English Translation
The following is an English translation of the original Japanesepress release and is being provided for informational purposes only.
May 31, 2019
To All Concerned Parties
REIT Issuer: Japan Rental Housing Investments Inc.
4-17-33 Minami Aoyama, Minato-ku, Tokyo 107-0062
Ikuo Shoda, Executive Director(Securities Code: 8986)
Asset Manager: Daiwa Real Estate Asset Management Co. Ltd.
Toshio Fukushima, President and Chief Executive Officer
Inquiries: Seiji Kimoto, Deputy Chief Corporate Division Officer
Tel: +81-3-6757-9680

Notice Concerning Acquisition of Assets

Japan Rental Housing Investments Inc. (hereafter referred to as the “Investment Corporation”) hereby announces that Daiwa
Real Estate Asset Management Co. Ltd. (hereafter referred to as the “Asset Manager”), the asset manager of the Investment
Corporation, has resolved to acquire the asset described below (hereafter collectively referred to as the “Acquisition”). Details areprovided below.

I. Summary and Reasons for the Acquisition[Asset to be acquired]
The property to be acquired will be completed in September this year. The planned acquisition date for the property is October
29, 2019. (Note 1). Considering that certain features of the property to be acquired—including its profitability, its location in 23
wards of Tokyo, and the fact that it is a new building—will help improve the quality of the Investment Corporation’s portfolio,
the Asset Manager has decided to make the acquisition. For details, please refer to the following.

Name of Property(Note 2)Gran Casa
Honkomagome

Region23 wards of Tokyo(Bunkyo ku, Tokyo)

Property
Type

Studio(Note 3)

Appraisal Value(as of Feb 2019)(B)(JPY thousand)(Note 4)

Difference Between
AnticipatedAcquisition Priceand Appraisal Value(B)-(A)(JPY thousand)((A)/(B))

1,500,000

1,540,000

40,000(97.4%)

AnticipatedAcquisition Price(A)(JPY thousand)(Note 1) The completion of the building of the property is specified as an assumption in the sales agreement so as to avoid development risk, etc.
(Note 2) The asset to be acquired has not been completed as of today and the planned property name at the time of the acquisition by the Investment Corporation isindicated.
(Note 3) Anticipated Acquisition Price does not include acquisition expenses, adjustments to property tax and city planning tax, and consumption tax and local
consumption tax. The price is rounded down to the nearest thousand yen. The same applies hereinafter.
(Note 4) We conduct appraisals of buildings etc. yet to be completed based on the real estate appraisal standard. The building of the property was not completed
at the time of appraisal, and we conducted an appraisal, assuming that construction work will be completed according to the working drawing etc. anduse and profit generation will become possible.
(Note 5) The ratio shown with bracket in “Difference between Anticipated Acquisition Price and Appraisal Value” shows the result of dividing the anticipatedacquisition price by the appraisal value (rounded off to the first decimal).

(1) Location
Bunkyo Ward where the property is located has many educational institutions including The University of Tokyo. It is
known as a ward with an enriched educational environment as indicated in the data (Note 1) showing that it has the highest
percentage of students entering national and private junior high schools, which is 45.3%, among the 23 wards of Tokyo, andhas developed with an aim to become a cultural town as the “the capital of culture”. Cultural facilities such as Toyo Bunko
Museum (7-minute walk), which houses approximately 1 million books, and Mori Ogai Memorial Museum (16-minute walk)as well as Rikugien Garden (6-minute walk), which is designated as a special place of scenic beauty, are located in thesurrounding area of the property, and the area offers a calm residential environment where people can feel close to the culture
and nature. On the other hand, Bunkyo Ward has the second smallest supply area of new residences for-sale and houses forrent in the 23 wards of Tokyo following Chiyoda Ward (Note 2) and is an area where new residences are very scarce.
The property consists mainly of 1LDK units and mainly targets singles and DINKS. It is a 7-minute walk from
Honkomagome Station on the Tokyo Metro Nanboku Line, a 10-minute walk from Komagome Station on the JR Yamanote
Line and a 10-minute walk from Sengoku Station on the Toei Mita Line, offering excellent access to central Tokyo by using 3
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English Translation
The following is an English translation of the original Japanesepress release and is being provided for informational purposes only.
stations and 3 lines. It is situated in a highly convenient location for commuting and everyday life where supermarkets, retailfacilities and public and medical facilities concentrate within a 10-minute walk distance.
(Note 1) Calculated from the data in “Fiscal 2018 Public School Statistics Survey Report” prepared by the Tokyo
Metropolitan Board of Education(Note 2) Calculated from the data in “2018 Survey of Building Construction Starts” prepared by the Ministry of Land,
Infrastructure, Transport and Tourism(2) Building equipment
The property is a new property for sale with a 15-story reinforced concrete structure. The fourth floor and above haveenriched security such as having an exclusive EV hall for 2 units on each floor. It has facilities and specifications focusing onfunctionality and design.
With the Acquitision, the total asset size is expected to be 223.5 billion yen for the 190 portfolio properties (acquisition pricebase, total of 12,810 units.)(Note) The asset to be acquired announced on April 11, 2019 is included, and the said asset to be acquired is scheduled to be acquired in around September
2019.

