October 2019 announced on June 21, 2019, and forecast DPU of SAKURA for the 7th fiscal period ending December 2019 announced on February 14, 2019.
(based on MIRAI DPU) and (based on SAKURA DPU) are the estimated DPU adjusted for the merger ratio. The operating results of MIRAI (after the Merger) are forecast for 8th fiscal period ending April 2020.

Portfolio Map (after the Merger)

10Overview of Investment Corporation after Merger (1)Asset typeArea diversification
11,232 million yen
3 properties
5.5%

6,769 million yen
4 properties
3.3%

13,636 million yen
3 properties
6.7%

Others29,472 million yen
11 properties
14.4%
OthersResidential
Hotel

Nagoya Area

Asset
Type

29,165 million yen
15 properties
14.3%

11

Area

OfficeTokyo Area

Osaka Area
Retail

48,371 million yen
9 properties
23.7%

108,493 million yen
16 properties
53.2%

Maintain high weighting to office

40,565 million yen
12 properties
19.9%

120,357 million yen
21 properties
59.0%

Over 85% of assets
located in 3 major metropolitan areas

Overview of Investment Corporation after Merger (2)Top 10 tenants (Note)
5.6%

12

Building age
5.0%
4.4%
4.1%

24,357 million yen
6 properties
11.9%

58,972 million yen
8 properties
28.9%

Less than
5 years
30 yearsor more3.1%

5~10 years

2.9%

Tenants

64.8%

Buildingage

2.8%

10~20 years

2.4%
20~30 years

2.4%
2.4%

Enhanced diversification
Note ：

10,000 million yen
1 properties
4.9%

Based on the rents per tenant as of July 29, 2019.

57,964 million yen
16 properties
28.4%

52,737 million yen
16 properties
25.8%

21.2 years of average building age

Financial Forecast of Investment Corporation after Merger
8th FP (Ending April 2020)
Forecast

13

9th FP (Ending October 2020)
Forecast

Variance

Operating revenues (yen)7,654 million

7,815 million+160 million

Operating income (yen)2,730 million

3,874 million+1,144 million

Ordinary income (yen)2,364 million

3,507 million+1,143 million

Net income (yen)3,420 million

3,506 million+86 million

Total amount distributions (yen)3,421 million

3,507 million+86 million

Distributions of earnings (total) (yen)3,421 million

3,507 million+86 million

1,600

1,640

+40

Distributions per unit (yen)Comparison with DPU before the Merger
Forecast before theMerger

8th FPΔ from forecast before（Ending April 2020）
the Merger
Forecast

9th FP（Ending
Δ from forecast before
October 2020）
the Merger
Forecast

MIRAI
8th FP（Ending April 2020）Forecast

1,570 yen

1,600 yen

+30 yen（+1.9%）

1,640 yen

+70 yen（+4.5%）SAKURA
7th FP（Ending December 2019）Forecast

2,427 yen

2,672 yen+245 yen（+10.1%）

2,738 yen+311 yen（+12.8%）

Note: Distributions in excess of earnings is expected to be 0.

Goodwill

14

Goodwill is calculated on the difference between “SAKURA net assets" and “merger consideration” at implementation and thefinal amount will be determined based on the MIRAI’s unit price when the Merger takes effect.
Conceptual Diagram
SAKURA Balance Sheettransferred to New MIRAI(as of Nov. 1,2019)

Accounting and Financial Effects
Positive Goodwill

Merger Consideration

AssumedLiabilities

Positive
Goodwill
Negative
Goodwill

Received
AssetsNet Assets

MergerConsideration
MergerConsideration

Handling on
Balance Sheet Recorded as an intangible assets

 The portion not applied to distributionsin the first Fiscal Period of New MIRAI
is recorded in net assets as “reserve fortemporary difference adjustment(RTA)”

Handling on
Profit and Loss Straight-line amortization within 20
years as an operating expenses

 Recorded as extraordinary income in
the first Fiscal Period of New MIRAI

Impact on
Distributions

 Amount equal to goodwill amortization
expenses distributed as “allowance fortemporary difference adjustment
(ATA)”

 In the case where MIRAI’s unit price increases, the merger consideration will increase Decrease in negative goodwill or increase in positive goodwill
 In the case where MIRAI’s unit price decreases, the merger consideration will decrease Increase in negative goodwill or decrease in positive goodwill

At least 1% of the initial RTA reserveamount is drawn down continuously
and applied to distributions
Can be used flexibly as source ofdistribution added to net income

