NEWS RELEASE
March 5, 2020
For Immediate Release

Investment Corporation
Japan Real Estate Investment Corporation
Yutaka Yanagisawa, Executive Director(TSE code: 8952)
Asset Management Company
Japan Real Estate Asset Management Co., Ltd.
Naoki Umeda, President & CEO
Contact: Masaru Motooka
Executive Officer & General Manager Planning
Department
Phone: +81‐3‐3211‐7951

Announcement of Acquisition of Trust Beneficial Interests
in Domestic Real estate
Japan Real Estate Investment Corporation (“JRE”) hereby announces that Japan Real Estate AssetManagement Co., Ltd. (“JRE‐AM”), an asset management company to which JRE entrusts the asset
investment, has decided today to acquire trust beneficial interests in domestic real estate as follows:
1. Outline of the acquisition
Name of property
Acquisition priceSellerBrokerage
Date of decision
Date of contract
Date of transfer (scheduled)
Date of payment (scheduled)

Otemachi Park Building¥ 10,175 million
Mitsubishi Estate Co., Ltd.
NoMarch 5, 2020
March 5, 2020
March 24, 2020
March 24, 2020

2. Purpose of the acquisition
JRE‐AM has decided to acquire the property after considering its current and future portfolio strategies,
while comprehensively taking into account the characteristics of the property, the profitability of theportfolio, and the trend of the real estate market, in conformity with “the basic policy of asset management”
and “the investment stance” set forth in the articles of incorporation of JRE.
Otemachi Park Building (“Otemachi Park Bldg.”) is a large, state‐of‐the‐art office complex that is owned by
Mitsubishi Estate Co., Ltd. (“Mitsubishi Estate”), located in the greater Marunouchi area (Otemachi,Marunouchi and Yurakucho areas), which is the business center of Tokyo.
Mitsubishi Estate is a parent company of JRE‐AM, and recently sounded it out about its purchase intentionof Otemachi Park Bldg. JRE‐AM has then determined that the said property will enhance JRE’s portfolio
1quality and decided to enter into the sale and purchase agreement.
While making the decision, JRE‐AM appreciated Otemachi Park Bldg. especially for the following points:(1) State‐of‐the‐art specification
Otemachi Park Bldg., having been completed in 2017, comes equipped with approx. 3,400 m2 ofcolumn‐free floor plate, where, thanks to the wide‐span structure, a view on the side overlooking theImperial Palace grounds stretches to about 50 meters. These specifications enable its office spaces to havebreathtaking views and make them bright and open.

(a view from a typical office floor)

This property offers on its second floor a range of facilities such as a tenant‐dedicated lounge facing theImperial Palace, a fitness gym, a nap room, and a nursery, which are conducive to productivity
improvement of those working there, allowing them to work in a more diverse way. Thanks to theaforementioned specifications teaming with strategies for recruiting and retention of tenant companies, theproperty is expected to continue to enjoy high rental demand going forward.
On the environmental front, the building has achieved the highest level of energy‐saving performance inJapan by introducing cutting‐edge environmental technologies, which include an air‐flow window systemthat reduces the heat load of a window surface, and an automatic sun tracking blind system, etc.
On the west side of its site, a community square is built, which is made up of the vegetation transplanted
from the Imperial Palace Moat. The said square visualizes the ecosystem of the Imperial Palace Moat
through monitoring surveys that take place as part of its maintenance work. Awareness‐raising activities arealso held there where people in the community can learn about biodiversity and environmental symbiosis.
Therefore, incorporating this property in JRE’s portfolio is deemed strategically effective from an ESG
investment perspective as well.

(the community square with lush greenery)

2(a water landscape that is a habitat for creatures)(2) Superior location
This property has excellent access to public transportation connected underground with Otemachi station
where there are five subway lines stopping. It also has business advantage owing to its location in Otemachi,
an international financial center.

3. Description of the property to be acquired
Otemachi Park Building
Name of property
Type of specified assets
Type of ownership

Trust beneficial interest in domestic real estateLand

Quasi co‐ownership interests in trust beneficial interests pertaining
to the following:・Land ownership interest (938/1000): 3.32/100
・Land ownership interest (62/1000): 3.32/100

Building

Trust beneficial interest in Co‐ownership interests of the following
sectional ownerships:
・Office spaces (9th through 20th floor) ( 48,896.27 m2): 5/100
・Retail spaces ( 1,431.54 m2): 5/100
・District heating and cooling facilities (1,948.40 m2): 5/100
・Quasi co‐ownership interest in leasehold right: 3.32/100※ Building ownership share: 2.91%

