March 2, 2020

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 Acquisition of Mezzanine Loan Debt
Star Asia Mezzanine Loan Debt Investment Series 5 (B Beneficiary Interest)

Star Asia Investment Corporation (“SAR”) announces that Star Asia Investment Management Co., Ltd. (the “AssetManager”), to which SAR entrusts the management of its assets, has decided today to invest in mezzanine loandebt (the acquisition of mezzanine loan debt is hereinafter referred to as the “Acquisition”). Details are asfollows.
The Acquisition is SAR’s fifth mezzanine loan debt investment and SAR regards the continued diversification ofrevenue-generating opportunities, as a part of the active managements, such as these as a differentiation
strategy in pursuit of maximization of unitholder value. Going forward, SAR will continue to discuss measures tocreate new investment opportunities corresponding to the state of the real estate market, without being boundby previous examples.
1. Overview of the Acquisition(1) Asset to be acquired

Subordinated beneficiary interest : Beneficiary interest of trust (the “BBeneficiary Interest”) with the base loan claims as asset in trust (thebase loan shall be a non-recourse loan to GK (undisclosed due to therequest from the “GK”.), whose collateral asset shall be the trust
beneficiary interest with Sanmaison Ohorikoenkita as the main asset intrust (the “Collateral Asset”)(Note 1).

(2) Name of asset to be acquired(3) Trustee

Star Asia Mezzanine Loan Debt Investment Series 5
Undisclosed (Undisclosed due to the request from the trustee (the“Trustee”).
From March 6, 2020 to March 31, 2030
Collateral Asset: The Beneficiary Interest in trust with Sanmaison
Ohorikoenkita as the main asset in trust(4) Trust period (Planned)(5) Collateral asset for loan claims(non-recourse loan) as asset intrust(6) Amount of the B BeneficiaryInterest(7) Planned acquisition price of the B
Beneficiary Interest(8) Planned dividend yield (Note 2)(9) LTV of loan claims (non-recourseloan) as asset in trust(10) Planned contract date of B
Beneficiary Interest transferagreement

150,000,000 yen
150,000,000 yen (excluding acquisition expenses, etc.)
Base rate (Note 3) +5.19%
Approximately 76.3% (Note 4)
March 6, 20201

(11) Planned acquisition date of the
B Beneficiary Interest(12) Planned dividend payment dateof the B Beneficiary Interest(13) Final redemption date (Planned)(14) Acquisition financing(15) Settlement method(16) Seller(17) Overview of the B BeneficiaryInterest structureMarch 6, 2020
20 of March, June, September and December (Four times a year)(The first dividend payment date is June 20, 2020.)
September 6, 2025 (Note 5)
Cash on handLump-sum settlement upon acquisition of the B Beneficiary Interest
Undisclosed (Undisclosed due to the request from the seller (the“Seller”).
Operator: GKGK

Trustee(A-ABLLender)

Collateral Asset
Sanmaison
Ohorikoenkita
1,140 million
yen(Appraisal value)

1.

2.

3.
4.

[Borrowing]
Non-recourse loan

[Loan]
Nonrecourseloan(BBeneficiary Interest)
150millionyenSAR[Equity]
Silent partnership,investment, etc.

(CBeneficiary Interest)

Loan (non-recourse loan) as asset in trust of the B
Beneficiary Interest will be executed on March 6, 2020 by
the Trustee to the GK based on an aggregate of A-ABL(monetary loan with limited special contract for non-exempt
property), approx. 150 million yen to be entrusted for the B
Beneficiary Interest and cash entrusted for the C BeneficiaryInterest.
Of the B Beneficiary Interest and the C Beneficiary Interest
granted to the Seller, SAR plans to acquire the B BeneficiaryInterest from the Seller. The GK plans to acquire theCollateral Asset using the payment for silent partnershipinvestment, etc. and the borrowing (non-recourse loan)
from the Trustee on the same day.
Dividend for the B Beneficiary Interest will be conductedbased on the interest for the borrowing (non-recourseloan) .
The B Beneficiary Interest is subordinated to the A-ABL
lender, but is prioritized over the C Beneficiary Interest interms of dividend payment and redemption of principal. On
the other hand, interest of the non-recourse loan from theTrustee to the GK, which is the base for dividend payment
to the B Beneficiary Interest and redemption of principal,
are prioritized over those for “equity (silent partnershipinvestment, etc.)” of GK. If the value of the Collateral Assetshould fall, “equity (silent partnership investment, etc.)” of
the GK is the first to incur loss, and after all “equities (silentpartnership investment, etc.)” have incurred loss and all theC Beneficiary Interest have incurred loss, then the principalof the B Beneficiary Interest incurs loss.

2(18) Relationship between SAR/theAsset Manager and the GK* Based on information as ofMarch 2, 2020.