Accounting and Tax Handling for Unitholders who Received
Distributions
Accounting HandlingMerger consideration＝MIRAI’s unit price (as of time when the Merger takes effect)
× 556,111 units (no. of new units issued）

Negative Goodwill

Distribution of
earnings/drawdown of
RTA
ATA(reference)
Distribution ofexcess profit

Tax Handling Distribution of profit

 Treated as dividend income

 “Distribution of profit” or “Refund of
capital” depending on theaccounting policies of eachunitholders

 Treated as dividend income

 Refund of capital(reduction of book value) Is a “reduction in capital for tax
purposes” and is treated as“deemed dividends” and “deemed
gain on sale”

Positioning after the Merger

15

The Merger would improve a number of key indicators such as risk diversification, and enhance market capitalization andincrease liquidity, leading to inclement of institutional investor demand and future global index inclusion, in addition to
improvement of valuation.
After the Merger
Residential
3.3%
Hotel
14.3%

Others
5.5%（DPU yield)
6.5%
6.0%

Kawasaki

Top 3
AssetsPortfolio diversification

Positioning analysis of diversified J-REITs (Note 3)

Retail
23.7%

5.0%
4.5%

TFT

Office53.2%

SAKURA
Target underRepower 2020-ER

4.0%
3.5%
3.0%
2.5%
35％

Top 10 lease contracts (Note 1)(% of total revenue)
Appraisal NOI yield (Note 2)(%)
Tokyo area office ratio(%)
Average property age(years)
Note 1：
Note 2：
Note 3：Note 4；Note 5：Note 6：Note 7:

MIRAI

5.5%

Shinagawa26.5%

Post-merger

35.2

5.0

40％

45％

（LTV）
55％

50％

MIRAI FP7th (2019/10)
DPU forecast (Pre-Merger)

Current
DPU yield(Note 4)Current MIRAI
unit price (Note 5) (yen)1,560 yen

5.5%

56,800円

MIRAI FP9th (2020/10)
DPU forecast (Post-Merger)

Potential
DPU yield

47.3
1,640 yen

21.2

Calculated based on leases with end-tenants at the end of the most recent fiscal year.
Calculated by weighted average of acquisition price.
The chart was prepared based on the disclosure materials of REITs as of the end of May 2019, and there is a possibility that the actual situation may differ. The size of the circle indicates the size of the market capitalization.
Dividend yield = forecasted dividend × (365 days/number of days of operation)/unit priceAs of August 2, 2019.
Rounding down below 100yen
Calculated by multiplying the merger ratio by unit price level after the Merger of MIRAI.

Potential unit price level
Post-Merger (yen)(Note 6)(Note 4)MIRAISAKURA

5.4%

60,500101,000

5.3%

61,700103,000

5.2%

62,900105,000

5.1%

64,100107,000

5.0%

65,400109,200(Note 7)

Expanded Mid-term Management Plan “Repower 2020-ER”

16

To improve various quantitative KPIs through maintenance and improvement of DPU as well as reduction of risk premium.
Quantitative target
DPU (yen per unit)

Expanded Mid-termManagement Plan

Post - merger=> (1,425)

Top 3 assets (%)(< 40)NOI yield (%) (after depreciation)“Repower 2020-ER”(=> 4.0)

DPU (yen per unit)

1,570

→

1,600

Top 3 assets (%)

34.8

→

26.5

NOI yield (after depreciation)

4.0 → （target 4.0~)

LTV (%)(< 45)LTV (%)

48.9

→

47.7

AUM (bn yen)(> 200)AUM (bn yen)

143.1

→

204.0

Post merger MIRAI AUM will be have doubled
since IPO in December 2016
Acquisition

204.0

300.0
billion yen

billion yen

145.0

56.0 billion yen

Short-term:1) Rating: to acquire AA2) To be a constituent ofbillion yen

Disposition

100.7

12.0

billion yen billion yen

ShinagawaSeaside Parktower

Global index

Tokyo Front
Terrace

Mi-Nara（Quasi-co ownership (Quasi-co ownershipof 50.2%）of 36.6%）

Portfolio reshuffling andincorporating growth assets

IPO(December 2016)

Targets

MI Terrace
Nagoya-Fushimi

Hotel Wing
International
Select Ueno
/Okachimachi

First Public OfferingOrico
Rokko Island DC
Hakataeki
Minami Bdg.

