August 17, 2020
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 (hereafter “MHR”) announces that Mori Building
Investment Management Co., Ltd. (hereafter the “Asset Manager”), the asset management company
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)

Anticipatedacquisition price

12,220 million yen (Note 2)

Appraisal value

15,232 million yen

Sales agreement dateAugust 17, 2020

Acquisition date

September 1, 2020 (anticipated)

SellerMori Building Co., Ltd.

Acquisition financing

Funds procured through the issuance of new investment units,
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 17% quasi co-ownership interest of the trust beneficiary interest and will hold 67% together
with the 50% already acquired. The remaining 33% 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 hereafter.
(Note 3) Please refer to “3. Details of the Asset to Be Acquired and Lease” for leasing terms and conditions andother details.

Note:This document is a press release regarding MHR’s asset acquisitions and has not been prepared as an inducement
or invitation for investment. We caution readers to refer to MHR’s Prospectus for the Issuance of New Investment
Units and Secondary Offering of Investment Units and the Notices of Amendments thereto, and to undertake any
investment decision at their own judgment and responsibility.

12. Reason for the Acquisitions
MHR decided on the additional acquisition of the property (hereafter 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 Building
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 hereafter.
(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. It is a premium property composed of offices with high specifications, world-classconference facilities, Japan’s first Andaz Tokyo hotel, residences, retail facilities, and others.
Toranomon Hills 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 boasts excellent access to the administrative district in Kasumigaseki as well as
major business districts in Tokyo such as Marunouchi, Hibiya and Ginza. Furthermore, in thesurrounding areas, several large-scale projects including the construction of Toranomon Hills
Station, a new station on the Tokyo Metro Hibiya Line, are underway. Through the completion ofsuch integrated 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.

Note:This document is a press release regarding MHR’s asset acquisition and has not been prepared as an inducement
or invitation for investment. We caution readers to refer to MHR’s Prospectus for the Issuance of New Investment
Units and Secondary Offering of Investment Units and the Notices of Amendments thereto, and to undertake any
investment decision at their own judgment and responsibility.

2

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 new 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 aleasing space on the standard floor. The same shall apply hereafter.

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)(17% 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

12,220 million yen

Acquisition date

September 1, 2020 (anticipated)

Appraisal

Appraiser

Japan Real Estate Institute

Appraisal value

15,232 million yen (Appraisal date: July 1, 2020)

PML (Note 4)

0.50%

Collateral

None

Property manager

Mori Building Co., Ltd.

Content of lease (As of May 31, 2020)
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

Note:
This document is a press release regarding MHR’s asset acquisition and has not been prepared as an inducement
or invitation for investment. We caution readers to refer to MHR’s Prospectus for the Issuance of New Investment
Units and Secondary Offering of Investment Units and the Notices of Amendments thereto, and to undertake any
investment decision at their own judgment and responsibility.

3Gross rent income (annual rent)(Note 6)527,395,404 yen

Deposits/ Guarantees (Note 7)

439,496,177 yen

Total leasable floor area (Note 8)

4,151.09 m2

Total leased floor area (Note 9)4,151.09 m2
Transfer of Quasi co-ownership interest to a third
party requires the written approval of Mori Building
Co., Ltd.

Other special consideration(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 hereafter.
(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 736.59 m2 (approximately 4.3%). 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 2,903.04 m2 (approximately 17.0%) after thisacquisition.
(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 4,152.10 m2(approximately 2.4%). Also, the exclusive floor area corresponding to the quasi co-ownership interest in thetrust beneficiary interest that MHR plans to own as indicated in the real estate registry will beapproximately 16,364.16 m2 (approximately 9.3%) 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 is equivalent to theextent 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 direct loss of the building(structure, finishing and architectural equipment) due to liquefaction of the ground and earthquake
vibration. Therefore, any loss in operation or loss in working time from the unavailability of 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 July 13, 2020.
(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 17% quasi co-ownership interestin 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 theagreement to change the co-owned property usage agreement and property management operationagreement entirely by the 17% 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 17% 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 lessee by
the 17% 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, mechanical rooms,
etc.

