NEWS RELEASE
March 7, 2024
For Immediate Release
Investment Corporation
Japan Real Estate Investment Corporation
Jo Kato, Executive Director(TSE code: 8952)
Asset Management Company
Japan Real Estate Asset Management Co., Ltd.
Shojiro Kojima, President & CEO
Contact: Masaru Motooka
Executive Officer & General Manager
Strategic Planning Department
Phone: +81‐3‐3211‐7951

Announcement of Acquisition of Domestic Real Estateand Disposition of Trust Beneficiary Interest in Domestic Real Estate
Japan Real Estate Investment Corporation (“JRE”) hereby announces that Japan Real Estate AssetManagement Co., Ltd. (“JRE‐AM”), the asset management company to which JRE entrusts asset investment,
today decided to acquire domestic real estate and dispose of trust beneficiary interest in domestic real estate(the “Acquisition” and the “Disposition” respectively; the “Transaction” collectively) as follows:≪Property to be acquired≫
Property nameLocation

Acquisition Price(planned)

Contract date(scheduled)Transfer date(scheduled)

3rd MINAMIAOYAMA

Minato‐ku,
Tokyo

JPY 21,000 million

March 8,2024

March 8, 2024

Disposition Price(planned)

Contract date

Transfer date(scheduled)≪Property to be disposed of≫Property nameLocation①April 1,①JPY 17,034 million
JRE Dojima Tower

Osaka‐shi,Osaka

JPY 33,400
million(Quasi‐co‐ownership: 51%)

②JPY 16,366 million(Quasi‐co‐ownership: 49%)

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March 7,2024

2024
②October 1,
2024

«Purpose of the Transaction»
The transaction is part of our portfolio reshuffling strategy aimed at improving its medium‐ to long‐termcompetitiveness. We decided to make the acquisition based on our judgment that it would help improve thecompetitiveness of our portfolio given the good metropolitan location and strong basic specifications andfunctionality of the property to be acquired. Meanwhile, we decided to conduct the disposition based on acomprehensive assessment through qualitative and quantitative evaluations of the properties we own fromthe viewpoints of profitability and asset value.

≪Property to be acquired: 3rd MINAMI AOYAMA≫
1. Outline of the Acquisition
Property name

3rd MINAMI AOYAMA

Acquisition price (planned)

JPY 21,000 million

SellerMitsubishi Estate Co., Ltd.

Brokerage

No

Decision date

March 7, 2024

Contract date (scheduled)

March 8, 2024

Transfer date (scheduled)

March 8, 2024

Payment date (scheduled)

March 8, 2024

2. Reason for the Acquisition
We particularly valued the following factors in our consideration of the property.
(1) Building and facilities
Completed in 2023, this property is a fairly new office building with high‐level specifications including afloor area of approximately 860 square meters on each floor, a ceiling height of 2,800 millimeters, and araised floor height of 100 millimeters. The property has a balcony in the exclusive use area of each floor asa standard specification and a roof‐top terrace for exclusive use of tenants to accommodate diverse
workstyles of tenants.

(Balcony in exclusive use area of tenants)(Roof‐top terrace)