Mid-term:

AUM 300 billion yen

Smile Hotel Smile Hotel
Naha City Hakataeki-Mae
ResortSecond Public Offering

6th FP
After the anticipated Merger（Ended Apr. 2019）Nov. 2019

Mid-term
targetMaintain a Strong Financial Basis (1)17After the Merger, LTV will remain at a conservative level. Backed by the credibility of the Mitsui & Co., Ltd. Group and strong A+
credit rating, MIRAI will pursue cost reduction of borrowings and extension of average term to maturity of loans
Changes in Financial Indicators

Diversified Funding Source

MIRAI

SAKURA

Post-Merger(Note 1)

(Note 1)

(Note 1)

Interest-bearing debt

74.7 billion yen

29.2 billion yen

103.9 billion yen

LTV(Total assets)

49.0%

44.8%

47.7%

Commitment line

3.0 billion yen-

3.0 billion yen

Room forimprovement after
the merger

Total Debt
103.9 billion
yen

Debt Maturity Ladder

Finance cost
(Interest rate)

0.53%

Average borrowing
period7.2 years

4.2 years

5.7 years

14,000

Fixed interest debt ratio(Note 2)100.0%

76.4%

89.5%

7,000

Lenders

10Note 1：
Note 2：0.83%

8※Syndicated
Loans Only

0.59%

13

■: Sumitomo Mitsui Banking Corporation (30.8%)■: Sumitomo Mitsui Trust Bank (14.8%)■: Mizuho Bank (14.4%)■: Shinsei Bank (13.5%)■: Resona Bank (6.1%)■: Fukuoka Bank (3.8%)■: Mizuho Trust Bank 3.6%)■: MUFG Bank (2.9%)■: Aozora Bank (2.9%)■: Development Bank of Japan (1.9%)■: Orix Bank (1.9%)■: Nishi-Nippon City Bank (1.4%)■: Nant Bank (1.0%)■: Investment Corporation Bond (1.0%)(million yen)

21,000

Room for further cost reductions
beyond published earnings
forecasts

0
2019

2020

2021

2022

2023

投資法人みらい
MIRAI

2024

2025

2026

さくら総合リート
SAKURA

Figures for MIRAI and SAKURA as of June 28, 2019 are used as the basis for calculating the combined figures. However, LTV of total assets is as of the end of April 2019 for MIRAI and as of the end of December 2018 for SAKURA.
Figures represent floating-rate borrowings, including those with interest rate swap agreements.

2027

2028

Maintain a Strong Financial Basis (2)18

A comprehensive strategy has been developed for refinancing after the Merger. At the next review, MIRAI will target an
upgrade of Long-term issuer rating based on the benefits of the Merger
Refinance plan after the Merger

Status of Long-Term Issuer Credit Rating

Discussions are underway with several major financial institutions on a postmerger support system, and a loan intention (Note 1), including the presentation of
specific economic conditions, has been received. With the aim of achieving
sustainable growth in DPU after the merger, New MIRAI will promote cost
reductions and the establishment of a long-term stable financial base, backed by
the creditworthiness of the Mitsui & Co., Ltd. Group.

MIRAI (before the Merger)

SAKURA

Plan after the Merger

Interest-bearing debt

Announcement of loan intention
after the Merger (long-term debt only)¥29.2 bn
Average borrowing period

4.3 years
Finance cost

0.83%
Cost savings from post-merger
refinancing (Note 2)▲43 million yen/Fiscal period

Note 1：
Note 2：

Japan Credit Rating Agency, Ltd.（JCR）
Long-termissuer rating

Rating andInvestment Information, Inc. (R&I)
Long-termissuer rating

Total ¥29.9 bn
Maximum term ofloan commitment

0.53%
DPU (yen)

20：A (Stable)

After the Merger

Next Review

10 yearsFinance costs of MIRAI：A+(positive)

JCR

AroundJanuary 2020

Long-termissuer rating : aim forAA- Aiming to acquire AA- by promoting risk diversification through the Merger,
maintaining a strong financial base, and MIP's asset management capabilities
 Acquisition of AA- is expected to enable the Bank of Japan to purchase MIRAI

A number of financial institutions have expressed their intention to extend loans, stating the amount and duration of the loans (scheduled). However, these financial institutions are required to conclude loan contracts that are reasonably satisfactory and to fulfill all the loan
assumptions that are separately set forth. In order for the financial institutions to actually extend loans, the final approval of the loan examination procedures must be completed. The financial institution shall not be obligated to provide loans to the Investment Corporations after the
Merger.
SAKURA's interest-bearing debt outstanding as of the end of July 2019 × (Average borrowing rate of SAKURA - the average borrowing rate of investment corporations) / 2.

