February 19, 2021
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 Acquisition of Trust Beneficiary Interest in Domestic Real Estate(Toranomon Hills Mori Tower: Additional Acquisition)
Mori Hills REIT Investment Corporation (hereinafter “MHR”) announces that Mori Building
Investment Management Co., Ltd. (hereinafter the “Asset Manager”), the asset managementcompany for MHR, has today determined to undertake the asset acquisition described below.
1. Overview of Acquisition and Lease
Property name

Toranomon Hills Mori Tower

Asset to be acquired

Trust beneficiary interest (Note 1)

Anticipated acquisition price

7,870 million yen (Note 2)

Appraisal value

9,856 million yen

Sales agreement dateFebruary 19, 2021

Acquisition dateAugust 2, 2021 (anticipated)

SellerMori Building Co., Ltd.

Acquisition financing

Borrowings and cash on hand (anticipated)

LesseeMori Building Co., Ltd. (Note 3)(Note 1) MHR plans to acquire trust beneficiary interest in 87.95% co-ownership interest in compartmentalized
ownership of the 28th-35th floors and co-ownership interest in the land use rights. MHR plans to acquire
an additional 11% quasi co-ownership interest of the trust beneficiary interest and will hold 78% together
with the 67% already acquired. The remaining 22% of the quasi co-ownership interest in the trust
beneficiary interest is to be held by Mori Building Co., Ltd.
(Note 2) The indicated anticipated acquisition price does not include acquisition-related costs, consumption taxes
and other expenses. The same shall apply hereinafter.
(Note 3) Please refer to “3. Details of the Asset to Be Acquired and Lease” for leasing terms and conditions and otherdetails.

2. Reason for the Acquisitions
MHR decided on the additional acquisition of the property (hereinafter the “Acquisition”) in orderto further improve profitability and stability while maintaining a focus on acquiring premium
properties (Note 1) located in central Tokyo as the core of the portfolio.
The Acquisition is an additional acquisition of the quasi co-ownership interest of the trust
beneficiary interest, and there are no changes in the methods, etc. of the lease with Mori Building1Co., Ltd. as master lessee (fixed-rent master lease (Note 2)).
(Note 1) “Premium properties” are defined in the management guidelines stipulated by the Asset Manager as
office buildings, residential properties or retail and other facilities (retail or other use) located in thecentral five wards of Tokyo (Minato, Chiyoda, Chuo, Shinjuku and Shibuya) and their vicinity that areable to maintain competitive advantage in the future in terms of quality, size, specifications, etc. The
same shall apply hereinafter.
(Note 2) A master lease scheme is a scheme in which the trustee or MHR leases a property to the master lessee(sublessor), and the master lessee subleases it to an end tenant (sublessee). A fixed-rent master lease
scheme is one type of master lease scheme in which the master lessee pays a fixed amount regardless of
the amount paid by the end tenant to the master lessee.