II. Details of Anticipated Properties
O-4-156 Gran Casa Honkomagome◇ Overview of the Property
Category of anticipatedproperty for acquisition

Real estate

Location (Note 1)(Residential indication) (undicided), Honkomaegome, Bunkyo-ku, Tokyo(Lot number) 230-4 Honkomagome, Bunkyo-ku, Tokyo
Type of ownership

Land
Area (Note 1)

Proprietary
ownership
240.69m2

FAR/Building coverage ratio (Note 3)

Proprietary
Use (Note 1)
ownership
2
Floor space (Note 1)
1,748.33m
Completion date (Note 1)
Structure type (Note 1) RC, 15-story and underground 1-story building
30 units (1LDK: 16 units, 1LDK: 14 units)

Type of ownership
Building

Use Area (Note 2)

Commercial districts
Category 1 medium-to-high-rise
exclusive residential district
600% / 80%
300% / 60%
Condominium
September, 2019 (planned)

No. of leasable units by type
Property management
HASEKO LIVENET, Inc. (planned)
company (planned)
Master lease party (planned)
G.K. Japan Rental Housing
Type of master lease (planned)
Pass through◇ Property Lease Summary (Note 4)◇ Property Engeineering Report Summary (Note 8)
Number of tenants (Note 5)
1 Engineering report company
ERI Solution, Co., Ltd.
Leasable area (Note 6)
1,358.68m2 Date of report
May 23, 2019
Leased area
- Priority repairs
Monthly rent (Note 7)
6,305 thousand Near-future repairs (1 year)
30 thousand
Lease and guarantee deposits- Far-future repairs (2~12 years)
16,970 thousand
Occupancy ratio- Probable maximum loss (PML)
4.5%
Special Note: This building is not completed at the time of the contract conclusion. Assuming that the building will be completed, theInvestment Corporation will acquire the property after the building is completed.
Collateral: None
(Note 1) In the Location, Area, Floor space, Structure type, Use, and Completion date fields, information is entered based on the registry and engineering report.
In the Structure type field, the following abbreviations are used: SRC (steel reinforced concrete), RC (reinforced concrete), S (steel construction).
(Note 2) In the “Use Area” column, the class of Use Area under Article 8, Paragraph 1, Item 1 of the City Planning Act (Law No. 100, 1968, including later
amendments) is listed.
(Note 3) Figures for “FAR” in the “FAR/Building coverage ratio” column show, as indicated in Article 52 of the Building Standards Act (Law No. 201 of 1950,
including later amendments) (hereafter the “Building Standads Act”), the ratio of the sum of the floor space of the building to the land area, and theupper limit as determined by city planning according to the use area. Figures for “building coverage ratio” show, as indicated in Article 53 of the
Building Standards Act, the ratio of the building area to the land area, and the upper limit as determined by city planning according to the use area.
(Note 4) Figures and information in the “Property Lease Summary” column are as of May 1, 2019 for the anticipated properties.
(Note 5) If a master lease agreement is planned to be concluded with a master lease company, the number of tenants is 1.
(Note 6) “Leasable area” shows the leasable area of the anticipated properties as of May 31, 2019, excluding area used by storage spaces, parking spaces,
custodian’s areas, signboards, vending machines, antennas and other spaces leased to the lessee in addition to their main use, or other areas leased for the
maintenance and supervision of the relevant property (including loan for use). Furthermore, leasable area is calculated using the center line of the wall,and includes the meter boxes and pipe spaces allotted to each unit.
(Note 7) The number in the Monthly rent field is monthly rental income (rent, common area charge, income from parking facilities, etc.) based on the estimatedappraisal value and other data on May 1, 2019 for the property to be acquired. Moreover, no leasing activities are scheduled to be conducted at the seller.
The buyer plans to start leasing activities before the acquisition but it is anticipated that there is sufficient possibility that tenants can be secured at an
early stage after completion due to the supply-demand environment of new apartments within Bunkyo Ward. There is a plan to achieve a highoccupancy rate at an early stage after the acquisition with the Asset Manager’s high operational capability.
(Note 8) The figures in the “Property Engineering Report Summary” column are rounded down to the thousands, and the ratios are rounded to the first decimal.
Furthermore, earthquake PML data was acquired from Tokyo Marine & Nichido Fire Insurance in May 2019.

