July 23, 2018
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: 03-5425-1340

Notice Concerning Acquisition and Transfer (Asset Replacement) of
Real Estate Beneficiary Interests in TrustStar 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 to acquire domestic real estate
beneficiary interests in trust of the “Hotel WBF Fukuoka Tenjin Minami” (hereinafter referred to as the "Asset to
be Acquired", and the acquisition of the Asset to be Acquired is referred to as the “Acquisition”), and transfer
the quasi-co-ownership interest in the domestic real estate trust beneficiary interests in trust of the “Hakata-eki
Higashi 113 Building” (hereinafter referred to as the "Asset to be Transferred", and the transfer of the Asset tobe Transferred is referred to as the “Transfer” and collectively with the Acquisition, the “Asset Replacement”).
Since its listing in April 2016, SAR has been pursuing the “maximization of unitholders’ value” throughimplementation of active management strategies that is unconventional. As part of these initiatives, SAR has
enhanced and strengthened its portfolio and realized attractive profits from the prior sales through two asset
replacements that it has consummated so far, and SAR has distributed the profits from sales to unitholders in
the third fiscal period (fiscal period ended July 2017) and the fourth fiscal period (fiscal period ended January2018). (For details of the 1st Asset Replacement, please see “Notice Concerning Acquisition and Transfer of Real
Estate Beneficiary Interests in Trust” as of December 5, 2016. For details of the 2nd Asset Replacement, pleasesee “Notice Concerning Acquisition and Transfer of Real Estate Beneficiary Interests in Trust” as of February 28,
2017.)
SAR and the Asset Manager continue to regard the asset replacement strategy as an important measure foractive management in the future as before, and hereby clarify the implementation policy for asset replacement
as an active management as follows.
<Implementation policy for asset replacement>
The following three points shall be comprehensively considered when implementing asset replacement.
① Future revenue contribution of the assets to be replaced (strengthen SAR's portfolio)‐ Periodic evaluation of future revenue contribution for all owned assets (i.e. stability and growthpotential of earnings, future estimate of the life-cycle costs, such as repair costs and capital
expenditures, and balance between sales price)‐ Comparison of assets available for acquisition and the future revenue contribution of currently
owned assets‐ Existence of real estate investors with different valuation bases for owned assets② Real Estate Market Conditions by Asset Type1‐

Evaluation of investment environment for each investment asset type given macro economic
environment and analyzing which asset types are most attractive for investment based on such
evaluation‐ Detailed consideration of asset type exposures that should be increased or decreased in theportfolio③ Level of the investment unit price of SAR‐ Comparison between market indices such as the Tokyo Stock Exchange REIT Index and the trend of
the investment unit price of SAR‐ Comparison between the level of investment unit prices and NAV per unit (Note) of SAR‐ Calculation of gains and losses on sales of assets through asset replacement and the impact of the
return to existing unitholders(Note) NAV: Abbreviation of Net Asset Value
NAV = Amount of Net assets-amount of Book value of owned real estate + Appraisal value of owned real estate

1. The reason of the asset replacement.
SAR has decided the implementation of the Asset Replacement comprehensively considering following threepoints based on the <Implementation policy for asset replacement> above.
① Future revenue contribution of assets to be replaced (strengthen SAR's portfolio)
The Assets to be transferred, "Hakata-eki Higashi 113 Building," is located in Fukuoka area, where thetight supply and demand in office continues. Since the acquisition by SAR, it has steadily increased
contracted average rent (from the contracted average rent of 9,585 yen per tsubo as of the end of the firstfiscal period (fiscal period ended July 2016) to the contracted average rent of 10,277 yen per tsubo as ofthe end of May 2018, achieving a 7.2% increase). As of the end of May 2018, the rent gap (Note 1) still
exists, and SAR believes there remains room for a possible increase in the rent as of today. However, (i)the property was constructed in October 1987, and it is expected that life-cycle costs, such as repair costs
and capital expenditures, will increase in the future, and (ii) the transfer can be easily executed and thesale price can be expected to significantly exceed the appraisal value, considering the existence of therent gap as of the date hereof. Therefore, it was determined that the choice of "transfer" rather than"holding" will certainly contribute to maximization of unitholders’ value.
Fukuoka-City, the center of the Kyushu region where the Asset to be Acquired, “Hotel WBF Fukuoka
Tenjin Minami" is located, enjoys good access from the Fukuoka Airport and the Port of Hakata, and isalso geographically close to Asian countries such as China, Korea and Taiwan. Therefore, the number offoreign visitors to Japan is steadily increasing given the cheaper travel costs and shorter travel time.
Furthermore, it has been officially decided that the second runway will be expanded and put into service
at Fukuoka Airport in 2024, and it is expected that the number of users of Fukuoka Airport will increase in
the future as a gateway from overseas to the Kyushu region, which has abundant tourism resources. As aresult, SAR expects that the demand for hotel accommodation will continue to increase. Considering
appropriate replaceable assets among the properties in the real estate market and those properties
owned by the Sponsor Group (Note 2), SAR concluded that it is appropriate and attractive opportunity toacquire the “Hotel WBF Fukuoka Tenjin Minami” for the following reasons.
“Hotel WBF Fukuoka Tenjin Minami” is located in the Tenjin area, the center of Fukuoka City, and SAR
believes it will be possible to capture inboundtraveler’s demand, which is expected to increase in the
future. SAR expects that, through the lease agreement with fixed and variable rent reflecting the hotel
profit performance entered into with the tenant of this property (currently fixed rent but the fixed andvariable rent will be introduced in the foreseeable future, the Asset to be Acquired will contribute to thegrowth of the portfolio's revenues. In addition, this property is newly constructed in February 2017 andSAR believes it will be able to maintain lower maintenance and management costs, such as repair costs