Investment Strategy for Properties owned by SAKURA after the Merger

19

By utilizing the expertise and support of Mitsui Group & IDERA Capital, aim to improve the value of real estate on a long termbasis.
OfficeRetailResidential

Overall Policy

1

Increase
Net
Operating
IncomeRevenueincrease

Cost
reduction2

Strategic Value-up（CAPEX）

 An operation team familiar with the market
is in charge of negotiating rent increases
with existing tenants

 Early reclamation of vacant lots throughprecise control of networks and retail
agents cultivated through MIRAI operations

 Utilizing the network cultivated through
MIRAI operations, search for new tenants
that contribute to eliminating the rent gap

 Plans for measures to improve the potentialof facilities centered on "symbiosis with thecommunity" Create opportunities for negotiation leading
to a rise in rent implementing creation of
new signboards, antennas, and vending
machines, etc.

 Improved sales through promotional
campaigns that create a sense of unity
between tenants and facilities

 Utilizing IDERA Capital's expertise inmanaging housing funds

 High-Rent pursuit by asset managers who
have experience in housing portfolios.
 Refurbishing in line with trends

 Verification of subcontracting costs such as property management and building management
 Reduction of utility costs through measures such as switching to new electricity through the Mitsui & Co., Ltd. Group Strict cost management of repair work through bulk ordering utilizing the size of the portfolio
 Operating results of the Mitsui & Co., Ltd. Group's various asset types and utilization of IDERA Capital's "Real Estate
Value Creation“
 Consider additional investment with "realization of potential real estate values" and "Maximizing tangible real estatevalue" in mind by combining the expertise of sponsor support and asset management companies

MIRAI's Value-Up Performance and Portfolio Stabilization

20

Increase the value that leads to progress in risk diversification and improved profitability with sponsor support. Promote
portfolio stabilization by utilizing the asset management company's management knowledge and managing risks ahead.
OfficeRetail / Hotel Invite convenience stores in one corner of thelobby Improve tenant satisfaction and profitability incommon areas Successfully invited 9 new tenants whilechanging usage

KawasakiTech Center Change of air conditioning system in the entire
building, all lighting LED, expansion of ceilingheight, renewal from women's viewpoint, etc

Tokyo Front
Terrace Large-scale multi-tenant construction
succeeded in attracting tenants from a wide
range of industries

MI Terrace
Nagoya-Fushimi

 Rent increases by more than 10% for otherexisting tenants in the most recent 1 year
periodShibuyaWorld East
Building Success in a tenant replacement without novacant period

Aug. 2014
100%/1 tenant Conducted a search for new tenant candidates
in parallel with reduction negotiations with theprevious tenant

Sponsor bridge + acquired by
MIRAI after value up

Apr. 2019
100%/22 tenants
 Improve illumination and energy conservationin common areas and elevator halls

 Switch from apparel to drugstores with strong
inbound demand on the first and second floors

Value up + tenant
replacement after acquisition
by MIRAI

Apr. 201997.5%/26 tenants Significantly renovated the first and second
floors to the grand entrance Redevelopment around Miyashita Park
increases real estate value

Dec. 2016
96.0%/19 tenants

 Attracting different types of tenants to stabilize
earnings
MEGA
Don Quijote
Izumi-Chuo Underground stores not operated at the time ofacquisition was excluded from the scope of rent
and the contract has been extended

Dec. 2016
100%/1 tenant Skeletonization of underground stores toexpand tenant candidates

Sponsor bridge + acquired by
MIRAI after value up

Apr. 2019
100%/9 tenantsHotel Sunroute
Niigata Successful long-term contract with an Izakaya
chain that is expected to have a synergistic
effect with hotels
 Energy conservation work taking advantage ofsubsidies

Miyashita Park
Redevelopment Area

Strong Ongoing Support from Dual Sponsors

21

Mitsui & Co AM Holdings and IDERA Capital Management have a firm commitment to support future growth of MIRAI.
Mitsui & Co. AM Holdings

Mitsui & Co.

IDERA Capital Management
Shareholders
agreement

100%

Fosun International (Listed on HKEx)

98%(Note 1)’

Scale of Mitsui & Co. business (Note 2)

50%

50%

Scale of Fosun business (Note 3)

Total Assets

Revenue

Total Assets

Revenue

11.9 trillion yen

6.95 trillion yen

10.1 trillion yen

1.74 trillion yen

Profit (bn yen)

Profit (bn yen)

414.2

213.7

Number of offices

139

Number of employees

43,993

Asset Manager(Mitsui Bussan & IDERA Partners)

Number of
Major International bases

50

Number of employees

Approx.