Note:
This document is a press release regarding MHR’s asset acquisition and has not been prepared as an inducement
or invitation for investment. We caution readers to refer to MHR’s Prospectus for the Issuance of New Investment
Units and Secondary Offering of Investment Units and the Notices of Amendments thereto, and to undertake any
investment decision at their own judgment and responsibility.

44. 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 March 31, 2020)

Established

June 2, 1959

Major shareholder

Morikiyo Co., Ltd. etc. (as of March 31, 2020)

Net assets

399,597 million yen (as of March 31, 2020)

Total assets

1,799,309 million yen (as of March 31, 2020)

Relationship with MHR or Asset Manager (as of August 17, 2020)
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
Capital relationshipparty, etc. as defined in the Act on Investment Trusts andInvestment Corporations (Act No. 198 of 1951, includes
subsequent revision) (hereafter 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.

Note:
This document is a press release regarding MHR’s asset acquisition and has not been prepared as an inducement
or invitation for investment. We caution readers to refer to MHR’s Prospectus for the Issuance of New Investment
Units and Secondary Offering of Investment Units and the Notices of Amendments thereto, and to undertake any
investment decision at their own judgment and responsibility.

55. 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. to
the Property
Name of company
Relationship with party
having a particular vested
interest
Acquisition backgroundand reason, etc.
Acquisition price
Acquisition timing

Prior titleholder
Mori Building Co., Ltd.

Titleholder before
the prior titleholder–

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

Newly constructed in May 2014–

Acquisition price is omitted as it is–
newly constructed property
Newly constructed in May 2014–

6. Profile of Broker
Not applicable.
7. 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.
8. Payment Method
Lump sum payment upon delivery
As for the property acquisition, MHR plans to use the proceeds from issuance of new investment
units together with borrowings and cash on hand. For the issuance of new investment units, pleaserefer to the press release “MHR Announces Issuance of New Investment Units and Secondary
Offering of Investment Units” separately announced today.
9. Date of Acquisition
Asset to be acquired
Date of decision of acquisitionand lease
Date of execution of acquisitionand lease agreement
Payment date
Delivery date

Trust beneficiary interest(Toranomon Hills Mori Tower)
August 17, 2020
August 17, 2020
September 1, 2020 (anticipated)
September 1, 2020 (anticipated)

10. Future Prospect
For the forecast of business results, please refer to the press release “MHR Revises Forecast for
the Fiscal Period Ending January 2021 and Announces Forecast for the Fiscal Period Ending
July 2021” separately announced today.
Note:
This document is a press release regarding MHR’s asset acquisition and has not been prepared as an inducement
or invitation for investment. We caution readers to refer to MHR’s Prospectus for the Issuance of New Investment
Units and Secondary Offering of Investment Units and the Notices of Amendments thereto, and to undertake any
investment decision at their own judgment and responsibility.

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

15,232,000 thousand yen

Appraiser

Japan Real Estate Institute

Appraisal dateJuly 1, 2020
(thousand yen)Contents(Note)

Items

Summaries, etc.

15,232,000

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

15,572,000―

Operating profit

527,395―

Price

Possible total
revenue

527,395

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

124,289―

Maintenancecosts

65,930Recorded annual maintenance cost.

Utilities0

Maintenanceand repairs0

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

408

057,192758

0403,106
4,395

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 based on the standard taxable amount inproperty taxes documents, 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%.

Note:This document is a press release regarding MHR’s asset acquisition and has not been prepared as an inducement
or invitation for investment. We caution readers to refer to MHR’s Prospectus for the Issuance of New Investment
Units and Secondary Offering of Investment Units and the Notices of Amendments thereto, and to undertake any
investment decision at their own judgment and responsibility.

7Capital
expenditures

2,465

Net return

405,036

Cap rate

Price based on the
DCF method

2.6%

14,875,000

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.