Furthermore, MHR particularly valued the following points when deciding on the Acquisition.
The property is a super high-rise multi-use tower with 52 floors above ground and 5 floors below
ground and standing at 247 meters in height with a standard rent floor size of approximately
1,000 tsubo located in the center of the Toranomon Hills area. It is a premium property composedof offices with high specifications, world-class conference facilities, Japan’s first Andaz Tokyo hotel,
residences, retail facilities, and others.
Toranomon Hills Mori Tower completed in 2014 is constructed by Mori Building Co., Ltd. being a
specified constructor under the urban redevelopment project executed by the Tokyo Metropolitan
Government. It utilized a breakthrough system that allowed for the construction of anarchitectural structure above roads and was constructed integrally with the construction of Ring
Road No. 2. It is a symbolic project of urban development under public-private partnership.
The property is directly connected to Toranomon Hills Station on the Tokyo Metro Hibiya Line,and Toranomon Station on the Tokyo Metro Ginza Line is also accessible by an undergroundpedestrian path. With six transit stations on 11 lines nearby, the location offers favorable accessto Haneda Airport, making this building an optimal global business base. Furthermore, in thesurrounding areas, several large-scale projects are underway. Through the completion of suchintegrated urban developments, there is an expectation that a new international city center/global
business center equipped with various functions such as global-level offices, residences, hotel,
retail facilities and transportation infrastructure will emerge.
The property’s office floors from the 6th to 35th floors are designed by placing their core functions
at the center. Each standard floor provides a non-pillared space with leasable floor area (Note) ofapproximately 3,400 m2 (approximately 1,000 tsubo) and a ceiling height (Note) of 2.8 meters,
offering a highly flexible and pleasant work environment.
Furthermore, the property is capable of firmly supporting stable and continuous businessactivities of tenants during disasters with not only a high level of earthquake resistance employing
three kinds of vibration control devices (oil dampers, brake dampers and unbonded braces), butalso with a disaster prevention well, warehouse for emergency supplies and such, while electricity
can be supplied from power generation facilities with a dual backup system. In addition, theproperty also excels in environmental performance and has acquired a rating of S (the highest
rank) in the CASBEE Real Estate Certification System.
MHR has decided on the acquisition since the property is, as described above, a super high-rise
multi-use tower with top-level facilities and is believed to continue possessing superior
competitiveness going forward as a representative landmark of Tokyo along with advancement ofredevelopment and construction of infrastructure in the vicinity.
(Note) “Standard floor leasable area” refers to leasable floor area on a standard floor (a floor with standard layout
pattern) and “standard floor ceiling height” refers to the height from the floor to the ceiling in a leasing
space on the standard floor. The same shall apply hereinafter.

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3. Details of the Asset to Be Acquired and Lease
Details of the Asset to Be Acquired
Property name

Trustee

Toranomon Hills Mori Tower
Trust beneficiary interest(87.95% of co-ownership of the 28th to 35th floors)(11% of quasi co-ownership interest)
Mitsubishi UFJ Trust and Banking Corporation

Trust establishment period

From June 26, 2014 to July 31, 2037

Location (Residential indication)

1-23-1 Toranomon, Minato-ku, Tokyo

Use

Offices, Shops, Hotel, Residences

Type of specified asset

Area(Note 1)Land

17,068.95 m2

Building

241,581.95 m2

Structure

Steel-framed and steel-framed reinforced concrete
structure with flat roof, 52 floors above ground and 5
floors below groundConstruction completion

May 2014

Designer

Nihon Sekkei, Inc.

Contractor

Obayashi Corporation

Building verification agency

The Building Center of Japan

Form ofownership

Land

Ownership (Note 2)

Building

Compartmentalized ownership (Note 3)

Anticipated acquisition price

7,870 million yen

Acquisition dateAugust 2, 2021 (anticipated)

Appraisal

Appraiser

Japan Real Estate Institute

Appraisal value

9,856 million yen (Appraisal date: February 1, 2021)

PML (Note 4)

0.50%

Collateral

None

Property manager

Mori Building Co., Ltd.

Content of lease (As of January 31, 2021)
Lessee (Note 5)

Mori Building Co., Ltd.

Type of agreement

Regular building lease agreement

Term of agreement

From August 1, 2017 to July 31, 2022

Gross rent income (annual rent)(Note 6)341,255,844 yen

Deposits/ Guarantees (Note 7)

284,379,879 yen

Total leasable floor area (Note 8)

2,686.00 m2

Total leased floor area (Note 9)

2,686.00 m2

Total number of end tenants

9 companies

Occupancy rates

99.8%

Other special consideration

Transfer of Quasi co-ownership interest to a third
party requires the written approval of Mori Building
Co., Ltd.