63,000Note 1: As of end of May 2019. Fosun International owns stake in IDERA Capital Management indirectly.
Note 2: Total assets, revenue and profit are those for the fiscal period ended March 2019. Profit refers to profit attributable to owners of parent. The number of offices and the number of consolidated employees are as of April 1, 2019.
Note 3: Total assets, revenue and profit are those for the fiscal period ended December 2018. For convenience, the Chinese yuan is calculated by converting it into the yen at the closing price (1 yuan = 15.93 yen) on Yahoo! Finance on December 31, 2018. Major international bases are as ofMarch 26, 2019. The number of consolidated employees is based on the Forbes 2019 GLOBAL 2000.

Asset Manager Profile and Governance Structure of MIRAI

22

Asset Manager
General Meeting of
Shareholders

Name

Mitsui Bussan & IDERA Partners co., Ltd.

Address

3-2-1 Nishi-kanda Chiyoda-ku, Tokyo 101-0065, Japan

Management

Representative Director, President/ Michio Suganuma
Representative Director, Vice President CIO/ Hiroyuki Iwasaki
Executive Director, CFO, Head of Finance & Administrative Division/ Shosaku Ikeda (Note 1)
Executive Director, Investment Management Division/ Akira Nagahama
Director (part-time)/ Tamotsu Hagino
Director (part-time)/ Takuya Yamada
Corporate Auditor (part-time)/ Ichiro Tsutsumi

Corporate Auditor
Investment
Management
Committee

Board of Directors
Compliance
Committee
PresidentInternal Audit Div.

Shareholders

Mitsui & Co. Asset Management Holdings Ltd.(50%)
IDERA Capital Management Ltd.(50%)

Paid-in capital￥200 million

Registration &Licenses

Building lots and building transaction business; Tokyo Governor's Office license(1) No.98041
Discretionary transaction agent; Minister of Land, Infrastructure, and Transport Approval No.94
Financial Instruments Business Operator (Director of Kanto Finance Bureau(Kinsho) No.2876)

Compliance Officer

Investment
Management Div.
Investment Group

Finance &Administrative Div.

Management Group

Governance Structure of MIRAI
Asset custody agreement
Sponsors
Mitsui & Co. Asset Management

General administrationagreement (accounting)Holdings Ltd.
IDERA Capital Management Ltd.

Sponsor support
agreement (Note 2)External Asset Manager
Mitsui Bussan & IDERA Partners Co., Ltd.

Asset Custodian
Sumitomo Mitsui Trust Bank, Limited

Asset managementagreement

Board of Directors

GeneralMeeting ofUnitholders

Executive Director
Michio Suganuma
Supervisory Director
Takehiko Negishi
Supervisory Director
Hideaki Nishii

General administrationagreement (institutional
administration)

Accounting
AuditorErnst & Young
ShinNihon LLC

General Administrator
Reiwakaikeisha Tax Corporation
General Administrator
Mizuho Trust & Banking Co., Ltd

Transfer agency agreement
Fiscal Agency Agreement(investment corporation
bonds)

Transfer Agent
Sumitomo Mitsui Trust Bank, Limited
General Administrator

Sumitomo Mitsui Trust Bank, Limited
Note 1：
Note 2:

Nobuaki Takuchi is scheduled to assume the post of Director, CFO and General Manager of Operations on August 8, 2019.
Sponsor support agreements are entered into separately between each of the sponsor company and the Asset Management Company and MIRAI.

Post Merger Management Structure Aiming to Maximize
Value and Unitholders’ Interests

23

After the Merger, the management policy on governance will reflect following three aspects.

Alignment with unitholders’ to maximize value

Investment Corporation-Centric Operational Strategy(Asset Manager)

Offer best asset management service for the investment corporation

Management
system MIRAI’s executive director will replace SAKURA’s executive director if
approved at by unitholders on August 30, 2019
 Major unitholder, director structure, etc. of MIRAI after the Merger
will remain unchanged, with no investment, management or director
involvement by SREFM or Galileo

Handling ofmerger fee

 SAKURA’s Articles of Incorporation specify that even if SAKURA
becomes an absorbed corporation, merger fee shall be paid; SREFM
has agreed to waive this fee to support successful implementation ofthis proposal
 MIRAI will pay the merger fee stipulated in its Articles ofIncorporation (up to 1% of appraisal value on the effective date) tothe Asset Management Company, and the amount will be disclosed inpresentation materials, etc.