14,569,000―

Land ratio

80.6%

―

Building ratio

19.4%

―

Other mattersconsidered in the appraisalby the appraiser(Note)

None

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 17% 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/

Note:This document is a press release regarding MHR’s asset acquisition and has not been prepared as an inducement
or invitation for investment. We caution readers to refer to MHR’s Prospectus for the Issuance of New Investment
Units and Secondary Offering of Investment Units and the Notices of Amendments thereto, and to undertake any
investment decision at their own judgment and responsibility.

8

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

(1) Projected property income

527,395(2) Projected property expenses

111,220(3) Projected NOI ((1)-(2))

416,175(4) Projected NOI yield((3)/anticipated acquisition
price)

3.4%(5) Depreciation and amortization

61,046(6) Operating profit ((3)-(5))

355,128(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 July 13, 2020, by Tokyo Bldg-Tech Center Co., Ltd., is 3,514 thousand yen.

Note:
This document is a press release regarding MHR’s asset acquisition and has not been prepared as an inducement
or invitation for investment. We caution readers to refer to MHR’s Prospectus for the Issuance of New Investment
Units and Secondary Offering of Investment Units and the Notices of Amendments thereto, and to undertake any
investment decision at their own judgment and responsibility.

9Office Buildings

Geographic
areaTokyo’scentral fivewards and
their vicinity

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

Property nameO-0

Roppongi Hills Mori
Tower

O-1

ARK Mori Building

O-4

Koraku Mori Building

O-6

Akasaka Tameike Tower

O-7

Atago Green Hills

O-8

ARK Hills South Tower

O-9

Toranomon Hills Mori
Tower

O-10

Holland Hills Mori
Tower

March 23, 2010
August 1, 2011
October 1, 2013
August 1, 2014
September 16, 2015
February 1, 2016
April 1, 2016
March 22, 2006
March 28, 2008
September 30, 2008
March 23, 2010
March 18, 2011
August 1, 2011
April 1, 2013
April 13, 2006
September 30, 2008
March 18, 2011
May 1, 2012
April 1, 2013
August 1, 2014
August 1, 2017
March 1, 2018
September 3, 2018
September 1, 2020
(anticipated)
August 1, 2017
March 1, 2018
September 3, 2018

Residential
Properties

Subtotal
Tokyo’scentral fivewards and
their vicinity

Retail andOther Facilities(Note 1)
(Note 2)

Investment
ratio
(%)
(Note 2)

115,380

28.6

62,48015.5

27,2006.8

43,93010.9

42,09010.4

19,1504.8

48,43012.0

16,3304.1

374,990

93.1

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

21,8205.4

Subtotal

21,820

5.4

Portfolio total

402,910100.0

Subtotal
Tokyo’scentral fivewards and
their vicinity(Anticipated)
Acquisition
price(millionsof yen)S-1

Laforet Harajuku(Land)

September 15, 2010

The table represents the portfolio list after the asset acquisition (Toranomon Hills Mori Tower: 12,220
million yen) to be conducted on September 1, 2020. Also, anticipated acquisition price includes appointed
acquisition price.
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.

Note:
This document is a press release regarding MHR’s asset acquisition and has not been prepared as an inducement
or invitation for investment. We caution readers to refer to MHR’s Prospectus for the Issuance of New Investment
Units and Secondary Offering of Investment Units and the Notices of Amendments thereto, and to undertake any
investment decision at their own judgment and responsibility.

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

Note:
This document is a press release regarding MHR’s asset acquisition and has not been prepared as an inducement
or invitation for investment. We caution readers to refer to MHR’s Prospectus for the Issuance of New Investment
Units and Secondary Offering of Investment Units and the Notices of Amendments thereto, and to undertake any
investment decision at their own judgment and responsibility.

11

[Attachment 4] Photos of the Property

Building Layout

Cross-Sectional Diagram of the Standard Floor

Note:
This document is a press release regarding MHR’s asset acquisition and has not been prepared as an inducement
or invitation for investment. We caution readers to refer to MHR’s Prospectus for the Issuance of New Investment
Units and Secondary Offering of Investment Units and the Notices of Amendments thereto, and to undertake any
investment decision at their own judgment and responsibility.

12