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(Note 1) Area (land) is the area of the entire site, and area (building) is the total floor area of the entire building,as indicated in the real estate registry. The same shall apply hereinafter.
(Note 2) As for land, land use rights for the property are established. The site area corresponding to the quasi coownership interest in the trust beneficiary interest that MHR plans to acquire equivalent to the ratio ofinterest in the building is approximately 476.61m2 (approximately 2.8%). Also, the site area
corresponding to the quasi co-ownership interest in the trust beneficiary interest that MHR plans to own
equivalent to the ratio of interest in the building will be approximately 3,379.65m2 (approximately 19.8%)
after this acquisition.
(Note 3) The exclusive floor area corresponding to the quasi co-ownership interest in the trust beneficiary interest
that MHR plans to acquire as indicated in the real estate registry is approximately 2,686.65m2(approximately 1.5%). Also, the exclusive floor area corresponding to the quasi co-ownership interest in
the trust beneficiary interest that MHR plans to own as indicated in the real estate registry will beapproximately 19,050.82m2 (approximately 10.8%) after this acquisition.
(Note 4) PML means the expected maximum loss rate due to an earthquake, but it is not strictly defined as a
unified definition and is variously defined according to purpose or usage. In this document, it isequivalent to the extent of damage by an earthquake that causes loss of exceedance probability of 10%
during the assumed planned usage period (50 years = useful life for buildings in general) as indicated by
the expected loss equivalent to the 90% non-exceedance probability to the replacement price of the
expected loss amount to the replacement price. However, the expected loss amount evaluates the directloss of the building (structure, finishing and architectural equipment) due to liquefaction of the groundand earthquake vibration. Therefore, any loss in operation or loss in working time from the unavailabilityof equipment, furniture, fixtures, building occupancy and the secondary damage such as loss of lives is
not included. PML figures are reported from Sompo Risk Management Inc. as of February 15, 2021.
(Note 5) With regard to the property, MHR will outsource building lease operations to Mori Building Co., Ltd. andshall receive a fixed amount of rent from the company, regardless of the rent amount paid by end tenants.
Due to this, Mori Building Co., Ltd. is treated as the end tenant in the Acquisition.
(Note 6) The gross rent income (annual income) represents the figure obtained by multiplying the monthly
consideration for granting leasing rights described in the agreement to change the co-owned property
usage agreement and property management operation agreement entirely by the 11% quasi co-ownershipinterest in the trust beneficiary interest rounded down below the unit and multiplying that amount by
12.
(Note 7) Deposits/Guarantees represents the figure obtained by multiplying the amount of deposits described in
the agreement to change the co-owned property usage agreement and property management operationagreement entirely by the 11% quasi co-ownership interest in the trust beneficiary interest rounded down
below the unit.
(Note 8) Total leasable floor area represents the figure obtained by multiplying the floor area deemed leasable tothe lessee by the 11% quasi co-ownership interest in the trust beneficiary interest, rounded to the second
decimal place.
(Note 9) Total leased floor area represents the figure obtained by multiplying the floor area leased to the lesseeby the 11% quasi co-ownership interest in the trust beneficiary interest, rounded to the second decimal
place. Total leasable floor area and total leased floor area do not include storage, parking lots, mechanicalrooms, etc.

4. Items Concerning Forward Commitments, etc.
The purchase agreement concerning the Acquisitions is a forward commitment, etc. (i.e. a
postdated sale agreement where the execution is scheduled over one month ahead of the payment
and delivery of the property, and other similar agreements), as provided in “Comprehensive
Guidelines for Supervision of Financial Instruments Business Operators, etc.”. Under thepurchase agreement, when the purpose of the purchase agreement cannot be fulfilled due to abreach of the purchase agreement by a party, the non-breaching party may cancel the purchaseagreement upon notice if the delivery has not been executed.
However, under the purchase agreement, MHR’s payment of the purchase price is subject to MHR
completing the financial arrangements necessary to pay the purchase price. Hence, if MHR is notable to complete the financing necessary to pay the purchase price, MHR shall not be obliged tomake the payment. In addition, there are no penalty provisions or payments of security deposits.
Consequently, even in cases where forward commitments are unable to be fulfilled due to failure
to complete financial arrangements, the likelihood of MHR’s financial conditions being
significantly impacted is low.