Clarification of
cost burden MIRAI and Mitsui Bussan & IDERA Partners determine cost burden of
the Investment Corporation and the Asset Manager on the basis ofburden classification stipulated in the asset management agreement
 Although it depends on the policy and each business agreement,
Mitsui Bussan & IDERA Partners confirm that all costs associated withplanned acquisition that is not completed will be the burden of theAsset Manager and not the Investment Corporation

Pursuit of best interest of the investment corporation
As an asset management company that is charged with the management of theinvestment corporation, the Asset Manager will aim for the best interest of theinvestment corporation through creativity and ingenuity with high level of expertise andethics. In addition, as part of KPI of this strategy, the Asset Manager will formulate
mid-term management plan of the investment corporation and work toward realizing
the target.
 Important information is quickly disclosed through TDnet and on the website
of investment corporation for dissemination.

Improvement of sustainability

Environmental certification:

18.6% (based on acquisition price)

The Asset Manager will work together with theinvestment corporation to aim for improvement ofsustainability of the society through investment
management activities. The Asset Manager will
actively promote to address issues centering on
EGS (Environmental, Social and Governance).

of assets obtained

MIUMIU Kobe

Shinagawa Seaside
Parktower

Make important information easily understood
Clarify fees
The Asset Manager will clearly state the fee
structure to be paid by the investment corporation
and will disclose the actual figures of each item inresult announcement of the investment corporation.
 Each item of the Asset Manager’s fees isdisclosedintheresultpresentationmaterials for clarification.

Asset Management Fee Structure / Result(5th and 6th FP)

Appendix

Portfolio List (after the Merger) (1)25

Assets
Office1

ShinagawaSeaside Parktower

13

Azabu Amerex
BLDG.

2

3

4

KawasakiTech Center

Shinjuku
Eastside SquareTokyo
Front Terrace

Hillcoat
Higashi-Shinjuku

Nippo Hommach
Building

15

16

17

18

MIUMIU Kobe

Shibuya World
East Building

14

Hiei-Kudan
BLDG.

Shin-Yokohama
Nara BLDG.

The Portal
Akihabara

5

6

7

RetailHotel

Residential

89

MI Terrace
Nagoya-Fushimi

Orico Hakataeki
Minami Building

Seishin BLDG.

19

20

21

AEON Kasai

MEGA Don Quijote
Izumi-Chuo

La Park
Kishiwada

Industrial
10

NK BLDG.

22

Suroy Mall
Chikushino

Properties owned by SAKURA
11

12

Tsukasamachi
BLDG.

Takadanobaba
Access

23

24

Seiyu
Minakuchi

25

26

27

28

29

30

31

32

33

34

Hotel Sunroute
Niigata

Daiwa Roynet
Hotel Akita

Super Hotel
Sendai/Hirose-doriSuper Hotel
Osaka/Tennoji

Super Hotel
Saitama/Omiya

Super Hotel
Kyoto
Karasumagojo

Comfort Hotel
Shin-Yamaguchi

Ise City
Hotel Annex

ComfortHotel Kitakami

ComfortHotel Nagano

37

38

39

40

41

42

43

44

45

46

47

Smile Hotel
Hakataeki-Mae

Smile Hotel
Nagoya-Sakae

Hotel WBF
Yodoyabashi-MinamiShiroi Logiman

Rokko Island DC

Funabashi HiTech Park
Factory Ⅰ

Funabashi HiTech Park
Factory Ⅱ

MatsuyaResidence
SekimeUrban Plaza
ImazatoAbode Yoyogi
Parkside

Mi-Nara35

Hotel Wing
International SelectUeno/Okachimachi

Suroy Mall
Nagamine36

Smile Hotel
Naha City Resort

Portfolio List (after the Merger) (2)Asset Type

Property Name

Shinagawa-ku, Tokyo

Kawasaki Tech Center

Kawasaki-shi,
Kanagawa

23,182

Shinjuku Eastside Square

Shinjuku-ku, Tokyo

10,000Core
Assets(Assumptions)
Acquisition% of thePrice
Portfolio(mn yen)Occupancy
Rate