2and capital expenditures, for the medium term. From the above, SAR believes that the Asset Replacement
will enhance the strength of SAR's portfolio by contributing to higher revenue growth and continue toreduce the age of its portfolio.
(Note 1)

The rent gap means the difference between the assumed market average rent of the surrounding area
and contracted average rent. The assumed market average rent of the surrounding area is based on
assessment of rent (median of the range) provided by CBRE. CBRE defined this figure as the moderatemonthly rent per tsubo, comprehensively considering leasing transactions of Asset to be Transeferredand surrounding competing assets in the neighboring area and the market condition, under theassumption that tenants seeking is carrying out in each timing of rent assessment and new contract isconcluded by a floor unit. Contracted average rent is calculated by the whole rent of all tenants of asset
to be transferred at the timing of assessing the rent divided by operated area and includes common
service fee, but free rent and rent holiday as of the day are not considered and don’t include tax.

(Note 2)

"Sponsor Group" means (i) Star Asia Management Limited, (ii) Star Asia Management Japan Limited, (iii)
Star Asia Asset Management LLC, (iv) Star Asia Group LLC, (v) Star Asia Asset Advisors, CO., Ltd., (vi) Star
Asia Sogokaihatsu Co., Ltd., (vii) Malcolm F. MacLean IV, (viii) Taro Masuyama and (ix) investment
vehicles in Japan that are the investment destination of funds (excluding minority investments) for
which Malcolm F. MacLean IV and Taro Masuyama make investment decisions (a) that are in Japan andown or acquire investment assets such as real estate or (b) that own or acquire SAR’s investment units.
The same shall apply hereinafter.

② Real Estate Market Conditions by Asset TypeSAR and the Asset Manager view the current real estate market conditions for each asset type asfollows.
Due to the favorable economic environment in Japan, corporate demand for office floors continues tobe stable, and it is expected that supply and demand in small and medium-sized offices in particular willremain tight for the time being.
In addition, the hotel operator's business performance is expected to remain increasing due to the
expected growth in demand backed by the steady growth of foreign visitors and the easing ofcompetition with private lodging due to the enforcement of the Residence Lodging Business Act (the New
Private Lodging Business Act) on June 15, 2018. Thus, the stability and growth potential in businessperformance of hotel owners are expected.
In light of the above recognition of the real estate market environment, and as mentioned in "①
Future revenue contribution of assets to be replaced (strengthen SAR's portfolio)"- SAR decided to
implement Asset Replacement giving consideration to the status of each property in its portfolio andAsset to be Acquired.
③ Level of the investment unit price of SAR
SAR and the Asset Manager are strongly aware of the level of investment unit prices of SAR. When unit
price of SAR is lower than NAV per unit, we consider that there is a discrepancy between the valuation ofproperties in the real estate market and the valuation of SAR units in the financial market, and we willmore actively consider returning the real estate value to unitholders by adding the realized gain to the
distribution through the sale of properties in the asset replacement.
The investment unit price of SAR at the time of the consideration of the Asset Replacement was lower
than the NAV per unit at the end of the fourth fiscal period (fiscal period ended January 2018) andremained at approximately the same level with the issue price (offer price) for the previous public
offering (in January 2018), and thus we decided to implement the Asset Replacement as a part of theactive management to maximize the unitholders’ value.
In searching the buyer of Asset to be Transferred, the Asset Manager made the best use of Star Asia
Group’s wide relationship and SAR succeeded in making contract that SAR can transfer the asset’s 49%

3quasi-co-ownership in the sixth fiscal period (fiscal period ending January 2019) and 51%
quasi-co-ownership in the seventh fiscal period (fiscal period ending July 2019) at the aggregate price of
2,580 million yen which exceeded approximately 37.7% of appraisal value of 2,070 million yen (as of theend of the fourth fiscal period (end of January 2018)).
SAR expects to record a gain on sale of the Asset to be Transferred in two fiscal periods, the sixth fiscal
period ending January 2019 and the seventh fiscal period ending July 2019, which will be allocated to the
distributions to unitholders.
As stated the above, SAR believes that Asset Replacement will contribute to strengthen SAR’s portfolio
as well as to expected increase in distribution per unit as a part of an active management which pursue
maximizing unitholder’s value.
As an active management that seeks to maximize the unitholders’ value, SAR will continue to consider
and implement a variety of measures through spirit of no constraint with conventional concepts,
including the replacement of assets. Please also refer to the "Supplementary Material Concerning
Acquisition and Transfer (Asset Replacement) of Real Estate Beneficiary Interests in Trust" publishedtoday.
2.

Summary of Asset to be Acquired and Assets to be Transferred(1) Overview of Asset to be Acquired
Asset to be Acquired

Beneficiary interest in trust whose main asset is domestic real estate

Property name

Hotel WBF Fukuoka Tenjin Minami

Asset type

Hotel

Date of execution of purchaseagreement
Planned acquisition dateJuly 23, 2018
The date to be separately agreed by the seller and the purchaser on thebusiness day by the end of December 2018 (Note 1)

Seller

Godo-Kaisha Topcat

Planned acquisition price(Note 2)

1,970 million yen

Acquisition financing

Cash on hand and the proceeds of the sale of Hakata-eki Higashi 113 Building

Appraisal value (Note 3)

1,990 million yen

Special notation

Please refer to “3.Details of Assets to be Acquired -Special Notation-“.