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English Translation
The following is an English translation of the original Japanesepress release and is being provided for informational purposes only.

Ⅲ. Due Diligence Information
Property Name

Building Promoter

Architect

Building Contractor

Verification Agency

Inspection Agency

Gran Casa
Honkomagome

NIHON HOUSE
HOLDINGS CO., LTD.

DEN Architecture
Design Office

Urata Co., Ltd.

HOUSEPLUS
ARCHITECTURALINSPECTION,inc.

(Note)(Note) All of the anticipated properties have received approval notices of their structural calculation suitability from an approved structural calculation review
agency under the amended Building Standards Act (June 2007, implementation), so no additional investigation by a third-party has been performed.

Ⅳ. Profile of the Counterparty
The seller of the asset to be acquired is a domestic company, whose name is not disclosed because the seller’s consent has notbeen obtained. There are no capital, human, or business relationships between the Investment Corporation or the Asset Manager
and the seller. The seller is not related party of the Investment Corporation or the Asset Manager.
The seller does not fall under the category of interested persons under the Order for Enforcement of the Act on Investment
Trusts and Investment Corporations, nor does it fall under the category of interested party, etc. under the internal rules on
dealings with interested parties of the Asset Manager.

Ⅴ. Profile of the Property Seller
The seller of the anticipated property is not classified as a special related party of the Investment Corporation and the AssetManager.

Ⅵ. Profile of Brokerage
The broker for the assets to be acquired of is a domestic company, whose name is not disclosed because the broker has notagreed on the disclosure of its name etc. There are no capital, human, or business relationships between the Investment
Corporation or the Asset Manager and the broker. The broker is not a related party of the Investment Corporation or the AssetManager.
The broker does not fall under the category of interested persons under the Order for Enforcement of the Act on Investment
Trusts and Investment Corporations. Nor does it fall under the category of interested party, etc. under the internal rules on
dealings with interested parties of the Asset Manager.

Ⅶ. Funds for Acquisition
Own funds or loans
Ⅷ. Settlement Method
For the asset to be acquired, Lump-sum settlement at the time of acquisition.

Ⅸ. Acquisition Schedule
・Decision of Acquisition andConclusion of Purchase Agreement
・Payment and Delivery: May 31, 2019: October 29, 2019 (However, confirmation of the fulfillment of the assumptions
specified in the sales agreement is a condition upon the acquisition of properties)3English Translation
The following is an English translation of the original Japanesepress release and is being provided for informational purposes only.

X．Impact on the Investment Corporation’s Finances if Forward Commitment, etc. is Not Able to be Met
The sales contract for the asset to be acquired fall under the category of forward commitments, etc. (future-dated sales
contracts where settlement and delivery take place a month or more after the conclusion of the contract, and other similar
contracts) provided for in the Comprehensive Guidelines for Supervision of Financial Instruments Business Operators, etc.
Under the sales contract, if the contract is cancelled due to the Investment Corporation’s failure to perform the obligations
specified in the contract, the Investment Corporation shall promptly pay 10% of the entire sales price as a penalty. However, theInvestment Corporation has ample funds of its own, and Investment Corporation considaers that the sales contract is not likely tohave a significant adverse effect on the Investment Corporation’s finances and distributions.

XⅠ．Rotation Rule between the Investment Corporation and Daiwa Residential Private Investment Corporation
The property to be acquired will be completed in an odd-numbered year in the Christian calendar, and the Investment
Corporation is given priority.

XⅡ．Forecasts
The Acquisition will have only a slight impact on the asset management condition in the fiscal period ending September 30,
2019 (April 1, 2019 to September 30, 2019) and the fiscal period ending March 31, 2020 (October 1, 2019 to March 31, 2020),
and there is no change in the asset management forecast.

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English Translation
The following is an English translation of the original Japanesepress release and is being provided for informational purposes only.

XⅢ．Property Appraisal Summary (Note)
Property Name

Gran Casa Honkomagome

Appraisal Value

JPY 1,540,000,000

Appraiser

Japan Real Estate Institute

Date of Appraisal

May 1, 2019

Item
Value indicated by income approach
Value indicated by the Direct Capitalization
Method(1) Total Operating Income: (a)-(b)Details

Overview, etc.

