March 17, 2022
For Translation Purposes Only
Real Estate Investment Fund Issuer:
Mori Hills REIT Investment Corporation(Securities Code: 3234)
1-12-32 Akasaka, Minato-ku, Tokyo
Hideyuki Isobe, Executive Director
Asset Manager:
Mori Building Investment Management Co., Ltd.
Hideyuki Isobe, President & CEO
Inquiries: Akira Nemoto
General Manager of Financial Department
TEL: +81-3-6234-3234
MHR Announces Partial Transfer of Trust Beneficiary Interest in Domestic Real Estate(Laforet Harajuku (Land): Partial Transfer)
Mori Hills REIT Investment Corporation (hereinafter “MHR”) announces that Mori BuildingInvestment Management Co., Ltd. (hereinafter the “Asset Manager”), the asset managementcompany for MHR, has determined today to conduct the partial asset transfer (hereinafter the“Transfer”) described below.
1. Overview of Transfer
Property name

Laforet Harajuku (Land)

Asset to be transferred

Trust beneficiary interest (Note 1)(7% quasi co-ownership interest)

Trust beneficiary interest (Note 1)(7% quasi co-ownership interest)

Book value

1,545 million yen (Note 2)

1,545 million yen (Note 2)

Transfer price

2,898 million yen (Note 3)

2,898 million yen (Note 3)Gain (loss) on transfer

1,347 million yen (Note 4)

1,345 million yen (Note 4)

Sales agreement date

March 17, 2022

Anticipated transfer dateJuly 1, 2022

Buyer

Mori Building Co., Ltd.

December 1, 2022

(Note 1) MHR plans to transfer trust beneficiary interest in ownership of land (land of Laforet Harajuku;
hereinafter the “Property”) to which fixed-term business-use leasehold rights are attached for the purposeof owning retail and other facilities. However, MHR will continue to hold the remaining 86% of the quasi
co-ownership interest in the trust beneficiary interest.
(Note 2) Book value indicates the estimate of the book value of the property as of the anticipated transfer date basedon the book value as of January 31, 2022. The same shall apply hereinafter.
(Note 3) The transfer price does not include transfer-related costs and other expenses. The same shall apply
hereinafter.
(Note 4) The gain (loss) on transfer represents the amount obtained by deducting the book value and transferrelated costs from the transfer price above. The same shall apply hereinafter.
(Note 5) In conjunction with the transfer of the quasi co-ownership interest in the trust beneficiary interest related
to the Property, MHR plans to conclude an agreement with the buyer and trustee and plans to agree thatwritten approval from the buyer is necessary if MHR would like to transfer the quasi co-ownership interest
it holds.

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2. Reason for the Transfer
The Property is land with fixed-term business-use leasehold rights and when the agreement related
to the establishment of the leasehold rights terminates in September 2030, as a general rule, theagreement will not be renewed. Because the agreement stipulates that the building is to be removed
and the land returned, MHR must conduct a transfer or take other measures in the future. Inaddition, considering the share of the entire portfolio represented by the Property, there will be a
relatively large decrease in rent income after the transfer, and the harm that this will cause tostable dividends is an issue.
MHR conducted a comprehensive review of trends in the economic environment and real estatemarket conditions, the impact of the transfer on the portfolio, etc. while taking into account thecurrent asset management status. As a result, MHR has determined that maintaining andincreasing the rent income of the entire portfolio, by splitting and transferring a small portion of
the Property while using the special tax treatment for property replacement of specified assets andreturning a portion of the gain from the transfer as dividends while retaining a portion as internal
reserves to utilize for acquiring new properties, will contribute to improving the interests ofunitholders.
The sponsor Mori Building Co., Ltd., which will be the buyer, is able to acquire the split portion ofthe ownership interest while becoming a property pipeline for new acquisitions, which is the policythat will be implemented concurrently with the transfer. In addition, Mori Building has an excellent
track record in many development projects in Japan and overseas, including Laforet Harajuku,
which is the building on the Property. As a future option, MHR may also transfer all of its ownershipinterest and participate with a minority interest in future redevelopment led by Mori Building.
3. Details of the Asset to be Transferred
Details of the asset to be transferred
Property name
Type of specified assetTrustee