100.0%

Hotel Sunroute Niigata

Niigata-shi, Niigata

2,108

1.0%

100.0%

11.4%

97.5%

Daiwa Roynet Hotel Akita

Akita-shi, Akita

2,042

1.0%

100.0%

4.9%

94.9%

Super Hotel Sendai/Hirose-doriSendai-shi, Miyagi

1,280

0.6%

100.0%

Osaka-shi, Osaka

1,260

0.6%

100.0%

5.2%

100.0%

Hillcoat Higashi-Shinjuku

Shinjuku-ku, Tokyo

3,900

1.9%

100.0%

Super Hotel Saitama/Omiya

Saitama-shi, Saitama

1,123

0.6%

100.0%

97.3%

Super Hotel Kyoto/Karasumagojo

Kyoto-shi, Kyoto

1,030

0.5%

100.0%

Osaka-shi, Osaka

1,465

0.7%

MI Terrace Nagoya-Fushimi

Nagoya-shi, Aichi

8,886

4.4%

100.0%

Comfort Hotel Shin-Yamaguchi

Yamaguchi-shi,
Yamaguchi

Orico Hakataeki Minami Building

Fukuoka-shi, Fukuoka

1,680

0.8%

100.0%Ise City Hotel Annex

Ise-shi, Mie

Comfort Hotel Kitakami
Comfort Hotel Nagano
Hotel Wing International SelectUeno/Okachimachi

Hotel

Budget902

0.4%

100.0%

1,800

0.9%

100.0%

Kitakami-shi, Iwate

820

0.4%

100.0%

Nagano-shi, Nagano

580

0.3%

100.0%

Taito-ku, Tokyo

3,720

1.8%

100.0%

Seishin BLDG.

Shinjuku-ku, Tokyo

8,900

4.4%

100.0%NK BLDG.

Chiyoda-ku, Tokyo

4,010

2.0%

100.0%

Tsukasamachi BLDG.

Chiyoda-ku, Tokyo

4,060

2.0%

100.0%

Takadanobaba AccessShinjuku-ku, Tokyo

3,550

1.7%

100.0%

Azabu Amerex BLDG.

Minato-ku, Tokyo

2,310

1.1%

100.0%

Smile Hotel Naha City Resort

Naha-shi, Okinawa

4,000

2.0%

100.0%

Smile Hotel Hakataeki-Mae

Fukuoka-shi, Fukuoka

3,800

1.9%

100.0%

Smile Hotel Nagoya-Sakae

Nagoya-shi, Aichi

2,950

1.4%

100.0%

Hotel WBF Yodoyabashi-Minami

Osaka-shi, Osaka

1,750

0.9%

100.0%

Hiei-Kudan BLDG.

Chiyoda-ku, Tokyo

2,120

1.0%

100.0%

Shin-Yokohama Nara BLDG.

Yokohama-shi
Kanagawa

2,030

1.0%

100.0%

Chiyoda-ku, Tokyo

1,520

0.7%

100.0%

108,493

53.2%

99.1%

MIUMIU Kobe (Note)

Kobe-shi, Hyogo

4,757

2.3%

100.0%

Shibuya World East Building

Shibuya-ku, Tokyo

3,200

1.6%

100.0%

Edogawa-ku, Tokyo

9,420

4.6%

Core
AssetsHotel (15 properties)

Residential

100.0%MEGA Don Quijote Izumi-Chuo

Izumi-shi, Osaka

3,000

1.5%

100.0%

La Park Kishiwada

Kishiwada-shi,
Osaka

6,650

3.3%

97.8%

Suroy Mall Chikushino

Chikushino-shi,
Fukuoka

7,790

3.8%

99.6%

l Seiyu Minakuchi

Koka-shi, Shiga

4,140

2.0%

100.0%

Suroy Mall Nagamine

Kumamoto-shi ,Kumamoto

4,470

2.2%

99.3%

43,427

21.3%

99.2%

Retail (8 properties)：New properties

Address

10,592

AEON Kasai

Community
Based

Property Name

Shinagawa-ku, Tokyo

Office (16 properties)

Retail9.9%

Asset TypeTokyo Front Terrace

The Portal Akihabara

Urban

20,288

Occupancy
Rate

Super Hotel Osaka/Tennoji

Nippo Hommachi Building

Mid-Scale(Assumptions)
Acquisition% of thePrice
Portfolio(mn yen)Shinagawa Seaside Parktower
Large-Scale