(Note 1) The planned acquisition date will be separately announced once determined.
(Note 2) The sales price of the Asset to be Acquired stated in the sales and purchase agreement pertaining to the
Asset to be Acquired (excluding acquisition expenses, consumption tax, and local consumption tax) is
stated.
(Note 3) For details of the appraisal value, please refer to "5. Summary of Appraisal Report."(2)

Overview of Asset to be Transferred
Asset to be Transferred

Quasi-co-ownership of beneficiary interest in trust whose main asset isdomestic real estate(The first transfer will be 49% quasi-co-ownership interest and the second
transfer will be 51% quasi-co-ownership interest.)

Property nameHakata-eki Higashi 113 Building

Asset type

OfficeDate of execution of sales
agreement
Planned transfer dateJuly 23, 2018
1st (49% quasi-co-ownership): December 3, 2018
2nd (51% quasi-co-ownership): February 1, 20194

Planned transferee

Godo-Kaisha Sunrise

Planned sales price (Note 1)

1st (49% quasi-co-ownership): 1,396.5 million yen
2nd (51% quasi-co-ownership): 1,453.5 million yen
Total: 2,850 million yen

Book value (Note 2)

2,070 million yen

Gain (loss) on transfer

1st (49% quasi-co-ownership): 401 million yen(estimate) (Note 3)

2nd (51% quasi-co-ownership): 418 million yen

Use of gain on transfer

Fund for acquisition of asset to be acquired and reserve as cash on hand for
future acquisition

Special notation

Not applicable.

(Note 1) The sales prices of the Asset to be Transferred stated in the sales and purchase agreements for the
Asset to be Transferred (excluding transfer expenses, consumption tax and local consumption tax) arestated.
(Note 2) Book value as of the end of January 2018 is stated.
(Note 3) Estimated gains and losses on the transfer based on the book value as of the end of January 2018 arestated. Actual gain or loss on transfer may differ from the above estimated amount.

3. Details of Asset to be Acquired
Hotel WBF Fukuoka Tenjin Minami
Propertyno.

HTL-05

Property
nameHotel WBF Fukuoka Tenjin Minami

Type

Hotel

Overview of specified asset
Type of specified asset

Beneficiary interest in
trust

Planned acquisition price 1,970 million yen

Trustee

Mitsubishi UFJ Trust and Banking Corporation

Planned acquisition
dateAppraised value

1,990 million yen

Location

3-14-2, Haruyoshi, Chuo-ku, Fukuoka-shi, Fukuoka

Indication of residential
address
Nearest station
Land

Type ofOwnership

Seller

By the end of December 2018 (Note 1)
Godo-Kaisha Topcat

3-23-32, Haruyoshi, Chuo-ku, Fukuoka-shi, Fukuoka
About 5-minute walk from Tenjin Minami Station on Fukuoka City Subway Nanakuma Line
Proprietary ownership
543.94m2

Use district

Commercial area

80%

Floor area ratio

400%

2,281.49m2

Use

Hotel

February 20, 2017

Structure and floors

OHI Co., Ltd.

Master lease company -Type of master lease-

Security

Trust period

End of September 2028

Site area
Building
coverage ratio
Building

Type ofownership
Total floor
area
Construction
completion

Property managementcompany

Proprietary ownership

Reinforced concrete structure with 10 floors above
groundUnsecured

Status of leasing5

Total leasable area

2,290.57m2

Total number oftenants

1

Monthly rent (including
Total leased area

Not disclosed (Note 2)common area

Not disclosed (Note 2) (Note3)

maintenance fee)
Occupancy Rate

100.0%

Security and guarantee
deposits

Not disclosed (Note 2)

Special notation
SAR is planning to make the settlement of the acquisition on the business day by the end of December 2018 and as separately
agreed by the seller and the SAR, and thus the sales and purchase agreement falls under the forward commitment, etc. In casewhere the SAR or the seller is in breach of any agreement or any representations and warranties provided in the Trust BeneficiaryInterest Sales and Purchase Agreement and such breach is so material that the purpose of the agreement cannot be achieved,
the non-breaching party may cancel the agreement after giving notice to the other party for a reasonable period of time, andmay claim against the other party the amount equivalent to 10% of the sales price as a penalty at the same time as the exerciseof the right of cancellation.
(Note 1) The date to be separately agreed by the seller and the purchaser, which shall be the business day by the end of December 2018.
(Note 2) The information is undisclosed as consent to disclosure has not been obtained from end tenant.
(Note 3) Currently the rent scheme is fixed rent scheme and it is scheduledto be changed to fixed + profit-linked variable rent scheme in the forseeable
future by the lease agreement.