Laforet Harajuku (Land)
Trust beneficiary interest((1): 7% quasi co-ownership interest (transfer on July 1,2022) and (2): 7% quasi co-ownership interest (transferon December 1, 2022))
Sumitomo Mitsui Trust Bank, Limited

Trust establishment period
Location(Residential indication)
Area (Note 1)

From July 1, 2022 to July 31, 2042 (anticipated)

Form of ownership

Ownership(1): 1,545 million yen(2): 1,545 million yen(1): 2,898 million yen(2): 2,898 million yen(1): 1,347 million yen(2): 1,345 million yen
Japan Real Estate InstituteBook value
Transfer priceGain (loss) on transfer
Appraisal

Appraiser
Appraisalvalue (Note 2)

Anticipated Transfer date

1-11-6 Jingumae, Shibuya-ku, Tokyo
2,565.06 m2

5,796 million yen (Appraisal date: January 31, 2022)(1): July 1, 2022(2): December 1, 2022

Content of lease (As of March 17, 2022)
LesseeMori Bldg. Ryutsu System Co., Ltd.

Type of agreement

Fixed-term business-use land lease agreement
From September 15, 2010 to September 14, 2030
(20 years)

Term of agreement2

Gross rent income (annual rent)(Note 3)

186,984,000 yen

Deposits/Guarantees

None

Total leasable floor area (Note 4)359.11 m2

Total leased floor area (Note 5)359.11 m2

Other special consideration

None(Note 1) Area is the area of the entire site as indicated in the real estate registry.
(Note 2) The appraisal value represents the figure for the 14% quasi co-ownership interest in the trust beneficiaryinterest.
(Note 3) The gross rent income (annual rent) represents the figure obtained by multiplying the monthly rent
indicated in the rent review memorandum related to the agreement for establishing the fixed-termbusiness-use leasehold rights by the 14% quasi co-ownership interest in the trust beneficiary interest,rounding down the amount below the unit and multiplying that amount by 12.
(Note 4) The total leasable floor area represents the figure obtained by multiplying the floor area deemed leasable
to the lessee by the 14% quasi co-ownership interest in the trust beneficiary interest, rounded to thesecond decimal place.
(Note 5) The total leased floor area represents the figure obtained by multiplying the floor area leased to the lesseeby the 14% quasi co-ownership interest in the trust beneficiary interest, rounded to the second decimal
place.

4. Items Concerning Forward Commitments, etc.
The purchase agreements concerning the Transfer are forward commitments, etc. (i.e. a postdated
purchase agreements where the execution is scheduled over one month ahead of the payment anddelivery of the property, and other similar agreements), as provided in “Comprehensive Guidelines
for Supervision of Financial Instruments Business Operators, etc.” Under the purchaseagreements, when the purpose of the purchase agreements cannot be fulfilled due to a breach of
the purchase agreements by a party, the non-breaching party may cancel the purchase agreements
related to each quasi co-ownership interest in the trust beneficiary interest upon notice if eachdelivery has not been executed.
However, because MHR is the seller under the purchase agreements and there are no concerns
about financing risks, etc. related to execution of the purchase agreements, the likelihood of
MHR’s financial conditions being significantly impacted is low.
5. Profile of Buyer
NameMori Building Co., Ltd.