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5. Profile of Seller and Lessee
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, 2020)

Established

June 2, 1959

Major shareholder

Morikiyo Co., Ltd. etc. (as of September 30, 2020)

Net assets

404,816 million yen (as of September 30, 2020)

Total assets

1,809,414 million yen (as of September 30, 2020)

Relationship with MHR or Asset Manager (as of February 19, 2021)

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”)

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 MHR
and 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 status
as a related party

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

56. Status of Titleholders, etc. of the Property
Toranomon Hills Mori Tower
Property name (location)(1-23-1 Toranomon, Minato-ku, Tokyo)
Status of titleholders, etc. toPrior titleholder
the Property
Name of company
Relationship with party
having a particular vested
interest
Acquisition backgroundand reason, etc.

Titleholder before
the prior titleholder

Mori Building Co., Ltd.

–

Refer to “4. Profile of Seller andLessee” above–

Newly constructed in May 2014–

Acquisition price

Acquisition price is omitted as it is–
newly constructed property

Acquisition timing

Newly constructed in May 2014–

7. Profile of Broker
Not applicable.
8. Transaction with Related Parties, etc.
A transaction with a related party, etc. will occur with the Acquisition.
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 anticipated acquisition price and other terms and conditions, the Asset Manager has taken
steps pursuant to the Related Parties Transaction Guidelines.
The Seller constitutes a related party, etc. of the AssetManager and the Acquisition constitute a transaction with aAcquisition of the Asset
related 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.
9. Payment Method
Lump sum payment upon delivery
As for the property acquisition, MHR plans to use borrowings and cash on hand.
10. Date of Acquisition
Asset to be acquired

Trust beneficiary interest (Toranomon Hills Mori Tower)

Date of decision of acquisition
February 19, 2021
and lease
Date of execution of acquisition
February 19, 2021
and lease agreement
Payment dateAugust 2, 2021 (anticipated)

Delivery dateAugust 2, 2021 (anticipated)

11. Future Prospect
For the forecast of business results, please refer to the press release “MHR Announces Forecast
for the Fiscal Period Ending January 2022” separately announced today.

612. Summary of Appraisal Report
Property name
Toranomon Hills Mori Tower
Appraisal value

9,856,000 thousand yen

Appraiser

Japan Real Estate Institute

Appraisal dateFebruary 1, 2021
(thousand yen)Contents(Note)

Items

Summaries, etc.

9,856,000

Estimated by correlation of the price based on the
direct capitalization method with the price based on
the DCF method.

Price based on the direct
capitalization method

10,087,000―

Operating profit

341,255―

Price

Possible total
revenue

341,255

Vacancies, etc.
loss , etc.

0

Recorded by taking into account the consideration for
granting leasing rights based on the current
agreements, the level of end tenants’ rents, vacancy
risks, etc.
Not recorded as the current agreements are judged tocontinue.

Operating costs

80,289―Maintenancecosts

42,660Recorded annual maintenance cost.

Utilities0

Maintenanceand repairs0

PM feeTenantrecruitment
costs, etc.
Property taxes
Insurance
premium
Other expenses
Operatingnet income
Investment incomeof lump sum

264

036,873491

0260,966
2,843

Not recorded because utilities are not to be borne by
the subject co-ownership interest holder.
Not recorded because maintenance and repairs are not
to be borne by the subject co-ownership interest
holder.
Recorded by reference to such factors as the fee
amount based on contract terms and conditions, andtaking into consideration such factors as the fee rateof similar real estate and the factors specific to thesubject real estate.
Not recorded because tenant recruitment costs, etc.
are not to be borne by the subject co-ownershipinterest holder.
Recorded by taking into account documents related toproperty taxes, contents of burden adjustment
measures, etc.
Recorded by taking into consideration such factors as
the insurance premium based on insurance contracts
and the insurance rate of the subject building andsimilar buildings.
Not recorded because other expenses are not to beborne by the subject co-ownership interest holder.
―
Appraised investment income at a rate of return on
investment of 1.0%.