Description by the investigation of the Asset Manager
・"Hotel WBF Fukuoka Tenjin Minami" is located in the Tenjin District, a commercial cluster in the central part of Fukuoka City. It isa business hotel located approximately 5-minute walk from Tenjin-Minami Station on the Fukuoka City Subway Nanakuma Line,approximately 10-minutes walk from Nakasu-Kawabata Station on the Fukuoka City Subway Kuko Line, approximately 15
minutes walk from Tenjin Station on the same line, and approximately 8 minutes walk from Fukuoka (Tenjin) Station on the
Nishitetsu Omuta Line.
・The extension of the Fukuoka City Subway Nanakuma Line from Tenjin-Minami Station to Hakata Station, the nearest station of
the hotel, is underway with the scheduled commencement of operation in FY2022, and the access to the hotel is expected to
be further improved.
・SAR believes that Hotel WBF Fukuoka Tenjin Minami is a hotel with a high appeal to a wide range of customers with total
number of rooms 117.

6

4. Details of Assets to be Transferred
Hakata-eki Higashi 113 Building
Propertyno.

Property

OFC-07

nameHakata-eki Higashi 113 Building

Type

OfficeOverview of Specified Asset
Type of specified asset

Beneficiary interest in
trust

Trustee

Mitsubishi UFJ Trust and Banking Corporation

1st (49%
quasi-co-ownership):

1st (49% quasi-co-ownership): December 3,

1,396.5 million yen
Planned sales pricePlanned2nd (51%transfer

datequasi-co-ownership):2018
2nd (51% quasi-co-ownership): February 1,
20191,453.5 million yen
Total: 2,850 million yen
Location

1-231, Hakata-eki Higashi, Hakata-ku, Fukuoka-shi, Fukuoka, etc.

Indication of residential
address
Nearest station

About 5-minute walk from Hakata Station on the JR Line and Fukuoka City Subway Line

Type ofLand

ownership
Site area
Building
coverage ratio
Type of

Building

ownership
Total floor
area

Proprietary ownership
950.75m2

Use district

Commercial area

80%

Floor area ratio

500%

Proprietary ownership
4,888.70m2(including the pump room Use

Officeof 17.25m2)

Construction
completion
Property

1-13-9, Hakata-eki Higashi, Hakata-ku, Fukuoka-shi, Fukuoka

managementcompany
Type of master lease

October 3, 1987

Structure and floors
Master lease

OHI Co., Ltd.

companies

Pass-throughStatus of collateral

Trust period

Steel-frame reinforced concrete structure withland roof, 8 floors above ground

SAR
UnsecuredEnd of April 2026

Status of leasing
Total leasable area

3,596.71m2

Total leased area

3,596.71m2

Total number of tenants
Monthly

Rent

34(includingcommon area maintenance

11,179 thousand yen

fee)
Occupancy rate

End of February

End

2018

2018

96.85%

100%

of

March

Security and guarantee deposits

End of April 2018

End of May 2018

End of June 2018

100%

100%

100%

96,041 thousand yen

Special notation
SAR is planning to execute the 1st settlement on December 3, 2018 (49% quasi-co-ownership interest) and the 2nd on February 1,
2019 (51% quasi-co-ownership interest), and thus the sales and purchase agreement falls under the forward commitment, etc.
In case where the SAR or the Seller is in breach of any agreement or any representations and warranties provided in the Trust

7Beneficiary Interest Sales and Purchase Agreement and such breach is so material that the purpose of the agreement cannot be
achieved, the non-breaching party may cancel the agreement after giving notice to the other party for a reasonable period oftime, and may claim against the other party the amount equivalent to 20% of the sales amount as a penalty at the same time as
the exercise of the right of cancellation
By the settlement of the 1st transfer, SAR will enter into an agreement among quasi-co-owners of the trust beneficiary interests
with the buyer, the trustee, and the Asset Manager, and agree upon how to make decisions as trust beneficiaries as well as rights
and obligations of quasi-co-owners including transfer restriction of their quai-co-ownership of trust beneficiary interests.
(Note 1)The condition of renatl contract is based on the information as of end of June 2018.

5. Summary of Appraisal Report(1) Hotel WBF Fukuoka Tenjin Minami(Unit: Yen)

Summary of Real Estate Appraisal Report
Property Name

Hotel WBF Fukuoka Tenjin Minami

Appraisal Value

1,990,000,000

Appraisal firm

The Tanizawa Sogo Appraisal Co., Ltd.

Date of Value

July 1, 2018
Item

Indicated value by income approach
Indicated value by direct capitalization
methodDetails

Description,etc.

1,990,000,000

100,701,384(a)Gross potential income

100,701,384(b) Vacancy loss, etc.

0(2) Operating expenses

10,230,708

Fee
Utilities expenses
Repair expenses

Property management fee
Tenant leasing cost, etc.
Property taxes

indicated value by DCF method.

2,040,000,000(1)Operating revenue ((a)−(b))

Maintenance and management

Estimated by correlation of the indicated value by direct capitalization method and theNot recorded in consideration of contract details, etc.

0

Not recorded as cost is allocated to tenants.

0

Not recorded as cost is allocated to tenants.

590,000
1,320,000
07,421,500

Appraised by reference to repair and renewal expenses in the ER and the level ofsimilar real estate.
Appraised according to hearings from requesters.
Not recorded in consideration of contract details, etc.
Appraised according to the actual.

Insurance premium

295,000

Appraised according to insurance premium for similar properties.

Other expenses

604,208

Appraised according to financial performance.

(3) Net operating income(NOI=(1)−(2))(4) Financial interests on deposits

90,470,676
432,000(5) Capital expenditures

1,180,000(6) Net cash flow (NCF=(3)+(4)−(5))

88,722,676(7) Capitalization rate

Indicated value of DCF method

4.4%

Appraised investment return as 1.0%.
Appraised according to ER and capital expenditures for similar properties.