Location

6-10-1 Roppongi, Minato-ku, Tokyo

Representative

President and CEO, Shingo Tsuji

Scope of business

General developer

Capital79,500 million yen (as of September 30, 2021)

Established

June 2, 1959

Major shareholder

Morikiyo Co., Ltd. etc. (as of September 30, 2021)

Net assets

429,906 million yen (as of September 30, 2021)

Total assets

1,870,438 million yen (as of September 30, 2021)

Relationship with MHR or Asset Manager (as of March 17, 2022)

Capital relationship

Mori Building is a major unitholder (15.0% stake) of MHR. Mori
Building is also the wholly owning parent company (100%stake) of the Asset Manager, and thus constitutes a related
party, etc. as defined in the Act on Investment Trusts andInvestment Corporations (Act No. 198 of 1951, includes
subsequent revision) (hereinafter the “Investment Trust Act”).

3Personnel relationshipOne director and one auditor of the Asset Manager are sentfrom this company.

Business relationship

Mori Building has executed a support agreement andinformation provision agreement with MHR and the AssetManager and an advisory business consignment agreementwith the Asset Manager, and provides support, etc. inconnection with property acquisitions, etc. In addition, Mori
Building has executed a brand license agreement with MHRand grants the license to use the brand name “Mori Hills REIT”
and the “m” mark. Furthermore, as for assets MHR owns in theform of trust beneficiary interest, Mori Building has executed abuilding lease agreement (so-called master lease agreement)with a trustee, and leases the entire property as a master
lessee. The company also executed a property managementagreement and conducts property management of the property.

Application of statusas a related party

Mori Building falls under the category of other related party ofMHR. In addition, it is a parent company of the Asset Manager.

6. Profile of Broker
Not applicable.
7. Transaction with Related Parties, etc.
A transaction with a related party, etc. will occur with the Transfer.
Accordingly, to comply with applicable laws and regulations and with the asset managementagreement, as well as to prevent the interests of MHR from being negatively impacted with respect
to the transfer price and other terms and conditions, the Asset Manager has taken steps pursuantto the Related Parties Transaction Guidelines.

Transfer of the Asset

The Buyer constitutes a related party, etc. of the AssetManager and the Transfer constitutes a transaction with arelated party, etc. as defined in the Investment Trust Act. In
accordance with provisions of the Investment Trust Act, theAsset Manager will deliver a written notice to MHR.

8. Payment Method
Lump sum payment upon delivery
Regarding the proceeds from the transfer, MHR plans to allocate a portion for dividends and retaina portion as internal reserves.
9. Date of Transfer
Asset to be transferred

Trust beneficiary interest((1): 7% quasi co-ownershipinterest)

Trust beneficiary interest((2): 7% quasi co-ownershipinterest)

Date of decision of transfer

March 17, 2022

Date of execution of transferagreement

March 17, 2022

Payment receipt dateJuly 1, 2022 (anticipated)

December 1, 2022 (anticipated)

Delivery dateJuly 1, 2022 (anticipated)

December 1, 2022 (anticipated)

10. Future Prospect
For the forecast of business results, please refer to the press release “Financial Report for theThirty-First Fiscal Period ended January 31, 2022” separately announced today.

411. Summary of Appraisal Report
Property name
Laforet Harajuku (Land)
Appraisal value

5,796,000 thousand yen

Appraiser

Japan Real Estate Institute

Appraisal date

January 31, 2022
(thousand yen)Contents

Items

Summaries, etc.

(Note)

5,796,000

Price based on the discounted cash flow method(hereinafter the “DCF method”) is used because theProperty is land to which fixed-term business-use
leasehold rights are attached and, as a general rule,
the agreement will not be renewed when itterminates.

Price based on the DCF
method5,796,000―

Operating profit

186,984―Possible total
revenue

186,984

Vacancies, etc.
loss , etc.

0PriceRecorded the rent income based on the current
agreements.
Not recorded because the fixed-term business-use
land lease agreement is a long-term agreement, andtaking into consideration the prohibition on earlyterminations, creditworthiness of lessees, etc.
―

Operating costs

27,952

Maintenancecosts

0Not recorded because there are no maintenancecosts.

Utilities

0Not recorded because there are no costs for utilities.

Maintenanceand repairs

0PM fee

93

Tenantrecruitment
costs, etc.

