July 27, 2022
For Immediate Release
Real Estate Investment Trust Securities Issuer
Star Asia Investment Corporation
Representative: Atsushi Kato, Executive Officer(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 Investment in Mezzanine Loan Debt
-Acquisition of Domestic Assets (Star Asia Mezzanine Loan Debt Investment Series 7 (Mezzanine Bonds)) -Star Asia Investment Corporation (“SAR”) announced that Star Asia Investment Management Co., Ltd. (the“Asset Manager”), to which SAR entrusts the management of its assets, has decided today to invest in theMezzanine Loan Debt Investment Series 7 (Mezzanine Bonds). This is a reinvestment associated with therefinancing of the subordinated bonds acquired as Star Asia Mezzanine Loan Debt Investment Series 1 on
October 31, 2017. Details are as follows.
More specifically, SAR is to acquire (hereinafter referred to as “Reinvestment”) the “Haneda HotelDevelopment GK No. 2 Class A Unsecured Bonds” (hereinafter referred to as “the Mezzanine Bonds”) to beissued to refinance the “Haneda Hotel Development GK No. 1 Class A Unsecured Bonds” (hereinafter referredto as “the Original Bonds”) to be redeemed on maturity on the scheduled repayment date (October 31,2022), which was issued by Haneda Hotel Development GK (the “GK”) for the purpose of acquiring the trust
beneficiary interests mainly comprised of Hotel Relief Premium Haneda as the trust asset (the “UnderlyingAsset”).
For details on the Original Bonds, please refer to the announcement made by SAR dated October 25, 2017
entitled “Notice Concerning Acquisition of Mezzanine Loan Debt (Subordinate Bonds)”.

1.

2.

Reason for the Reinvestment
SAR has held the Original Bonds under “Star Asia Mezzanine Loan Debt Investment Series 1” since October
2017; however, refinancing has been decided, given that the senior loan and the Original Bonds are to matureon the scheduled repayment date.
SAR’s assessment of the underlying asset is as described under “3. Overview of the Underlying Asset”, andfurthermore, as the investment in the mezzanine loan debt is to be made from SAR’s own capital, interest
income (exceeding 5% p.a.) will be earned as effective use of own funds, and is anticipated to have the effectof boosting distributable profits.
The Reinvestment was decided, as the Asset Manager determined that making such investment inmezzanine loan debt will have the effect of diversifying investment targets and contribute to the maximizationof unitholders' interests.
Overview of the Reinvestment

1(1) Planned reinvestment
asset(2) Name of reinvestment
asset(3) Underlying Asset(4) Trustee of Underlying
Asset(5) Trust period ofUnderlying Asset(6) Face amount of theMezzanine Bonds to beacquired(7) Issue price of theMezzanine Bonds(8) Expected interest rate
(Note 2)(9) LTV(10) Signing date ofMezzanine Bonds
Underwriting Agreement(11) Planned acquisition dateof the Mezzanine Bonds(12) Interest payment datesof the Mezzanine Bonds(13) Scheduled redemption
date(14) Final redemption date(15) Acquisition financing(16) Settlement method(17) Seller

The Mezzanine Bonds: “Haneda Hotel Development GK No. 2 Class A
Unsecured Bonds” which are certain bonds to be issued by the GK for theUnderlying Asset.
Star Asia Mezzanine Loan Debt Investment Series 7
Trust beneficial interests mainly comprised of HOTEL RELIEF Premium Haneda
as the trust asset (Note 1)
Mitsubishi UFJ Trust and Banking Corporation
From October 31, 2017 to October 31, 2027
Total amount: 400,000,000 yen

400,000,000 yen
100 yen per 100 yen of face amount of each Mezzanine Bond
Base rate (Note 3) +5.0%
Approximately 65.2 % (Note 4)* The appraisal value of the Underlying Asset, which is used as thedenominator for calculating LTV, is 3,680 million yen.
July 27, 2022

July 29, 2022Last day of February, May, August and November (Four times a year)(The initial interest payment date is November 30, 2022.)
July 29, 2027 (Note 5)
July 29, 2029 (Note 6)
As the reinvestment amount is the same amount as amount invested in theOriginal Bonds, it will be offset with the redemption amount.
As the reinvestment amount is the same amount as amount invested in theOriginal Bonds, it will be offset with the redemption amount.
Haneda Hotel Development GK

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(18) Overview of thestructure of theMezzanine Bonds

Name of Business Operator: Haneda Hotel Development GK (the GK)
Haneda Hotel Development GK
Underlying Asset

Relief Premium Haneda
Appraisal value
3,680 million yen

Reserves and expenses etc.
1.

2.