Appraised by reference to repair and renewal expenses in the ER and the level ofsimilar real estate.

1,970,000,000

Discount Rate

4.4%

Terminal capitalization rate

4.6%

Appraised by calculating the base yield of residential complex based on the yield offinancial products, considering an individual risk.
Appraised by adding future uncertainty based on the cap rate. 4.5% for the tenth year.

8Indicated value by cost approach

2,040,000,000

Ratio of land

64.6%

Ratio of building

35.4%

Estimated by adjusting the replacement cost

Matters considered in reconciliation of indicated values andDetermined using the indicated value by income approach as standard and bydetermination of appraisal values

reference to the indicated value by cost approach.

9(2) Hakata-eki Higashi 113 Building(Unit: Yen)

Summary of Real Estate Appraisal Report
Property Name

Hakata-eki Higashi 113 Building

Appraisal Value

2,070,000,000

Appraisal firm

Daiwa Real Estate Appraisal Co.,Ltd.

Date of Value

January 31, 2018
Item

Indicated value by income approach
Indicated value by direct capitalization
methodDetails

Description,etc.

2,070,000,000

162,313,408(a) Gross potential income

171,208,640(b) Vacancy loss, etc.

8,895,232(2) Operating expenses

52,310,443

Fee
Utilities expenses
Repair expenses

Property management fee
Tenant leasing cost, etc.

Property taxes

indicated value by DCF method.

2,150,000,000(1)Operating revenue ((a)−(b))

Maintenance and management

Estimated by correlation of the indicated value by direct capitalization method and theRecorded taking into consideration the average vacancy rate in the area,
competitiveness of the subject real estate, etc.

11,400,000

Recorded by judging the actual data.

15,681,000

Appraised by reference to historical data.

8,611,083
3,809,553
970,890
10,939,100

Appraised based on the ER by reference to the level of repair expenses of similar realestate.
Appraised rent revenue as 2.5%
Recorded the amount equivalent to 1 month rent to be paid by newly occupying tenant
by reference to the level of similar real estate.
Appraised according to the actual.

Insurance premium

245,817

Recorded the actual data.

Other expenses

653,000

Appraised by reference to the actual data of other miscellaneous expenses.

(3) Net operating income(NOI=(1)−(2))(4) Financial interests on deposits(5) Capital expenditures(6) Net cash flow (NCF=(3)+(4)−(5))

110,002,965
961,764
12,007,370

Appraised based on the ER by reference to the level of renewal expenses of similar realestate (taking into consideration the CM fee).

98,957,359(7) Capitalization rate

Indicated value of DCF method

Appraised investment return as 1.0%.

4.6%

Appraised by comprehensively taking into account the competitiveness of the subject
real estate, etc.

2,030,000,000

Discount Rate

4.4%

Estimated by adjusting the replacement cost

Terminal capitalization rate

4.8%

Appraised by reflecting aging risk, market trend risk, etc

Indicated value by cost approach

2,360,000,000

Ratio of land

84.2%

Ratio of building

15.8%

Estimated by making depreciation adjustment to replacement cost.

Matters considered in reconciliation of indicated values andDetermined using the indicated value by income approach as standard and bydetermination of appraisal valuereference to the indicated value by cost approach.

10

6. Profile of the seller and planned buyer(1) Seller Profile (Hotel WBF Fukuoka Tenjin Minami)
Name

Godo-Kaisha Topcat

Location

Capital5-1-4, Toranomon, Mianto-ku, Tokyo
Representative partner: Ippanshadanhoujin Sarushima,
Operational executor: Takaaki Fukunaga
1. Acquisition, ownership, disposition of real estate
2. Leasing and management of real estate
3. Acquisition, ownership, disposition of beneficially interest in trust
4. Acquisition, ownership, disposition of securities
5. All business incidental to the above
100,000 yen

Established

October 20, 2015

Representative
Main Business Description

Net Asset
Total Asset
Major shareholder and

Not disclosed as consent from the seller has not been obtained.

ratio of shareholding
Relationship with SAR or the Asset Manager
Capital relationship
Personnel
Relationship

There is no capital relationship to report.
There is no personnel capital relationship to report.

Business Relation

There is no business relationship to report.

Related party or not

The seller does not fall under the category of interested person, etc. as provided in Act on
Investment Trusts and Investment Corporations (the "Investment Trusts Act"), but falls under
the category of interested party (Note) prescribed in the “Rules on Transactions with
Interested Parties”, which is the voluntary rules set forth by the Asset Manager for
preventing conflict of interests regarding its management of SAR’s assets. Upon
determination of the acquisition of the assets, the Asset Manager has performed
deliberation and approval in accordance with the voluntary rules.

(Note) "Related Party" means (i) Star Asia Management Limited, (ii) Star Asia Management Japan Limited, (iii) Star Asia
Asset Management LLC, (iv) Star Asia Group LLC, (v) Star Asia Asset Advisors, CO., Ltd., (vi) Star Asia Sogokaihatsu Co.,
Ltd., (vii) Malcolm F. MacLeanIV, (viii) Taro Masuyama and (ix) investment vehicles in Japan that are the investment
destination of funds (excluding minority investments) for which Malcolm F. MacLean IV and Taro Masuyama makeinvestment decisions (a) that are in Japan and own or acquire investment assets such as real estate or (b) that own
or acquire SAR’s investment units. The same shall apply hereinafter. Godo-Kaisha Topcat falls under investment
vehicles in Japan that are the investment destination of funds (excluding minority investments) for which Malcolm F.
MacLean IV and Taro Masuyama make investment decisions (a) that are in Japan and own or acquire investment
assets such as real estate.