In addition, the property adopts various initiatives designed to reduce environmental footprints including
the use of renewable energy for 100 percent of its energy needs. It also has an emergency power generator
that can work for 48 hours as a BCP measure. It is a highly competitive property in terms of both theenvironment and disaster mitigation.
(2) Location
The property is located in the Aoyama area. Surrounded by places rich in greenery and art galleries, it is ahighly sought‐after area by a wide range of companies including those in apparel, design, and IT industries.
The property is four minutes on foot from the Gaiemmae subway station and within walking distance fromthe Omote‐sando and Aoyama‐itchome stations, allowing easy access to multiple subway lines. Given theplanned large‐scale joint redevelopment project in the vicinity of the property, the value of the area is
expected to increase further.
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3. Description of the Property to Be Acquired
Property name
3rd MINAMI AOYAMAType of specified asset
Domestic real estate
Type of ownership・Land ownership of 12 lots
Land・Leasehold right for 19 lots (Quasi‐co‐ownership: 77.76/100)
Building
Ownership (co‐ownership interest: 77.76/100)
Location (Building address)
3‐1‐34 Minami‐aoyama, Minato‐ku, Tokyo
Usage
Offices and shops
Area
Land
2,411.62 m2 (area stated in the real property registry)
14,376.28 m2
Building(gross floor area stated in the real property registry)
S/SRC structure with flat roof, 13 stories above the ground andStructure
1 basement level
Typical floor area
863 m2Completion
February 2023
Matters related to
PML: 2.2% (based on the seismic risk assessment report by Tokio
earthquake resistanceMarine dR Co., Ltd.)
Mortgage
No
Appraisal value
JPY 21,200 million(Date of value)(as of February 1, 2024)
Appraisal institution
Daiwa Real Estate Appraisal Co., Ltd.
Outline of lease
Total number of tenants 13
Total rent revenues
JPY 405 million per year
Security deposit
JPY 872 million
Total leased area
6,469 m2
Net rentable area
7,781 m2
March 31, 2023
44.5 %
Occupancy rate
September 30, 2023
58.1 %
Scheduled acquisition date 83.1 %・Agreements with the other joint building owner address matters
Special notes
concerning preferential negotiation rights for the transfer ofownership in the property.
(Note)
・The land of the property consists of 19 lots, of which we will acquire the ownership of 12 lots
(1,240.90 sqms). Leasehold rights will be established on these lots for JRE and the other joint
building owner. The quasi‐co‐ownership of the leasehold right for all 19 lots, including the 12
mentioned earlier, will be allocated at a ratio of 77.76% to JRE and 22.24% to the other joint
building owner, respectively.
・JRE, upon acquisition of the property, will lease the whole space to be acquired to Mitsubishi
Estate, which will then sublease it to third parties under a master lease contract of a pass‐ throughtype.
・ “Area,” “Structure,” and “Completion” show the same entries stated in the real property registry.
“Usage,” however, indicates the main entries, among those listed in the real property registry.
・ “Outline of lease” is based on the data provided by the seller and calculated on the basis of JRE’s
interest. “Total number of tenants” shows the number pertaining to the entire property.
・“Total rent revenues” shows the actual revenues for the year through January 2024.
・“Total number of tenants,” “Total leased area,” “Net rentable area,” and “Occupancy rate on the3scheduled acquisition date” are forecasts as of the scheduled acquisition date.
・ NOI (Net Operating Income): JPY 636 million a year (an estimated amount)・ Depreciation: JPY 160 million a year (an estimated amount)
4. Outline of Seller
Corporate name

Mitsubishi Estate Co., Ltd.

Location

1‐1‐1, Otemachi, Chiyoda‐ku, Tokyo

Representative

Atsushi Nakajima, President & Chief Executive Officer

Principal business

Real estate business

Paid‐in capital

JPY 142,414 million (as of Dec. 31, 2023)

Date of establishment

May 7, 1937

Net assets(Consolidated): JPY 2,493,784 million (as of Dec. 31, 2023)

Total assets(Consolidated): JPY 7,555,268 million (as of Dec. 31, 2023)

Major shareholders and theirshareholding percentages(as of September 30, 2023)

The Master Trust Bank of Japan, Ltd. (Trust Acc.): 16.93%
Custody Bank of Japan, Ltd. (Trust Acc.): 5.64%
Meiji Yasuda Life Insurance Company: 3.31%

