March 16, 2023
For Immediate Release
Real Estate Investment Trust Securities Issuer
Star Asia Investment Corporation
Representative:
Atsushi Kato, Executive Director(Code: 3468)
Asset Management Company
Star Asia Investment Management Co., Ltd.
Representative:
Atsushi Kato
President and CEO
Contact:
Akiko Kanno
Director and CFO
TEL: +81-3-5425-1340

Notice Concerning Signing of Building Lease Option Agreement Presupposing Extension of the Building(Funabashi Hi-tech Park Factory I)
Star Asia Investment Management Co., Ltd. (the “Asset Manager”), to which Star Asia Investment Corporation(“SAR”) entrusts the management of its assets, announces today that, concerning “Funabashi Hi-tech Park FactoryI” (the Property”) which is an asset managed by SAR, a Building Lease Option Agreement (the “Lease OptionAgreement”) has been signed with the current tenant which presupposes the building extension of the Property(the “Building Extension”). Details are stated below.

1. The Purpose and Reason for the Building Extension and Signing of the Lease Option Agreement
SAR, as a part of active management aiming to maximize unitholders’ interests and with the aim to improve
profitability of the portfolio, is considering multiple options for each of the assets held, such as redevelopment,building extension, and asset replacement etc.
At the property, unused floor area (under floor area ratio restrictions) has been confirmed, and as possibilities
for internal growth by using such unused floor area was considered and verified, a request was received fromthe current tenant to extend the building to enhance capacity. In response to the request, the Asset Manager
confirmed the specific requests for building extension with the current tenant, calculated the buildingextension cost based on such information, negotiated the lease conditions after the building extension withthe current tenant, and considered the profitability for the Property after the building extension, and was able
to confirm that the profitability of the Property would improve by effective use of the unused floor area bybuilding extension. Therefore, the Building Extension and signing of the Lease Option Agreement which
presupposes acquisition of the Building Extension portion of the building was decided. The Lease Option
Agreement sets forth the agreement that when the Building Extension construction works is completed (to beconfirmed based on the confirmation application drawing) and the tenant commences using such extended
portion, the lease agreement will transfer to a lease agreement for the entire Property which includes theBuilding Extension portion, and will provide for a non-cancellable period of 10 years, and therefore, it isenvisioned that it would contribute to long-term stable increase in revenues. To note, the construction contract
for the Building Extension has not yet been signed as of today, and will be announced after it is signed.
The key points of the Building Extension and signing of the Lease Option Agreement are as follows.

1【Key Points of the Building Extension and Signing of the Lease Option Agreement】
Revenue improvement measure for a long-term span
Contribute to increase in revenues, as rents will arise for the extended building portion. Also, by(1)
providing for a non-cancellable period for the 10-year ordinary lease will contribute to long-term
stable revenues.

(2)

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

(3)

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

2. Details of the Lease Option Agreement (Note1)
Contract counterparty
Current tenant (Number of tenants: 1)
Name of Property
Funabashi Hi-tech Park Factory I
Net rentable area
8,819.65 ㎡
Leased area
8,819.65 ㎡
Rent
Not disclosed (Note2)
Deposit and Guarantee Money Not disclosed (Note3)
Signing date of building lease
March 16, 2023 (scheduled date)
option agreement
Type of lease contract
Ordinary building lease contract
Term of lease contract
10 years from the delivery date, with provision for automatic renewal
every 3 years.
Revision of Rents
Revision possible at the time of contract renewal.
Early termination
Not allowed for 10 years.
(Note 1)

The above is described based on the Option Lease Agreement signed today.

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

(Note 3)

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

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

After extension

Increase/Decrease
478.67 ㎡ (+5.7%)

8,340.98 ㎡

8,819.65 ㎡

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

1,710 million yen

2,070 million yen

360 (+21.1%)

110 million yen (Note 3)

134 million yen (Note 4)

24 million yen(+21.8 %)(Note 1)

Floor area usage ratio(Note 2)(Current / Designated)
Appraisal value (Surveyvalue)
Annual NOI(Note 1) 0.1% of the total leasable area of the assets held as of the end of the fiscal period ending January 31, 2023.
(Note 2) Gross floor area (area subject to floor area ratio restrictions) ÷ site area ×100
(Note 3) The figures stated are 2 times the actual figures recorded for the fiscal period ended January 2023.
(Note 4) The is the annual estimate figure, based on the rents stated in the Lease Option Agreement, and after2

excluding special factors of the year of construction completion.