0

Property taxes

27,858Insurance
premium0

Other expenses

0Operating
net income
Investment
incomeof lump sum
Capitalexpenditures
Net return

159,03100159,031

Not recorded because there are no costs formaintenance and repairs.
Recorded by taking into consideration such factors
as the fee rate of similar real estate and the factors
specific to the subject real estate.
Not recorded because
recruitment costs, etc.

therearenotenant

Recorded by taking into consideration documents
related to property taxes, contents of burden
adjustment measures, etc.
Not recorded because there are no insurance
premiums.
There are no expenses otherwise to record.
―
Investment income is not recorded because there
are no lump sums that have the characteristics ofdeposits.
Not recorded because there are no capital
expenditures.
―

5Appraised by taking the standard cap rate andadding/subtracting the spread attributable to thelocation conditions and other conditions, and taking
into consideration such factors as the market cap
rate based on disclosed J-REIT data and the market
cap rate for similar real estate.

Discount rate

3.8%

Price based on thepercentage method

5,964,000―

Land price

6,622,000―

90%―

Land percentage

Price that faithfully reproduced the price formation process from
Other mattersan income perspective was determined to be more persuasive, andconsidered in the appraisal
this price is used while referencing the price based on theby the appraiser
percentage method.
(Note) For the appraisal value related to the trust beneficiary interest in ownership of the land of Laforet Harajuku,
the figure corresponding to the 14% quasi co-ownership interest rounded down below the unit, which MHRplans to transfer, is indicated. For the profit and cost items related to the price based on the DCF method,
the figures represent the figures for the first year of the analysis period using the DCF method.

[Attachments]
Attachment : Portfolio List Post Asset Transfer
MHR’s website address is https://www.mori-hills-reit.co.jp/en/

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Geographicarea

Property nameAcquisition date

Acquisition
price(millionsof yen)

Roppongi Hills Mori
Tower

March 23, 2010
August 1, 2011
October 1, 2013
August 1, 2014
September 16, 2015
February 1, 2016
April 1, 2016

115,380

28.5

O-1ARK Mori Building

March 22, 2006
March 28, 2008
September 30, 2008
March 23, 2010
March 18, 2011
August 1, 2011
April 1, 2013

62,48015.4

O-4

Koraku Mori Building

April 13, 2006

27,2006.7

O-6

Akasaka Tameike Tower

September 30, 2008
March 18, 2011

43,93010.8

O-7

Atago Green Hills

May 1, 2012
April 1, 2013

42,09010.4

O-8

ARK Hills South Tower

August 1, 2014

19,1504.7

56,30013.9

16,3304.0

382,860

94.5

Property
numberPrincipal
use[Attachment] Portfolio List Post Asset Transfer (Note 1)

Office Buildings

O-0

Tokyo’scentral fivewards andtheir vicinity

O-9

Toranomon Hills Mori
Tower

O-10

Holland Hills MoriTower

August 1, 2017
March 1, 2018
September 3, 2018
September 1, 2020
August 2, 2021
August 1, 2017
March 1, 2018
September 3, 2018

Residential
Properties

Subtotal
Tokyo’scentral fivewards and
their vicinity

R-3

Roppongi First Plaza

April 13, 2006

2,100

0.5

R-4

Roppongi View Tower

March 22, 2006
April 13, 2006

4,000

1.0

6,100

1.5

16,0244.0

Subtotal

16,024

4.0

Portfolio total

404,984

100.0

Retail andOther Facilities

Subtotal
Tokyo’scentral fivewards and
their vicinity

Investmentratio(%)(Note 2)

S-1

Laforet Harajuku(Land)

September 15, 2010

(Note 1) The table represents the portfolio list after the asset transfers to be conducted on July 1, 2022 and December
1, 2022.
(Note 2) Figures in the investment ratio are the ratios of respective acquisition price to the portfolio total, and havebeen rounded to the first decimal place.

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