JPY thousand

1,540,000-

JPY thousand

1,570,000-

JPY thousand

75,665

Rental revenues includingcommon service fees

JPY thousand

74,477

Parking fees

JPY thousand

485

Other revenues

JPY thousand

3,879

Losses from vacancies

JPY thousand

3,176

Bad debt losses

JPY thousand0

JPY thousand

14,625

Operation costs

JPY thousand

3,800

Utilities

JPY thousand

650

Repairs and maintenance expense

JPY thousand

1,103

Property management fees

JPY thousand

1,295

Tenant promotion fees, etc.

JPY thousand

2,956

Taxes and public dues

JPY thousand

4,206

Nonlife insurance

JPY thousand

219

Other expenses

JPY thousand396

JPY thousand

61,040(a)(b)(2) Total Operating Expenses(3) Net Operating Income (NOI):(1)-(2)(4) Lump-sum Investment Return

JPY thousand

60

Assessed the level of unit price for rent, etc. that can be received consistently overthe medium to long term based on the level of rents and common service fees,
assuming new rental contracts for the property, and posted rental revenues andcommon service fees (hereinafter “Rental Revenues, Etc.”) based on theassessment.
Assessed the level of unit price for use fees that can be received consistently overthe medium to long term based on the level of new use fees, assuming new parking
space lease agreements, and posted parking fees based on the assessment. Posted
motorbike and bicycle parking fees based on projections in the medium to longterm by considering the occupancy rate.
Assessed the contracted number of months for each tenant, the average rate at
which tenants change annually, and the average contract term, and posted key
money, renewal fees, etc. based on the assessment. No revenues that should be
posted as other revenues.
Assessed the consistent level of medium- to long-term occupancy rate by use basedon occupancy rates and supply-demand trends of similar properties that have
replacement competition relationships and other relationships in similar areas in thesame supply-demand area, the occupancy rates of the property in the past, andexpected future trends, and posted losses from vacancies based on the level ofoccupancy rate. Assessed motorbike and bicycle parking fees based on projectionsin the medium to long term and posted no losses from vacancies.
Determined that bad debt losses do not need to be posted in consideration of thesituation of tenants.
Posted operation costs, which consist of cleaning, facilities management, andsecurity costs, etc., considering operation costs for similar properties and theindividuality of the property.
Assessed utility costs for the common use space, considering utility costs for
similar properties and the individuality of the property.
Posted restoration costs based on standard restoration costs by apartment usually
incurred when tenants change, the proportion of the tenant’s burden, the average
period for restoration costs, and the degree of restoration, etc. Assessed and posted
repair costs, considering the level for similar properties.
Assessed and posted property management fees, commission fees paid to acontractor that supervises tenant management and building management, etc.,
considering rates for similar properties and the individuality of the property, etc.
Posted secretarial costs associated with looking for new tenants, the conclusion ofcontracts, and renewal of contracts with tenants, using rent conditions for similar
properties in neighboring assets, etc. As for commission for rental agents, posted
advertising expenses, etc. assessed based on commission necessary for looking for
new tenants and results of similar properties. As for renewal fees, posted
compensation paid to contractors for the conclusion of contract renewal, etc.,
considering the average rate at which tenants change annually and the occupancyrate, etc.
Assessed based on the appraised value for fiscal 2018 and considering special
measures for being a small-scale residence.
Assessed based on building replacement costs (does not include relief measures for
new residences).
Posted non-life insurance premiums, considering premium rates for properties
similar to the property, etc.
Posted internet use fees, etc. as other expenses.
Assessed the stable number of months for which deposits are paid in the medium
to long term as shown in the appendix based on the number of months for new
contracts and multiplied the calculation result (number of months) by theoccupancy rate, then assessed the lump-sum investment return by multiplying theabovementioned calculation result by the investment return. Assessed the5English Translation
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(5) Capital Expenditure

JPY thousand

1,423(6) Net Cash Flow (NCF):(3) + (4) - (5)JPY thousand

59,677(7) Capitalization Rate
Value Indicated by DCF Method(%)
JPY thousand

Discount Rate(%)

Terminal Capitalization Rate(%)

Value indicated by cost approach

JPY thousand

3.8

appropriate investment return in fund management during the deposit period at
1.0%, considering interest rates in both fund management and financing, etc.
Renewal costs necessary for maintaining the functions of the building are usually
incurred irregularly. However, decided to accumulate expected average
expenditures in each fiscal period and assessed renewal costs, considering the levelof capital expenditure for similar properties, the building age, and the averageannual repair and renewal cost according to engineering reports, etc.
Assessed the capitalization rate by adding spread attributable to the conditions of
the property, including its location and building, to (or subtracting the spread from)the standard rate set by the research institute for each region and considering
uncertainty and rates for similar properties, etc. (refer to the body text).