OfficeAddress

26

Residential

29,16514.3%

100.0%

Shiroi Logiman

Shiroi-shi, Chiba

2,170

1.1%

97.8%

Matsuya Residence Sekime

Osaka-shi , Osaka

1,970

1.0%

97.9%

Urban Plaza Imazato

Osaka-shi, Osaka

949

0.5%

97.1%

Abode Yoyogi Parkside

Shibuya-ku, Tokyo

1,680

0.8%

91.3%

6,769

3.3%

97.5%

Residential (4 properties)
RetailGrowthAssetsIndustrial

Community
Based

Industrial

Mi-NaraNara-shi, Nara

4,944

2.4%

100.0%

Rokko Island DC

Kobe-shi, Hyogo

8,650

4.2%

100.0%

Funabashi Hi-Tech Park Factory Ⅰ

Funabashi-shi,
Chiba

1,800

0.9%

100.0%

Funabashi Hi-Tech Park Factory Ⅱ

Funabashi-shi,
Chiba

782

0.4%

100.0%

Industrial (3 properties)

11,2325.5%

100.0%

Total

204,030

100.0%

99.3%

Note： As of June 28, 2019, the disposition of 29% of the quasi-co-ownership interest was completed. Subsequently, dispositions of 33% of the quasi-co-ownership interest on November 29, 2019 and 38% of the quasi-co-ownership interest on June 30, 2020 are planed, respectively.

Disclaimer
Monetary amounts are rounded down to the nearest unit.
Percentage figures are rounded off to the first decimal place.
This material contains forward-looking business results, plans, and management targets and strategies. Such forward-looking statements are based on current
assumptions and conditions, including those regarding anticipated future developments and business environmental trends, and these assumptions andconditions may not always be correct. Such forward-looking statements assume the investment policy of Investment Corporations, the market environment,interest rate conditions, business practices and other fact relationships and applicable laws and regulations as of the date this material was published and they do
not reflect or take into consideration any change in circumstances occurring after such date. Forward-looking statements involve known and unknown risks,
uncertainties and other factors, whether express or implied, and the actual performance, operating results, financial situation and other results of MIRAI mayvary significantly due to a variety of factors.
This material is provided for your information and does not constitute a solicitation to buy the investment securities of Investment Corporations or to conclude
any other financial instrument transaction contract. In making investments, investors should do so based on judgements and responsibilities of their own.
The investment units of Investment Corporations are closed-end fund investment units, whereby investment units are not redeemable at the request of investors.
Investors wishing to liquidate their investment units will in principle need to sell them to third parties. The market value of the investment units will be influenced
by investor supply and demand at securities exchanges and will fluctuate in accordance with the situation for interest rates, economic circumstances, real estate
prices, and other market factors. It is therefore possible that investors will not be able to sell the investment units at their acquisition price and, as a result, may
suffer losses.
Investment Corporations plans to make cash distributions to investors, but whether or not distributions are made and the amount of distributions thereof are notguaranteed under any circumstances. Gains or losses on the sale of real estate, losses on the disposal of fixed assets accompanying the replacement ofstructures, and other factors would cause fiscal-period income to vary greatly, which would result in change in amount of distribution to be made.
Information provided herein does not constitute any of the disclosure documents or performance reports required by the Financial Instruments and Exchange Act
or the Act on Investment Trusts and Investment Corporations or by the Securities Listing Regulations of the Tokyo Stock Exchange.
This material is to be read and used at the responsibility of customers. Investment Corporations and related persons involved in the preparation and publicationof this material will not bear any responsibility for any damage arising from the use of this material (whether for direct or indirect damage, and regardless of thecause thereof).
While every effort has been made to avoid errors and omissions regarding the information presented in this material, the material has been created as an easy
reference for customers, and the presented information may contain inaccuracies of misprints. MIRAI bears no responsibility for the accuracy. This material issubject to change/discontinuation without notice. Investment Corporations is not obliged to update or announce any of the information contained in this material(including forward-looking statements).
Investment Corporations holds the copyrights to the information appearing in this material. Copying, altering, publishing, distributing, appropriating, or displaying
this information or using it for commercial purposes without the prior approval of Investment Corporations is prohibited. Also, trademarks (trademarks, logos,
and service marks) related to MIRAI appearing in this material are owned by Investment Corporations, and copying, altering, publishing, distributing,appropriating, or reproducing such trademarks or using them for commercial purposes without the permission of Investment Corporations is prohibited.
@ Investment Corporations. All rights reserved.
Asset Manager : Mitsui & IDERA Partners Co., Ltd.
-Financial Instruments Business Operator (Director of Kanto Finance Bureau (Kinsho) No.2876)
Asset Manager : Sakura Real Estate Funds Management, Inc.
-Financial Instruments Business Operator (Director of Kanto Finance Bureau (Kinsho) No.2907)

27