Relationship with JRE and JRE‐AM

Capital relationship

Personnel relationship

Business relationshipApplicability to relatedparties

Mitsubishi Estate Co., Ltd. (hereinafter referred to as “thecompany” in this table) is a parent company of JRE‐AM, holding a
100% stake as of March 7, 2024. The company also holds 17,120
investment units of JRE as of September 30, 2023, which accounts
for 1.20% of the number of units outstanding.
Thirteen personnel from the company are on loan to JRE‐AM as ofMarch 7, 2024, and JRE’s executive director concurrently serves ascorporate advisor of the company.
The company is the previous owner and trust beneficiary of someof the JRE‐owned properties. It is also a lessee for JRE. In addition,it has several collateral contracts regarding properties held by JRE.
The company falls within the definition of related party of JRE‐AM
under the Regulation for Terminology, Forms, and Preparation
Methods of Financial Statements. Furthermore, the company falls
within the definition of interested persons, etc. of JRE‐AM under
the Order for Enforcement of the Act on Investment Trusts andInvestment Corporations (Cabinet Order No. 480 of 2000, including
later amendments), and also falls within the definition of interested
parties under the internal rules of JRE‐AM.

5. Status of Owners, Etc. of the Property
Property name
3rd MINAMI AOYAMA(Location)(3‐1‐34 Minami‐aoyama, Minato‐ku, Tokyo)
Status of owners, etc. of thePrevious owner
Second previous ownerproperty
Corporate name
Relationship withinterested parties of JRE
Acquisition backgroundand reason, etc.

Mitsubishi Estate Co., Ltd.

―See “Outline of Seller” above―

Newly built in February 2023―

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Acquisition price― (Note)―Acquisition date
― (Note)―(Note) The descriptions are omitted because there is no second previous owner, as the building was developedby the previous owner.
6. Transaction with Interested Party
This acquisition falls under a transaction with an interested party. In order for such an acquisition toproceed, JRE‐AM first goes through the deliberation and approval process at its compliance committee,
and then obtains approval from its investment management council pursuant to the rules for interested‐
party transactions.
7. Settlement Method
1) Acquisition fundLoans and cash on hand
(Note) For more information about the loans for the acquisition, please refer to the press release “Announcement of
Debt Financing “announced today.

2) Settlement method
Lump‐sum payment at the time of transfer
8. Summary of Appraisal Report
Property nameAppraisal value
Appraiser
Date of value

3rd MINAMI AOYAMAJPY 21,200 million
Daiwa Real Estate Appraisal Co., Ltd.
February 1, 2024
Item

Value indicated by the income approach
Value indicated by the direct
capitalization method(1) Operating income [①‐②]AmountDescription

21,200,000

Indicated by the income approach, placing more weighton the DCF method that incorporates fluctuations of the
future net cash flow, while employing the direct
capitalization method for verification

21,900,000
1,114,721①Poten al rental
income1,166,383②Vacancy loss

51,662(2) Operating expenses
Maintenance andmanagement fee
Property management fee
Utilities expenses

Estimated considering the medium‐ to long‐termcompetitiveness of the subject property and the newrent level of comparable properties
Recorded based on average vacancy rates ofcomparable properties, considering the competitivenessof the subject property

467,195(note)

Estimated based on past and future projected expenses
for the maintenance and management fee, and theplanned contract for property management fee

48,019Estimated based on past and future projected expenses

Repair expenses

6,393

Leasing cost

8,999

Estimated according to the average annual expenses
stated in the engineering report
Estimated referring to the leasing cost of comparable
properties
Recorded based on the taxes levied for fiscal year 2023
for land, and the estimated taxable standard for thebuilding

Property tax and city
planning tax
Insurance Premium
Other expenses(3) Net operating income [(1)‐(2)]

113,427

142,269850
147,236
647,525

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Recorded based on an insurance premium estimate
Recorded land rent and contingency fund(4) Operating profit on lump‐sum payments

0(5) Capital expenditures

12,188(6) Net cash flow [(3)+(4) ‐ (5)]635,336(7) Capitalization rate

2.9%

Value indicated by the DCF
method20,900,000

Discount rate

2.7%

Terminal capitalization rate

3.1%

Value indicated by the cost approach
Land ratio
Building ratio

20,700,000
77.9%
20.1%

Excluded from consideration
Estimated based on 0.4% of the building replacement
cost, deducting repair costs, and referring to therepair/renewal expenses of comparable properties
Estimated referring to the market capitalization rates ofcomparable properties