(2) Planned buyer profile (Hakata-eki Higashi 113 Building)Name

Godo-Kaisha Sunrise

Location

Capital1-1-1, Uchisaiwaicho, Chiyoda-ku, Tokyo
Representative partner: Ippanshadanhoujin IES2,
Operational executor: Hiroki Yamamoto
1. Acquisition, ownership, disposition of real estate beneficiary interests in trust
2. Acquisition, ownership, disposition of real estate
3. All business incidental to the above
10 million yen

Established

July 3 2018

Representative
Main Business Description

Net Asset
Total Asset

Not disclosed as consent from the seller has not been obtained.

11

Major shareholder andratio of shareholding
Relationship with SAR or the Asset Manager
Capital Relationship
Personnel
Relationship

There is no capital relationship to report.
There is no personnel relationship to report.

Business Relation

There is no businessl relationship to report.

Related party or not

The planned buyer does not fall under the category of interested person.

7. Status of Parties Related to the Acquisition of the Property
Hotel WBF Fukuoka Tenjin Minami
Current owner, current trustee

Previous owner, previous
trusteeCompany Name

Godo-KaishaTopcat

Other than the one with a relationshipof special interest

Relationship with parties

The company does not fall under the category of

who have special interests

interested person, etc. as provided in the―Investment Trusts Act, but falls under the
category of interested party prescribed in the“Rules on Transactions with Interested Parties”
set forth by the Asset Manager.
Acquisition background andAcquired for investment management purpose―

Acquisition Price

1,900 million yen―

Acquisition period

April 27, 2018―

reason, etc.

8.

9.

Transaction with interested person, etc.
The Asset Replacement is not transactions with interested person, etc. as provided in the Investment Trusts
Act, but the seller in the asset acquisition falls under the category of interested party prescribed in the “Rules
on Transactions with Interested Parties,” which is the voluntary rules set forth by the Asset Manager for
preventing conflict of interests regarding its management of SAR’s assets. Upon deciding on the acquisition of
the asset, the Asset Manager has performed deliberation and resolution in accordance with the voluntaryrules.
Overview of broker(1) Hotel WBF Fukuoka Tenjin Minami① Broker Profile

Name

Jones Lang LaSalle, Inc.

Location

2-13-10, Nagata-cho, Chiyoda-ku, Tokyo

Representative

Toshinobu Kasai

Main business description

1. Consultant and research of real estate investment
2. Sales, trading, leasing, management of real estate; and agent and brokerage of such
3. Appraisal and consultant of real estate
4. through 24. (Omitted)
25. All business incidental to the above

Capital

195 million yen

Established

April 23, 1985

Relationship with SAR or the Asset Manager

12Capital relationship

There is no capital relationship to report

Personnel

There is no personnel relationship to report

Relationship
Business Relation

There is no business relationship to report

Related party or not

The aforementioned company does not fall under the category of related party of SAR/theAsset Manager.

② Breakdown and value of the brokerage commission
Since the consent has not been obtained from the broker, the information is not disclosed as an
undisclosed case due to unavoidable reasons.
(2) Hakata-eki Higashi 113 Building① Broker Profile
Name

Star Asia Asset Advisors Co., Ltd.

Location

2-8, Nihonbashikodenmacho, Chuo-ku, Tokyo

Representative

Keiji Watanabe

Main business description

1. Consulting
2. Planning, design, development, structuring of computer software, hardware, and network
3. Internet-related services
4. Buy/Sell, holding, and management of securities, real estate, and monetary claim
5. Information processing related services
6. Telecommunication business
7. Real estate brokerage
8. Type II financial instruments business9. Investment advisory and agency
10. Lease, management and operation of real estate
11.- through 13. (Omitted)
14. All business incidental to the above

Capital10 million yen

EstablishedMay 2, 2008

Relationship with SAR or the Asset Manager
Capital relationship

There is no capital tie to be noted between SAR/the Asset Manager and the abovementioned
company, however the aforementioned company falls under the category of interested party
prescribed in the “Rules on Transactions with Interested Parties”, which is the voluntary rules
set forth by the Asset Manager for preventing conflict of interests regarding its managementof SAR’s assets. Upon determination of retainance as the broker, the Asset Manager has
performed deliberation and approval in accordance with the voluntary rules.

Personnel

There is no personnel relationship to report.

Relationship
Business Relation

There is no business relationship to report.

Related party or not

The aforementioned company does not fall under the category of interested person, etc. asprovided in the Investment Trusts Act, but falls under the category of interested party
prescribed in the “Rules on Transactions with Interested Parties”, which is the voluntary rules
set forth by the Asset Manager for preventing conflict of interests regarding its managementof SAR’s assets. Upon determination of the retainance as broker, the Asset Manager has
performed deliberation and approval in accordance with the voluntary rules.

13

② Breakdown and value of the brokerage commission
Breakdown ofBrokerage fee for transfer of Trust Beneficiary Interest
Brokerage Fee
Amount of
1st:Transfer Price x 1.5%（20,947,500 yen）
Brokerage Fee
2nd:Transfer Price x 1.5%（21,802,500 yen）
Calculated by the above calculation method (excluding consumption tax and local
consumption tax)

10.