1,500,000

-

3.5

-

3.9

-

1,750,000-

Land Ratio

(%)

75.0

-

Property Ratio

(%)

25.0

-

Other items of note by appraiser

None(Note) The building is not completed at the time of appraisal, and we have conducted an appraisal of the building etc. yet to becompleted based on the real estate appraisal standard. The appraisal is on the assumption that construction work were completed
according to the working drawing etc. and use and profit-making were possible at the time of appraisal.
*URL:

http//www.jrhi.co.jp/en/

6English Translation
The following is an English translation of the original Japanesepress release and is being provided for informational purposes only.

(Reference Material 1)

Anticipated Photograph of the Asset to be Acquired7English Translation
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(Reference Material 2) Location of the Asset to be Acquired8English Translation
The following is an English translation of the original Japanesepress release and is being provided for informational purposes only.

(Additional Material 1) Overview of Portfolio after the Acquisition<Number of Properties etc.>
Before the Acquisition(Note1)

Acquisition of Property

After the Acquisition

189 properties

1 property

190 properties

12,780 units

30 units

12,810 units

Total Leasable area

513,073.79 m2

1,358.68 m2

514,432.47 m2

Average Age of Buildings(Note2)15.16 years

Total Number of Owned
Properties
Total Number of Leasable
Units

-

15.16 years(Note1) It includes 1 asset to be announced on April 11, 2019, and the asset to be acquired is scheduled to be acquired around September 2019.
The same is true below.
(Note2) The average age of buildings is estimated at the weighted average of the building ages of the properties using (anticipated) acquisition prices. The
building ages as of the date of this notice are used.

<Asset Size etc.>
Before the Acquisition
Total (Anticipated)
Acquisition Price

Acquisition of Property

After the Acquisition

JPY 222.0 billion

JPY 1.5 billion

JPY 223.5 billion

JPY 212.7 billion

JPY 1.5 billion

JPY 214.2 billion

JPY 261.9 billion

JPY 1.5 billion

JPY 263.5 billion

81.2％

97.4％

81.3％

JPY 1.17 billion

JPY 1.50 billion

JPY 1.17 billion

5.7%

4.1%

5.7%

(Note 1)

Total Book Value (a)(Note 2)

Appraisal Value (b)(Note 3)Ratio(a) / (b) × 100%
Average (Anticipated)
Acquisition Price per
Property(Note 1)NOI Yield(Note 4)(Note 1) Total (Anticipated) Acquisition Price and Average (Anticipated) Acquisition Price per Property are calculated based on the acquisition(Anticipated) price.
(Note 2) Book Value for Before the Acquisition is the value reported on the balance sheet for the fiscal period ended March 31, 2019 and the anticipatedacquisition price of the asset to be acquired announced on April 11, 2019. Book Value for Acquisition of Property is the anticipated acquisition
price of the Property.
(Note 3) Appraisal Value for Before the Acquisition is the appraisal value as of the end of the fiscal period ended March 31, 2019 and the appraisal value asof February 2019 of the asset to be acquired announced on April 11, 2019. Appraisal Value for Acquisition of Property is the appraisal value as of
May 2019 of the Property.
(Note 4) NOI Yield is NOI divided by (anticipated) acquisition price. NOI for Before the Acquisition is the sum of the performance in the fiscal period
ended September 30, 2018 and the performance in the fiscal period ended March 31, 2019 and the appraisal NOI as of February 2019 of the asset tobe acquired announced on April 11, 2019. NOI for Acquisition of Property is the appraisal NOI as of May 2019 of the Property.

<Amount and Rate of Investment by Type (Based on (Anticipated) Acquisition Price) >Rental Property Category
StudioFamilyBefore the Acquisition

Acquisition of Property

After the Acquisition

JPY 1.5 billion(100.0%)

JPY 142.2 billion(63.6%)
JPY 81.3 billion(36.4%)

JPY 140.7 billion(63.4%)
JPY 81.3 billion(36.6%)-<Amount and Rate of Investment by Region (Based on (Anticipated) Acquisition Price)>
Region23 Wards of Tokyo
Three Major Metropolitan
Areas
Other Major Cities

Before the Acquisition

Acquisition of Property

JPY 91.7 billion(41.3%)
JPY 92.3 billion(41.6%)
JPY 38.0 billion(17.1%)

JPY 1.5 billion(100.0%)-9After the Acquisition
JPY 93.2 billion(41.7%)
JPY 92.3 billion(41.3%)
JPY 38.0 billion(17.0%)