Capital relationship

There is no capital relationship to report
between SAR/the Asset Manager and the GK.
Personnel
There is no personnel relationship to report
relationshipbetween SAR/the Asset Manager and the GK.
Furthermore, there is no personnel
relationship to report between associatedpersons and associated companies of SAR/theAsset Manager and associated persons andassociated companies of the GK.
Business relationship
There is no business relationship to report
between SAR/the Asset Manager and the GK.
Furthermore, there is no businessrelationship to report between associatedpersons and associated companies of SAR/theAsset Manager and associated persons andassociated companies of the GK.
Related party status
There is no related party status to report
between SAR/the Asset Manager and the GK.
(Note 1) For an overview of the Collateral Asset, please refer to 2. Reason for the Acquisition <Overview ofCollateral Asset>.
(Note 2) SAR is scheduled to receive an up-front fee upon the acquisition of the B Beneficiary Interest
separately from the planned dividend payment.
(Note 3) Base rate is JBA 3-month JPY TIBOR. The Japanese yen TIBOR by JBA can be confirmed on the websiteof the JBA TIBOR Administration (http://www.jbatibor.or.jp/english/rate/). For each interest
calculation period, the rate announced at 11 a.m. (Tokyo time) two business days prior to the last dayof the previous calculation period of the relevant calculation period (the first date is two businessdays prior to the drawdown date of the loan claim of the trust asset of the B Beneficiary Interest) will
be applied as the base rate.
(Note 4) The figure indicates the ratio of (a) amount procured from the GK’s loans through a loan claim(non-recourse loan) to (b) the appraisal value indicated in the appraisal report obtained by GKregarding the Collateral Asset (1,140 million yen), rounded to one decimal place.
(Note 5) The final redemption date of the B Beneficiary Interest is September 6, 2025. However, the B
Beneficiary Interest may be repaid earlier due to the sale of the Collateral Asset and other reasons.

2. Reason for the Acquisition
The Acquisition will not only realize diversification of investment targets, but also likely boost distributableprofits since it will be conducted with cash on hand held by SAR, allowing SAR to receive interest income(planned interest rate: more than 5%) from effective use of own funds. Therefore, SAR has decided on theAcquisition judging that such will contribute to maximization of unitholder value. The Asset Manager
recognized the following points upon deciding the acquisition of the B Beneficiary Interest.
① The appraisal value of the Collateral Asset is 1,140 million yen, and LTV against the amount of
the B Beneficiary Interest and senior debts calculated based on this figure is 76.3%. Therefore,risk of loss while holding the B Beneficiary Interest is judged to be low.
② The trust asset of the Collateral Asset is a residential building located in Fukuoka area, whichfalls under the category of investment target defined by SAR and is believed to have strong
liquidity. In addition, since the loan can be fully repaid at 76.3% of the appraisal value asexplained in ① above, the certainty of redemption of the B Beneficiary Interest through saleof the Collateral Asset or refinancing is judged to be high.
③ The certainty of interest payment for the loan claim of the trust asset of the B BeneficiaryInterest is assessed to be high since its rent income is highly stable as shown in the evaluationof the Collateral Asset below.
④ As planned, the dividend rate of the B Beneficiary Interest is “base rate + 5.19%” (please referto 1. Overview of the Acquisition above), securement of profits that surpass theafter-amortization yield of real estate portfolio can be expected.

3⑤ It has been determined that the certainty of interest payment for the loan claim of the trust
asset of the B Beneficiary Interest is high, even if capital expenditures and repair expenses arise
more than assumed.
⑥ The Collateral Asset is a newly constructed property and planned to be transferred with nooccupancy. However, allowance for management operations including leasing expense and theinterest payment for borrowings will be made, thereby securing dividend income for certain
period.
Overview of Collateral Asset and Evaluation of Collateral Asset by the Asset Manager are as follows.
<Overview of Collateral Asset>
Asset type

Real estate beneficiary interest in trust

Property name

Sanmaison Ohorikoenkita

Planned acquisition dateMarch 6, 2020

Planned buyerGKLocation

2-1-28 Minato, Chuo-ku, Fukuoka-shi, Fukuoka

Use (Note 1)

ResidenceStructure (Note 2)

Reinforced Concrete (RC) structure with flat rooftop, 14 floors

Area

457.57 m2

Land (Note 3)
Building(Total floor area)

2,005.85 m2

Land

Proprietary ownership

Building

Sectional ownership (100%)(Note 4)

Type ofownership(Note 5)Construction completion
Earthquake PML (Note 6)

August 5, 2019
4.37%

Appraisal value 1,140 million yen
Appraisal NOI
49,445,516 yen
obtained

Appraisalby the GK (Note 7)(Note 8)

Appraisal dateFebruary 1, 2020

Appraiser

DAIWA REAL ESTATE APPRAISAL CO.,LTD.