Estimated from the discount rates in the transactions ofcomparable properties and comparisons with the yields
of other financial instruments, etc.
Estimated on the basis of the capitalization rate, while
taking into account the marketability of the subject
property at the end of the holding period
Including leasehold rights* In thousands of yen (amounts are rounded down to the nearest thousand yen)

Any special considerations in thereconciliation between indicatedvalues and determination of the final
appraisal value
Note:

Nothing in particular

No consent has been obtained from the property management company to disclose the property
management fee as a separate item. Moreover, if the property management fee for the subject property isdisclosed separately, it might potentially affect other deals done by the property management company,
which could negatively affect JRE in efficiently delegating property management services under its policyon the maintenance and management of target investment properties. This could in turn undermine theinterests of its unitholders. Accordingly, the maintenance and management fee and the property
management fee are shown by the combined amount.

≪Property to be disposed of: JRE Dojima Tower≫
1.

Outline of the Disposition
Property name
Disposition price(planned)
Estimated book value

JRE Dojima Tower
JPY 33,400 million①JPY 17,034 million②JPY 16,366 million(Quasi‐co‐ownership: 51%)

(Quasi‐co‐ownership: 49%)

JPY 19,824 million①JPY 10,174 million

JPY 13,220 million

Estimated gain on
disposition②JPY 9,650 million①JPY 6,670 million

Buyer

Undisclosed (see “Outline of Buyer” below)

Brokerage

Yes (not an interested party)

Decision date

March 7, 2024

Contract date

March 7, 2024

②JPY 6,540 million

Transfer date (scheduled)①April 1, 2024

②October 1, 2024

Payment date

①April 1, 2024

②October 1, 2024

(scheduled)(Notes)・ The disposition price does not include disposition expenses, property tax and city
planning tax adjustments and consumption taxes.
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・ The estimated book value is the book value estimated as of today, calculated by JRE‐
AM on the basis of capital expenditures planned to be incurred by and depreciation
estimated as of the transfer date.
・ The estimated gain on disposition is the estimated amount as of today derived bysubtracting the estimated book value and disposition expenses (partially
undetermined) from the disposition price.
2.

3.

Reason for the Disposition
The Dojima area where the property is located is adjacent to the Umeda area where a large number ofoffice buildings are scheduled to be built in the future. This makes it necessary to closely monitor theproperty’s future location competitiveness and the supply‐demand trend. Against this background, JRE‐
AM compared the benefits of keeping the property over the medium‐ to long‐term as opposed todisposing of it. Based on the results of this consideration, we decided to dispose of the property, partly
due to a proposal made by the buyer with the afore‐mentioned conditions.
The proceeds from the disposition will likely be spent on repaying borrowings or kept as funds on hand forthe future acquisition of investment properties or other purposes.

Description of the Property to Be Disposed of
Property name

JRE Dojima Tower

Type of specified assets

Trust beneficiary interest in domestic real estate

Type of ownership
Land

Ownership

Building

Ownership

Location (Building address)

2‐4‐27 Dojima, Kita‐ku, Osaka City, Osaka Prefecture

Completion

April 1995

Usage
Appraisal value(Date of value)

Offices and shops

Appraiser

Daiwa Real Estate Appraisal Co., Ltd.

JPY 20,300 million(as of February 1, 2024)

Outline of lease
Total number oftenants

47

Total rent revenues JPY 793 million (for the September 2023 period)

Special notes(Notes)Security deposit

JPY 1,348 million

Total leased area

27,829 m2

Net rentable area

28,403 m2

Occupancy rate

September 30, 2021

98.4%

March 31, 2022

95.9%

September 30, 2022

96.8%

March 31, 2023

98.0%

September 30, 2023

98.0%

None
・“Usage” shows the main entries, among those listed in the real property registry.
・“Outline of lease” indicates the figures as of the end of the fiscal period ended
September 2023.
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4.