7Capital
expenditures

1,595

Net return

262,215

Cap rate

Price based on the
DCF method

2.6%

9,625,000

Discount rate

2.3%

Terminal cap rate

2.8%

Cumulative priceAppraised by assuming that an average amount is set
aside every fiscal period, and taking into account suchfactors as the level of capital expenditures of similar
real estate, the building age and the annual averageamount of repair and renovation expenses in theengineering report.
―
Appraised by taking the standard cap rate and adding/
subtracting the spread attributable to the location
conditions, building conditions and other conditions,and taking into account such factors as future
uncertainties and the market cap rate for similar realestate.
―Appraised by reference to the investment cap rates intransactionsofsimilarreal
estate,andcomprehensively taking into account such factors as
the factors specific to the subject real estate.
Appraised by reference to such factors as the market
cap rate of similar real estate, and comprehensively
taking into account such factors as future trends in theinvestment cap rate.

9,361,000―

Land ratio

81.2%

―

Building ratio

18.8%

―

Other mattersconsidered in the appraisalby the appraiser

None(Note) Based on the figures in the appraisal report for trust beneficiary interest in the co-ownership interest incompartmentalized ownership of the 28th to 35th floors (87.95%) and co-ownership interest in the land use
rights, the figures corresponding to the 11% quasi co-ownership interest rounded down below the unit, which
MHR plans to acquire, are indicated.

[Attachments]
Attachment 1: Income and Expenditure Projections
Attachment 2: Portfolio List Post Asset Acquisition
Attachment 3: Map of the Property (surrounding portfolio map)
Attachment 4: Photos of the Property
MHR’s website address is https://www.mori-hills-reit.co.jp/en/

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[Attachment 1] Income and Expenditure Projections(thousand yen)

(1) Projected property income

341,255(2) Projected property expenses

73,234(3) Projected NOI ((1)-(2))

268,021(4) Projected NOI yield((3)/anticipated acquisition price)

3.4%(5) Depreciation and amortization

41,817(6) Operating profit ((3)-(5))

226,203(7) Yield after depreciation((6)/anticipated acquisition price)

2.9%(Note 1) The figures above are annual income and expenditure after excluding factors specific to the fiscal year ofacquisition and take into account property taxes, and are not forecast figures for the next fiscal period.
(Note 2) The average maintenance and repair costs per annum for the next 15 years based on the engineering report
dated February 9, 2021, by Tokyo Bldg-Tech Center Co., Ltd., is 2,273 thousand yen.

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Geographic
area

Property name(Anticipated)
Acquisition date(Anticipated)
Acquisition
price(millionsof yen)Investment
ratio
(%)
(Note 2)

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

28.1

O-1

ARK Mori Building

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

62,48015.2

O-4

Koraku Mori Building

April 13, 2006

27,2006.6

O-6

Akasaka Tameike Tower

September 30, 2008
March 18, 2011

43,93010.7

O-7

Atago Green Hills

May 1, 2012
April 1, 2013

42,09010.2

O-8

ARK Hills South Tower

August 1, 2014

19,1504.7

56,30013.7

16,3304.0

382,860

93.2

Property
numberPrincipal
use[Attachment 2] Portfolio List Post Asset Acquisition (Note 1)

Office Buildings

O-0

Tokyo’scentral fivewards and
their vicinity

O-9

Toranomon Hills Mori
Tower

O-10

Holland Hills Mori
Tower

August 1, 2017
March 1, 2018
September 3, 2018
September 1, 2020
August 2, 2021
(anticipated)
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

21,8205.3

Subtotal

21,820

5.3

Portfolio total

410,780

100.0

Retail andOther Facilities

Subtotal
Tokyo’scentral fivewards and
their vicinity

S-1

Laforet Harajuku(Land)

September 15, 2010

(Note 1) The table represents the portfolio list after the asset acquisition (Toranomon Hills Mori Tower: 7,870 million
yen) to be conducted on August 2, 2021. Also, anticipated acquisition price includes appointed acquisition
price.
(Note 2) Figures in the investment ratio are the ratios of respective anticipated acquisition price to the portfolio total,and have been rounded to the first decimal place.

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[Attachment 3] Map of the Property (surrounding portfolio map)

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[Attachment 4] Photos of the Property

Building Layout

Cross-Sectional Diagram of the Standard Floor

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