4. General Description of the PropertyProperty
No.

LGC-09The Property (before extension)

The Property (after extension) (Note 1)

Name of specified asset

Funabashi Hi-tech Park Factory I

Type of specified asset

Trust beneficial interest

Trustee

Mitsubishi UFJ Trust and Banking Corporation

Location

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

Date acquired

August 1, 2020

End of December 2023 (expected)

Form ofProprietary ownershipownership
Site area

13,420.44 ㎡

Use district

Industrial district

BuildingLand

coverage ratio

32.72%（60％）

34.88%（60％）

62.16%（200％）

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

Proprietary ownershipownership
Total floor
area

BuildingUse
Timing ofconstruction

8,340.98 ㎡ (Note 2)

8,868.22 ㎡ (Note 3)

Factory

Factory
Construction works to begin in June

May 19, 2003

Structure/2023 (expected)
Steel construction, galvanized steel roof, 2-stories highno. of stories
PM Company

Tokyo Capital Management Co., Ltd.

Master lease company

Master Lessee Mars Limited GK

Type of master lease

Pass-throughSecurity

UnsecuredSpecia notations
Designer
Contractor

None
Toyo Construction Co. Ltd. First Class

To be announced after the constructionArchitect Officecontract is signed.

Toyo Construction Co. Ltd.

To be announced after the construction
contract is signed.

(Note1) Stated based on the plan assumed by the Asset Manager based on the Lease Option Agreement and theconstruction confirmation application drawings etc. as of today. As of today, the construction contract for the
Building Extension has not been signed. Furthermore, an appraisal report related to the appraisal value after
the Building Extension and the seismic risk evaluation report regarding earthquake resistance have not beenobtained. Such appraisal report and seismic risk evaluation report regarding earthquake resistance are planned
to be obtained after the construction is completed.
(Note2) Total floor space indicates the leasable floor space in the building lease agreement before the expansion.
(Note3) The total floor area is the area of the entire building as indicated in the application for confirmation (building)for the building expansion.

35.

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

Property Name

Funabashi Hi-tech Park Factory I

Appraisal value (survey value)2,070,000,000 yen

Appraisal institution

Japan Real Estate Institute

Date of valuation

March 13, 2023
Items

Value indicated by income approach

Details

General Description etc.

2,070,000,000

Value by Direct Capitalization Method

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

147,897,000

A. Potential total revenue

147,897,000

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

PM Fee13,401,000
204,000

Non-life insurance premiums(5)Capital expenditures(6) Net income (NCF＝(3)+(4)－(5))(7) Capitalization Rate
Value by DCF method

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

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

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

Recorded the master lease fees and bank fees.

0Tenant solicitation costs etc.
Taxes and public dues

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

0

Utility charges
Repair costs

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

0None

134,496,000
1,137,000

Investment yield assessed at 1.0%.

1,348,000

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

134,285,000
Appraised taking into account the competitiveness of the subject real estate
property and transaction yield etc. of similar real estate properties.

6.4%
2,040,000,000

Discount ratio

6.3%

Terminal Cap Rate

6.7%

Value indicated by cost approach-Land ratio
Building ratio

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

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

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

46.

Schedule of signing of the Building Lease Option Agreement and Building Extension
March 16, 2023
Sign Building Lease Option Agreement
Beginning of April 2023 (expected)
Sign construction contract(expected)
Commence building extension construction works
Around June 2023 (expected)(expected)
Complete building extension construction works
Around December 2023 (expected)(expected)
Around January 2024 (expected)

Commence operations of extended building ／新賃料へ移行(expected)

7.

Timing of payment and amount of construction costs for the Building Extension
The payment schedule will be announced again, after the construction contract for construction works of theBuilding Extension is signed.

8.

Future Outlook
The signing of the Lease Option Agreement and the Building Extension are included in the assumptions
underlying management status forecast announced in the “Financial Report for Fiscal Period Ended January 31,2023” announced today, and thus there are no revisions to the management status forecasts for the fiscal
period ending July 2023 (February 1, 2023 to July 31, 2023) and for the fiscal period ending January 2024
(August 1, 2023 to January 31, 2024).

9.

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

*Star Asia Investment Corporation website address:

http://starasia-reit.com/en/<Appendix>
Reference document: Image drawing of building extension of Funabashi Hi-tech Park Factory I<Other press releases announced today>・(REIT) Financial Report for Fiscal Period Ended January 31, 2023
・Notice Concerning the Transfer of Trust Beneficial Interests of Domestic Real Estate (Urban Park Gokokuji)・Notice Concerning signing of Right of First Refusal Agreement for Acquisition of Assets (Preferred EquitySecurities) and Receipt of a Letter of Intent regarding Lending of the Preferred Equity Securities (HAKUSANHOUSE)
・Notice Concerning Partial Amendment to the Management Guidelines of the Asset Managerr

This is an English translation of the announcement in Japanese dated March 16, 2023. However, no assurance orwarranties are given for the completeness or accuracy of this English translation.

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<Appendix>
architectural perspective

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