(19) Relationship between
SAR/the Asset Managerand the GK

Senior loan
(Note 7)
Approximately 2,000 million yen
Class A mezzanine bonds
SAR
400 million yen
Class B subordinated bonds(Note *)
Silent partnership investment, etc.
(Note *)On the refinancing to be executed on July 29, 2022, the senior loan will
be executed, and the Class A mezzanine bonds and the Class B
subordinated bonds will be issued.
After acquiring the Mezzanine Bonds, SAR as the bondholder against
the GK will have the right to receive interest on the Mezzanine Bonds
and the right to receive redemption of such bonds.
(*) The Mezzanine Bonds are subordinated to senior loans in terms ofinterest payment and redemption of principal. On the other hand, inprinciple, interest payments and redemption of principal on theMezzanine Bonds are to be made in priority over such payments on“silent partnership investments etc.” and “Class B subordinated bonds”.
In particular, with respect to redemption of principal, even if the valueof underlying assets falls, the “silent partnership investments etc.” will
be first to incur a loss, and next principal of the “Class B subordinatedbonds”, and the Mezzanine Bonds will incur a loss only after the fullprincipal amount of the “Class B subordinated bonds” is impaired.

Please refer to 4. Overview of the Seller.

(Note 1) For overview of the Underlying Asset, please refer to “3. Overview of the Underlying Asset”.
(Note 2) SAR is scheduled to receive 1% of face amount of the Mezzanine Bonds to be acquired as an up-front fee upon
the acquisition of the Mezzanine Bonds, separately from the interest payments. The up-front fee will be offset
with the acquisition expenses, etc. and any remaining amounts will be recorded as revenue.
(Note 3) Base rate is JBA 3-month JPY TIBOR as announced by JBA Tibor Administration. The Japanese yen TIBOR may be
confirmed on the website of the JBA TIBOR Administration (http://www.jbatibor.or.jp/english/rate/). The baserate to be applied, for each calculation period, shall be the interest rate announced at 11:00 am (Tokyo Time) on
the day which is 2 business days prior to the last day of the calculation period immediately preceding the relevant
calculation period (or in the case of the first interest payment, 2 business days prior to the for the loan executiondate).
(Note 4) The ratio of the procured amount including the Mezzanine Bonds and the amount of all senior claims to theappraisal value stated in the appraisal report obtained by SAR for the Underlying Asset, rounded to the 1 st decimal
point.

3LTV= (the amount including the mezzanine loan debt to be invested in by SAR and all senior claims*)÷ (the appraisal value indicated in the appraisal report obtained by SAR)
(Note 5) “Scheduled redemption date” means the date on which the remaining principal amount is scheduled to beredeemed in a lump sum.
(Note 6) “Final redemption date” means the last day of the period of grace provided for redemption when the principal is
not redeemable by the scheduled redemption date.
(Note 7) The senior loan lenders, Class B subordinated bond holders, and silent partnership investors are not disclosed, asconsent for such disclosure has not been obtained from each of the respective party.

3. Overview of the Underlying Asset
Property name

Relief Premium Haneda

Asset type

Real estate beneficiary interest in trust

Owner

Haneda Hotel Development GK

Location (residence indication)

1-25-2 Minamikamata, Ota-ku, Tokyo

Use (Note 1)

HotelStructure (Note 2)

Reinforced concrete structure with 12 floors

Area

Land (Note 3)

Approximately 691m2

Building (Total floor area)(Note 4)

Approximately 2,874m2

Type ofLand
ownership Building(Note 5)Constructioncompletion

Proprietary ownership (beneficiary interest in trust)Appraisal value

September 2017
4.9 % (Inspection body undisclosed)
3,680 million yen

Appraisal NOI (Note 7)

170,845,394 yen

Appraisal dateJuly 1, 2022

Appraiser

Savills Japan K.K.

Earthquake PMLAppraisalobtained by SAR(Note 6)

Proprietary ownership (beneficiary interest in trust)

Total number of end tenants
Occupancy rate (Note 8)
Special notation1
100.0%
No matters worth noting.

(Note 1)

“Use” indicates the use stated in the real estate registry.

(Note 2)

“Structure” indicates the structure stated in the real estate registry of the building.

(Note 3)

“Land” is the entire land area of Relief Premium Haneda stated in the real estate registry (rounded tothe nearest whole number).

(Note 4)

“Building (Total floor area)” is the total floor area of Relief Premium Haneda building stated in thereal estate registry (rounded to the nearest whole number).

(Note 5)

“Type of ownership” is the type of right held by the trustee of Relief Premium Haneda.

(Note 6)

Items other than those indicated above that which are stated in the appraisal report obtained by SAR
are not disclosed, as consent for disclosure has not been obtained from the planned buyer of theUnderlying Asset.

(Note 7)

“Appraisal NOI” indicates the amount of net operating income (NOI) obtained through direct
capitalization method, stated in the real estate appraisal report.