Total number of units

25

Occupancy rate (Note 9)

0.0% (as of January 2020)

Special notation
Not applicable.
(Note 1) “Use” indicates the use stated in the real estate registry, and may differ from the present state.
(Note 2) ”Structure” indicates the structure stated in the real estate registry of the building.
(Note 3) “Land” is the entire land area stated in the real estate registry and may differ from the presentstate.
(Note 4) “Building (Total floor area)” is the total floor area stated in the real estate registry and may differ
from the present state.
(Note 5) “Type of ownership” is the type of right held by the trustee of Sanmaison Ohorikoenkita.
(Note 6) The PML (probable maximum loss) calculated in the evaluation of seismic risk analysis conducted
by DAIWA REAL ESTATE APPRAISAL CO.,LTD., which was entrusted by the GK upon acquisition ofthe Collateral Asset as part of efforts to grasp the appropriate price of the real estate is indicated.
“Probable Maximum Loss” means the probable maximum loss that may result from an earthquake
and, herein, refers to the extent of damage that may be suffered due to an earthquake of theassumed maximum scale (earthquake with a probability of occurring once in 475 years =earthquake with a probability of occurrence in 50 years of more than 10%) in the scheduled use
period (50 years = useful life of a general building), expressed as the estimated cost of restoring4

such damage (physical loss corresponding to a probability of more than 90% in the event ofoccurrence of such earthquake) as a percentage (%) of the replacement cost.
(Note 7) Items other than indicated above that are stated in the real estate appraisal report the GK has
obtained for grasping the appropriate price of the real estate at the time of its acquisition of theCollateral Asset are not disclosed as consent has not been obtained from the planned buyer of theCollateral Asset.
(Note 8) “Appraisal NOI” indicates the amount of net operating income (NOI) obtained through the direct
capitalization method, stated in the real estate appraisal report.
(Note 9) No leasing has begun as of January 2020.
<Evaluation of the Collateral Asset by the Asset Manager>
Sanmaison Ohorikoenkita, the Collateral Asset, is a residential property located at an approximately
7-minute walk from “Ohori-koen” on the Fukuoka Municipal Subway Airport Line. “Ohori-koen” station
has good access to the Tenjin district and Hakata district, as it is 3 minutes from “Tenjin” station and 8
minutes from “Hakata” station. Furthermore, it is approximately 16 minutes to Hakata station bybicycle, and is conveniently located for commuting to both work and school, and is an area which ishighly appealing to families as it is nearby Ohori-koen Park and Maizuru-koen Park with rich greenery.
In terms of property aspects, the all of the residential units are equipped with IH cooking heaters anddishwashers, and also functional and stylish facilities with LED lightings and the natural refrigerant CO2
heat pump water heater EcoCute makes for the newest type eco-housing specifications which is highly
safe and helps to save energy. Furthermore, the newest type of security system allowing for hands freekey system as well as 24-hour integrated security system have been installed. A housing performance
evaluation system where a third-party entity conducts screening has been used, and a “designperformance evaluation report” and “construction performance evaluation report” have beenobtained.
Each of the 25 units mainly consists of 2LDK and 3LDK layout. The Collateral Asset, which has been
newly built, has high standard of privacy protection as the top floor contains only one exclusive unit
and other floors have two units per floor, which makes the Collateral Asset competitive compared withother properties.
3. Seller profile
The Seller is a domestic financial institution. However, details are undisclosed as consent for disclosure has notbeen obtained from the Seller. There is no capital or personnel relationship to report between SAR/the AssetManager and the Seller as of today, but SAR has debt financed by the Seller.
In addition, the Seller does not fall under the category of a related party of SAR or the Asset Manager.
4. Transaction with interested person, etc.
The acquisition of the B Beneficiary Interest is not a transaction with an interested person, etc. under the Act
on Investment Trusts and Investment Corporations (Act No. 198 of 1951, as amended)or interested person, etc.
defined in the “Rules on Transactions with Interested Parties” set forth by the Asset Manager.
5. Schedule for the Acquisition
Decision date of the Acquisition
March 2, 2020
Contract date of the B Beneficiary Interest transfer agreement
March 6, 2020
Date of drawdown from the Trustee to the GK
March 6, 2020
Planned acquisition date of the B Beneficiary Interest
March 6, 2020
(Note) The Acquisition will be conducted on the assumption that the GK acquires the Collateral Asset on March
6, 2020 using the borrowings from the Trustee and payment for silent partnership investment, etc.
6. Settlement method
The Acquisition is planned to be settled through lump-sum payment of the acquisition price on the planned
acquisition date.
* Star Asia Investment Corporation website address: http://starasia-reit.com/en/<For Reference>5Other press releases etc. disclosed dated today.
Notice Concerning Conclusion of a Merger Agreement by and between Star Asia Investment
・Corporation and Sakura Sogo REIT Investment Corporation
・ Notice Concerning Split of Investment Units
Notice Concerning the Forecast of Operating Results and Distributions Subsequent to the Merger
・ of Star Asia Investment Corporation and Sakura Sogo REIT Investment Corporation for the Fiscal
Periods Ending January 31, 2021 and July 31, 2021
Notice Concerning Acquisition and Transfer (5th Asset Replacement) of Real Estate Beneficiary・Interests in Trust・ Notice Concerning Debt Financing
Notice Concerning Revision to Forecasts of Operating Results and Distributions for the Fiscal
・Periods ending January 31, 2020 and July 31, 2020
・ Notice Concerning Partial Amendment to the Management Guidelines of the Asset Manager・ Supplementary Explanatory Material Regarding Press Releases dated today (March 2)This is an English translation of the announcement in Japanese dated March 2, 2020.
However, no assurance or warranties are given for the completeness or accuracy of this English translation.

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