Outline of Buyer
The buyer’s is undisclosed due to the absence of its content.
There are no capital, personnel or business relationships to note between JRE or JRE‐AM and the buyer.
In addition, the buyer does not fall under the category of a related party of JRE or JRE‐AM.

5.

Settlement Method
A lump‐sum payment is to be made on each of the transfer dates.

6.

Summary of Appraisal Report
Property nameAppraisal value
Appraiser
Date of value

JRE Dojima Tower
JPY 20,300 million
Daiwa Real Estate Appraisal Co., Ltd.
February 1, 2024
Item

Value indicated by the income approach
Value indicated by the direct
capitalization method(1) Operating income [①‐②]AmountDescription

20,300,000

Indicated by the income approach, placing more weighton the DCF method that incorporates fluctuations of the
future net cash flow, while employing the direct
capitalization method for verification

20,600,000
1,590,867①Poten al rental
income1,651,545②Vacancy loss

60,677(2) Operating expenses
Maintenance andmanagement fee
Property management fee

Estimated considering the medium‐ to long‐termcompetitiveness of the subject property and new rent
levels of comparable properties
Recorded based on average vacancy rates ofcomparable properties, considering the competitivenessof the subject property

676,733
236,619(note)

Estimated based on expenses incurred in previous years
for the maintenance and management fee, and expensesof comparable properties for property management fee

Utilities expenses

215,000

Repair expenses

34,872

Leasing cost

11,205

Estimated referring to expenses incurred in previous
years, taking into account occupancy rates
Estimated according to the average annual expenses
stated in the engineering report
Estimated referring to the leasing cost of comparable
properties

Property tax and city
planning tax

176,721

Estimated based on the taxes levied for fiscal year 2023

Insurance Premium

2,314

Other expenses(3) Net operating income [(1)‐(2)](4) Operating profit on lump‐sum payments

Recorded based on insurance premiums incurred inprevious years

0914,133
13,162Estimated under the assumption of an investment yieldof 1.0%(5) Capital expenditures

125,818

Estimated referring to the average annual repair/renewal expenses stated in the engineering report(6) Net cash flow [(3)+(4) ‐ (5)]

801,477(7) Capitalization rate

3.9%

Value indicated by the DCF
method20,200,000

Discount rate

3.7%
8

Estimated referring to the market capitalization rates ofcomparable properties

Estimated from the discount rates in the transactions ofcomparable properties and comparisons with the yields
of other financial instruments, etc.

Terminal capitalization rate

4.1%

Value indicated by the cost approach
Land ratio
Building ratio

20,500,000
80.4%
19.6%

Estimated on the basis of the capitalization rate, while
taking into account the marketability of the subject
property at the end of the holding period* In thousands of yen (amounts are rounded down to the nearest thousand yen)

Any special considerations in thereconciliation between indicatedvalues and determination of the final
appraisal value
Note:

Nothing in particular

No consent has been obtained from the property management company to disclose the property
management fee as a separate item. Moreover, if the property management fee for the subject property isdisclosed separately, it might potentially affect other deals done by the property management company,
which could negatively affect JRE in efficiently delegating property management services under its policyon the maintenance and management of target investment properties. This could in turn undermine theinterests of its unitholders. Accordingly, the maintenance and management fee and the property
management fee are shown by the combined amount.

≪Future Outlook≫
There are no revisions to the operating performance forecasts for the fiscal period ending March 2024
(October 1, 2023 to March 31, 2024) as the acquisition will likely have only a marginal effect on
performance.
Regarding forecast revisions for the fiscal period ending September 2024 (from April 1, 2024 to
September 30, 2024), please refer to the press release titled “Announcement of forecast revisions for the
September 2024 period” announced today.

This is the English translation of the announcement in Japanese dated March 7, 2024.
No assurance or warranties are given for the completeness or accuracy of this English translation.
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(Reference) map of 3rd MINAMI AOYAMA(Reference) Exterior of 3rd MINAMI AOYAMA

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