(Note 8)The occupancy rate is 100%, as the entire building of the Underlying Asset is leased by a hotel operator.

< Evaluation of the Underlying Asset by the Asset Manager >4(1) Location
The Underlying Asset is a business hotel located at an approximate 5-minute walk from Keikyu Kamata
Station on the Keikyu Line, and an approximate 15-minute walk from Kamata Station on the JR Keihin
Tohoku Line. The Kamata area where the property stands features medium- to small-sized officebuildings with shops centering around Kampachi-dori Street and a residential area concentrated behindthe office buildings. Recently, several business hotels similar to the Underlying Asset have been
constructed mainly in the area surrounding Keikyu Kamata Station.
The property provides good transport convenience by offering access to the main business areas inTokyo in around 20 to 30 minutes, as well as access to Tokyo International Airport in about 10 minutes,
and thus has strong appeal to both business and leisure guests.
(2) Hotel features
The hotel has a total of 120 rooms, comprised of 20 single rooms, 22 double rooms, 66 twin rooms,
11 deluxe double rooms, and 1 deluxe twin room, accommodating all types of business and leisureguests.
Furthermore, Core Global Management K.K., the current hotel operator, plans to rebrand the hotel toits own hotel brand name after the refinancing (details yet to be determined). Through the rebranding,by offering flexible styles of stay, the property is expected to become a city-type hotel acquiring newusers with differing purposes of stay.
(3) Operator
The hotel operator for the Underlying Asset was changed on July 1, 2022, and Core Global
Management K.K. became the new hotel operator.
The company operates multiple resort hotels and city hotels throughout Japan, and has continued topromote business even under the COVID-19 pandemic environment using its own unique marketingstrategy and market analysis.
Within the hotel operator’s group, there are divisions conducting adequate cleaning services andmaintenance and inspection resulting in long-term budget management, and is able to precisely control
costs by its organizational capacity, and conduct operations focused on profits. Furthermore, therecovery of accommodation demand is also anticipated going forward.
Based on the above evaluation, hotel operation is expected to remain stable, and it is believed thatthe certainty of rent payments by the tenant is high.
4. Overview of the Seller
Name

Haneda Hotel Development GKLocation

2-9-15 Yotsuya, Shinjuku-ku, Tokyo (within Aruto Sogo law office)Representative

Representative Partner, Haneda Hotel Development, Executive Member,
Takeshi Morita

Main business description

1.

Acquisition, holding, disposal, and management of trust beneficialinterests.

2.

Sale and purchase, holding, management, and leasing of real estate.

3.

Any and all businesses incidental to each of the above items.

Capital100,000 yen

Date of Establishment

August 15, 2016

Net assets

Not disclosed, as consent for disclosure has not been obtained from the Seller.

5Total assets
Major shareholders andshareholding ratioRelationship with SAR / Asset Manager
Capital relationship

There is no capital relationship to note between SAR/the Asset Manager andthe GK.

Personnel relationship

There is no personnel relationship to note between SAR/the Asset Manager
and the GK. Furthermore, there is no personnel relationship to note between
related persons or affiliated companies of SAR/the Asset Manager and related
persons or affiliated companies of the GK.
There is no business relationship to note between SAR/the Asset Manager

Business relationshipand the GK, other than the investment in the Mezzanine Bonds. Furthermore,
there is no business relationship to note between related persons or affiliatedcompanies of SAR/the Asset Manager and related persons or affiliatedcompanies of the GK.

Related party status

There is no status of related parties to note between SAR/the Asset Manager
and the GK.

5. Transaction with interested person, etc.
The acquisition of the Mezzanine Bonds is not a transaction with an interested person, etc. under the Act onInvestment 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.
6. Schedule for the Reinvestment
Decision date of the Reinvestment

July 27, 2022

Date of signing the Underwriting Agreement forthe Mezzanine Bonds

July 27, 2022

Planned redemption date of the Original Bonds

July 29, 2022

Planned acquisition date of the Mezzanine
Bonds

July 29, 2022

7. Settlement Method
Settlement of the Reinvestment will be conducted by offsetting of the repayment amount, pursuant toprovisions in the “Memorandum on Payment Method” to be signed between the Asset Manager and the Seller.
8. Future Outlook
Since the impact of the reinvestment in the Mezzanine Bonds on the forecast for operating results for thefiscal period ending July 31, 2022 (February 1, 2022 to July 31, 2022) announced on March 16, 2022, and for thefiscal period ending January 1, 2023 (August 1, 2022 to January 31, 2023), are minimal, there are no changes tothe forecast.
*SAR HP URL: http: //starasia-reit.com/en/
This is an English translation of the announcement in Japanese dated July 27, 2022. However, no assurance or warranties aregiven for the completeness or accuracy of this English translation.

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