Trustee
Location (Building address)
Usage

Mitsubishi UFJ Trust and Banking Corporation
1‐1‐1, Otemachi, Chiyoda‐ku, Tokyo
Offices and stores

Area

Typical floor area

9,338.74 m2 ( the area stated in the real property registry)
146,611.42m2 (the gross floor area stated in the real property registry)
S/SRC structure with flat roof, 29 stories above the ground and 5
basement levels
3,392 m2

Completion
Matters related to earthquake
resistanceMortgage
Appraisal value( Date of value)
Appraisal institution

January 2017
PML: 1.2% ( based on the seismic risk assessment report by Tokio
Marine & Nichido Risk Consulting Co., Ltd.)No¥ 10,500 million(as of February 1, 2020)
Daiwa Real Estate Appraisal Co., Ltd.

Land
Building
Structure

Outline of lease
Total number of tenants
Total leasing businessincomeSecurity deposit

22Total rented area

2,371 m2

Net rentable area

2,371 m2

Occupancy rate

¥ 410 million per year
¥ 328 million

March 31, 2018

97.0%

September 30, 2018

100.0%

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Special notes

March 31, 2019100.0%

September 30, 2019100.0%

Scheduled date of acquisition
100.0%
・Matters pertaining to a right of first refusal on a transfer of
co‐owners’ interests in the property are provided for.
・Matters pertaining to a drag along right over JRE’s interest in theproperty are provided for. The said right is exercised, provided
that the one or ones who own more than 95% of theco‐ownership interest dispose of its or their interests.

(Note)
・JRE, upon acquisition of the property, will lease the whole owned space to Mitsubishi Estate, a master
lessee, which will then sublease it to third parties under the master lease contract of a pass‐throughtype.
・The trust beneficial interests have been established on the land and the building separately.
・”Area”, “Structure”, and “Completion” show the same ones as stated in the real property registry.
“Usage”, however, indicates the main one, among those listed in the real property registry.
・”Outline of lease” are based on the data provided by the seller and calculated on the basis of JRE’sinterest. “Total number of tenants” shows that of the whole strata title to be sold.
・”Total number of tenants”," “Total rented area”, “Net rentable area”, and “Occupancy rate as of thescheduled date of the acquisition” are forecasts as of the scheduled acquisition date.
・JRE’s interest includes the co‐ownership interest of the portions treated as common elements pursuant
to the management bylaws.
・NOI (Net Operating Income): ¥ 267 million a year (an estimated amount)・Depreciation: ¥ 68 million a year (an estimated amount)

4. Outline of seller
Mitsubishi Estate Co., Ltd.
Corporate nameLocation
1‐1‐1, Otemachi, Chiyoda‐ku, Tokyo
Representative
Junichi Yoshida, President & Chief Executive Officer
Principal business
Real estate business
Paid‐in capital¥ 142,147 million (as of Dec. 31, 2019)
Date of establishment
May 7, 1937
Net assets(Consolidated): ¥ 1,925,804 million (as of Dec. 31, 2019)
Total assets(Consolidated): ¥ 5,995,817 million (as of Dec. 31, 2019)
Major shareholders and their The Master Trust Bank of Japan, Ltd. (Shintaku Acc.): 8.31%
shareholding percentages
Japan Trustee Services Bank, Ltd. (Shintaku Acc.): 4.99%(as of Sep. 30, 2019)
Meiji Yasuda Life Insurance Company: 3.42%
Relationship with JRE or the asset management company
Capital relationship
Mitsubishi Estate is a parent company of JRE‐AM, holding a 90%
stake in it. Mitsubishi Estate also holds 17,120 investment units ofJRE as of September 30, 2019, which accounts for 1.24% of thenumber of units outstanding.
Personnel relationships
14 personnel from Mitsubishi Estate are on loan to JRE‐AM as ofMarch 5, 2020 and JRE’s executive director concurrently serves ascorporate advisor of Mitsubishi Estate.
Business relationship
Mitsubishi Estate is the previous owner and trust beneficiary ofsome of the JRE‐owned properties. It is also a lessee for JRE. In
addition, it has several collateral contracts regarding properties heldby JRE.

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Applicability to relatedparties

Mitsubishi Estate falls within the definition of related party of
JRE‐AM under the Regulation for Terminology, Forms, andPreparation Methods of Financial Statements. Furthermore,
Mitsubishi Estate falls within the definition of interested persons,etc. of JRE‐AM under the Order for Enforcement of the Act onInvestment Trusts and Investment Corporations (Cabinet Order
No.480 of 2000, including later amendments), and also falls within
the definition of interested parties under the internal rules ofJRE‐AM.