Schedule for the Transactions(1) Hotel WBF Fukuoka Tenjin Minami
July 23, 2018
Acquisition decided
Conclusion of a sale and purchase agreement of trust beneficiary interest
By the end of
Acquisition of beneficiary interest in trust (planned)
December 2018
Payment of acquisition price (planned)
Conclusion of the property management contract (planned)(2) Transfer of Hakata-eki Higashi 113 Building
July 23, 2018
Transfer decided
Conclusion of each of the sale and purchase agreements of eachquasi-co-ownership of trust beneficiary interest in trust
Receipt of deposit
December 3, 2018
Transfer of quasi-co-ownership (49%) of real estate beneficiary interest in
trust (planned)
Receipt of transfer price for quasi-co-ownership (49%)
of real estate beneficiary interests in trust (planned)
February 1, 2019
Transfer of quasi-co-ownership (51%) of real estate beneficiary interest in
trust (planned)
Receipt of transfer price for quasi-co-ownership (51%) interest of realestate beneficiary interests in trust (planned)

11.

Settlement method
As for the Asset to be Acquired, the acquisition price is scheduled to be settled in lump sum payment on
the planned acquisition date. As for the Asset to be Transferred, SAR will receive the sales price withdeduction of 1 million yen (2 million yen in total) for 1st and 2nd settlement that SAR has received as
deposit on the contract date of the sale and purchase agreement of beneficiary interest in trust.

12.

Future outlook
The Asset Replacement has led to a change in SAR’s assumptions of forecasts of financial results
disclosed in “Finanial Report for Fiscal Period Ended January 31, 2018” as of March 16, 2018, and asdifference in operating revenue, ordinary income and cash distribution per unit from the previous forecast
expected to be 10% or more, SAR has made revisions on SAR’s forecasts of financial results for the sixth
fiscal period ending January 2019 (From August 1, 2018 to January 31, 2019).
In addition, SAR has made a revision on SAR’s forecasts of financial results and cash distribution for thefifth fiscal period ending July 2018 (from February 1, 2018 to July 31, 2018).
For details, please see “Notice Concerning Revision to Forecasts for Operating Results and Distribution
for the 5th Fiscal Period Ending July 31, 2018 and 6th Fiscal Period Ending January 31, 2019” as of today.

14

End of Document<Appendix>
Reference Material 1
Reference Material 2
Reference Material 3

Portfolio List after the Aseet Replacement
Summary of engineering report and earthquake risk analysis
Hotel WBF Fukuoka Tenjin Minami: photos of exterior of property andlocation map<Reference>
Other press releases published as of today
・“Supplementary Material Concerning Acquisition and Transfer (Asset Replacement) of Real Estate BeneficiaryInterests in Trust”
・“Notice Concerning Revision to Forecasts for Operating Results and Distribution for the 5th Fiscal Period Ending
July 31, 2018 and 6th Fiscal Period Ending January 31, 2019”＊ This material will be distributed to Kabuto Club, Land, Infrastructure and Transport Press Club,
Land, Infrastructure and Transport Construction Trade Paper Press Club＊ Find SAR at http://starasia-reit.com/en/

15

Reference Material 1: Portfolio List after the Aseet Replacement

Property

Property Name

No.

Location(Planned)

Real estate

acquisition

appraisal

Investment

price

value

ratio (%)

(million yen)(million yen)

(Note 3)(Note 1)

(Note 2)