5. Status of owners, etc. of the property
Otemachi Park Building
Property name
(1‐1‐1, Otemachi, Chiyoda‐ku, Tokyo)(Location)
Status of owners, etc. of theThe previous owner
The second previous ownerproperty
Mitsubishi Estate Co., Ltd.
Corporate name―
Relationship
withSee item 4 above―
interested parties of JRE“Outline of seller”
Acquisition background
Newly built in January 2017―
and reason, etc.
Acquisition price―――

Acquisition date―

6. Transaction with interested party
This transaction falls under a transaction with an interested party. In order for such a transaction to proceed,
JRE‐AM first goes through the deliberation and approval process at the compliance committee, and thenobtains the approval at the investment management council pursuant to the rules for interested party
transactions.

7. Settlement method1) Acquisition fundCash reserves
2) Settlement method
A lump‐sum payment at the time of transfer

8. Future outlook
JRE does not make any revision to the operating performance forecasts for the fiscal periods ending March 31,
2020 (from October 1, 2019 to March 31, 2020) and September 30, 2020 (from April 1 2020 to September 30,2020) because this acquisition will likely have only a marginal effect on the performance.

9. Summary of appraisal report
Name of property
Appraisal value
Appraisal institution
Date of value

Otemachi Park Building¥ 10,500 million
Daiwa Real Estate Appraisal Co., Ltd.
February 1, 2020
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Item

AmountDescription

Value indicated by the income approach

10,500,000

Indicated by putting more weight on the DCF method,which weaves fluctuation of the future net cash flows
into the value, while employing the direct capitalization
method for verification

Value indicated by the direct
capitalization method(1) Operating Income [①‐②]

11,100,000(Note1)
413,432①Potential rental income

425,884②Vacancy Loss

12,451(2)Operating expenses
Maintenance and management
fee
Property management fee

Recorded on the basis of new rent levels of comparableproperties, etc.
Recorded on the basis of historical vacancy rates andaverage vacancy rates of comparable properties, etc.

136,738
31,212(Note2)Estimated on the basis of the contract for the property
management fee, while referring to expenses incurredin previous years for the maintenance management fee
Estimated on the basis of expenses incurred in previousyears and those of comparable properties.
Estimated according to the average annual expensestated in the engineering report

Utilities expenses

25,570

Repair expenses

3,311

Leasing Cost
Property tax and city planning
tax
Insurance Premium

3,174

Estimated in light of cases of comparable properties

72,969Estimated on the basis of the taxes levied for fiscal year
2019

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

145

Estimated on the basis of expenses incurred in previousyears

3,841

Estimated under the assumption of an interest rate of1%

3,821

Estimated referring to renewal expenses incurred bycomparable properties

276,713(7) Capitalization rate
Value indicated by the DCF method

Estimated referring to comparable properties

276,693(5) Capital expenditure(6) Net Cash Flow [(3)+(4)－(5)]

356

2.5%
10,300,000

Discount rate

2.3%

Terminal capitalization rate

2.7%

Value indicated by the cost approach
Land ratio
Building ratio

Estimated referring to market capitalization rates ofcomparable properties
Estimated comparing with the discount rates pertaining
to trading comparable properties and the yields ofother financial instruments
Estimated on the basis of the capitalization rate, while
taking into account the marketability of the subject
property at the termination of its retention period

11,400,000
84.2%
15.8%

* In thousands of yen (Amounts are rounded down to the nearest thousand yen)

Any special considerations in the reconciliation between indicated values
and determination of the final appraisal value

Nothing in particular(Note1): The figures shown in items (1) – (6), which are calculated for the value indicated by the direct capitalization
method, are subject to JRE’s co‐ownership interest in the property of 5%. They are calculated by multiplying thecorresponding values shown in the appraisal report, which are subject to the portion of the property to be sold(the office spaces, the retail spaces, and the DHC facilities), and the common elements, the leasehold right, andthe trust beneficial interests that are all linked with the said portion, by JRE’s interest of 5 %.
(Note2): The property management company did not consent to us disclosing the property management fee. If the fee
for the subject property is disclosed, it might potentially affect other deals done by the company, which could
affect JRE in effective delegation of property management services under our policy on property maintenanceand management. This could in turn undermine the interests of our unit holders. Accordingly, themaintenance‐management fee and property management fee are shown in the total amount for presentation.

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This is the English translation of the announcement in Japanese dated March 5, 2020.
No assurance or warranties are given for the completeness or accuracy of this English translation.

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(Reference) map of Otemachi Park Building(Reference) Exterior of Otemachi Park Building8