OFC-01

Minami-Azabu Shibuya Building

Minato-ku, Tokyo

2,973

3,150

3.4

OFC-03

Honmachibashi Tower

Osaka-shi, Osaka

6,065

6,920

7.0

Shibuya-ku, Tokyo

1,763

2,430

2.0

OFC-04

Nishi-Shinjuku Matsuya
Building

OFC-05Alphabet Seven

Minato-ku, Tokyo

1,725

2,330

2.0

OFC-06

Shibuya MK Building

Shibuya-ku, Tokyo

2,042

2,810

2.4

OFC-08Asahi Building

Yokohamashi, Kanagawa

6,320

6,890

7.3

OFC-09Hakata-eki East Place

Fukuoka, Fukuoka

2,286

2,480

2.7

Chuo-ku, Tokyo

1,450

1,520

1.7

Office property subtotal

28.6

OFC-10Nihonbashi Hamacho Park
Building

RSC-01

Urban Park Azabujuban

Minato-ku, Tokyo

2,045

2,170

2.4

RSC-02

Urban Park Daikanyama

Shibuya-ku, Tokyo

6,315

7,310

7.3

RSC-04

Urban Park Shin-Yokohama

Yokohama-shi, Kanagawa

2,528

2,580

2.9

RSC-05

Urban Park Namba

Osaka-shi, Osaka

1,490

1,610

1.7

RSC-06

Urban Park Gokokuji

Toshima-ku, Tokyo

1,460

1,510

1.7

RSC-07

Urban Park Kashiwa

Kashiwa-shi, Chiba

1,186

1,190

1.4

RSC-08

Urban Park Ryokuchi Koen

Suita-shi, Osaka

1,550

1,570

1.8

RSC-09Urban Park Koenji

Suginami-ku, Tokyo

1,167

1,170

1.4

Residential property subtotal

20.6

LGC-01

Iwatsuki Logistics

Saitama, Saitama

6,942

7,130

8.1

LGC-02

Yokohama Logistics

Yokohama-shi, Kanagawa

3,560

4,050

4.1

LGC-03

Funabashi Logistics

Funabashi-shi, Chiba

7,875

8,560

9.1

LGC-04

Baraki Logistics

Ichikawa-shi, Chiba

4,700

4,890

5.5

LGC-05Tokorozawa Logistics

Tokorozawa-shi, Saitama

1,300

1,400

1.5

LGC-06

Funabashi Nishiura Logistics I

Funabashi-shi, Chiba

3,000

3,010

3.5

LGC-07

Funabashi Nishiura Logistics II

Funabashi-shi, Chiba

821

833

1.0

LGC-08

Matsubushi Logistics

Kitakatsushika, Saitama

2,755

2,850

3.2

Logistics property subtotal

35.9

HTL-01R&B Hotel Umeda East

Osaka-shi, Osaka

2,069

2,290

2.4

HTL-02

Smile Hotel Namba

Osaka-shi, Osaka

1,750

1,750

2.0

Edogawa-ku, Tokyo

3,827

3,890

4.4

Yokohama-shi, Kanagawa

3,248

3,270

3.8

Fukuoka-shi, Fukuoka

1,970

1,990

2.3

Hotel property subtotal

14.9

86,182100.0

HTL-03
HTL-04
HTL-05BEST WESTERN Tokyo
Nishikasai
BEST WESTERN Yokohama
Hotel WBF Fukuoka Tenjin
Minami93,553(Note 1) With respect to the "(Planned) acquisition price”, the purchase price in the sale and purchase agreement in relation to acquired assets andAsset to be Acquired is indicated. Consumption tax, local consumption tax, and expenses required for acquisition are not included in thetransaction price.
(Note 2) With respect to the appraisal value of the acquired properties other than those acquired during the fifth fiscal period, the appraisal value as of16

January 31, 2018 in the Real Estate Assessment Report is indicated. With respect to the properties acquired during the fifth fisical period(Nihonbashi Hamacho Park Building, Urban Park Ryokuchi Koen, Urban Park Koenji, Funabashi Nishiura Logistics I, and Funabashi Nishiura
Logistics II), the appraisal value as of November 1, 2017 in the Real Estate Assessment Reportis indicated.
(Note 3) “Investment ratio” shows the ratio of the (planned) acquisition price of each of acquired assets or Asset to be Acquired against the sum of the(planned) acquisition price for acquired assets and Asset to be Acquired rounded to the first decimal place.

17Reference Material 2: Summary of engineering report and earthquake risk analysis
Type

OfficePropertyno.

Property name

PML (%)

OFC-01 Minami-Azabu Shibuya Building

12.6

OFC-03 Honmachibashi Tower

2.7

OFC-04 Nishi-Shinjuku Matsuya Building

12.2

OFC-05 Alphabet Seven

7.8

OFC-06 Shibuya MK Building

13.1

OFC-08 Asahi Building

4.8

OFC-09 Hakata-eki East Place

7.3

OFC-10 Nihonbashi Hamacho Park Building

12.1

RSC-01 Urban Park Azabujuban

7.2
Existing bldg. 12.7
Bldg. A: 10.2
Bldg. B: 7.9

RSC-02 Urban Park Daikanyama

Residence

RSC-04 Urban Park Shin-Yokohama

14.5

RSC-05 Urban Park Namba

13.2

RSC-06 Urban Park Gokokuji

9.2

RSC-07 Urban Park Kashiwa

10.0

RSC-08 Urban Park Ryokuchi Koen

Residential bldg. 8.8

RSC-09 Urban Park Koenji

Bldg. A:6.7

12.2

LGC-02 Yokohama Logistics

10.8
Bldg.1A: 13.9

LGC-04 Baraki Logistics

Bldg.1B: 14.4

Bldg.2: 11.1

10.9

LGC-05 Tokorozawa Logistics

Warehousing bldg.: 9.7

Office bldg.: 3.8

LGC-06 Funabashi Nishiura Logistics I

Warehousing bldg.: 8.8

Office bldg.: 13.5

Office bldg.: 14.3 Factory bldg.: 15.9
Warehousing bldg.: 14.0

LGC-07 Funabashi Nishiura Logistics II

Hotel

Bldg. B:6.9

LGC-01 Iwatsuki Logistics

LGC-03 Funabashi Logistics
Logistics

Parking bldg. 4.0

LGC-08 Matsubushi Logistics

9.8

HTL-01 R&B Hotel Umeda East

11.4

HTL-02 Smile Hotel Namba

12.3

HTL-03 BEST WESTERN Tokyo Nishikasai

13.3

HTL-04 BEST WESTERN Yokohama

7.9

HTL-05 Hotel WBF Fukuoka Tenjin Minami

7.8

Entire Portfolio(29 properties) (Note)

3.33（Note）SAR consigned calculation of individual PML and portfolio PML to Deloitte Tohmatsu Property Risk Solution Co., Ltd. and have received“portfolio
earthquake risk evaluation report” dated July 9, 2018. The figure in the entire portfolio column is the PML for the entire portfolio (portfolio PML)
based on such report.

18

Reference Material 3: Hotel WBF Fukuoka Tenjin Minami: photos of exterior of property and location map< Photo of exterior of property>< Location map>

19