March 15, 2019
To all concerned parties:
Investment Corporation
MCUBS MidCity Investment Corporation
Representative: Katsuhiro Tsuchiya, Executive Director
TSE Code: 3227, LEI Code: 353800WZPKHG2SQS1P32
URL: https://www.midcity-reit.com/en/

Asset Management Company
MCUBS MidCity Inc.
Representative: Katsura Matsuo, President & CEO
Inquiries:
Naoki Suzuki, Deputy President

TEL: +81-3-5293-4150

Notice Regarding Acquisition of a Trust Beneficiary Interest in Domestic Real Estate(M-City Edogawabashi Bldg.)
MCUBS MidCity Investment Corporation (hereafter “MCUBS MidCity”) announces that, its asset managementcompany, MCUBS MidCity Inc. (hereafter the “Asset Management Company”), decided today to acquire an asset,
as detailed below.
1. Overview of Acquisition
Property Name

M-City Edogawabashi Bldg. (Note 1, 2)

Type of Specified Asset

Trust beneficiary interest in real estate

Location

1-44-10, Sekiguchi, Bunkyo-ku, Tokyo

Planned Acquisition Price (A)¥4,070 million

Appraisal Value (B)¥4,240 million (Appraisal Date: January 31, 2019)

Difference between Planned Acquisition Price andAppraisal Value (B-A)+ ¥170 million

Planned Agreement Date

March 18, 2019

Planned Acquisition Date

March 19, 2019

SellerA domestic non-financial corporation (Note 2)

Acquisition Funds

Cash on hand

Payment

Full payment at closing

Notes:
1.
“Property Name” shall be used by the Asset Management Company following the acquisition.
2.
Not disclosed as the seller has not agreed to the disclosure.

1

2.

Reason for Acquisition
MCUBS MidCity is committed to managing assets from a medium- to long-term perspective to assure stablerevenues and steady growth of assets under management and emphasizes investment in the three majormetropolitan areas (the Tokyo Metropolitan Area, the Osaka Metropolitan Area and the Nagoya Metropolitan
Area (Note)).
MCUBS MidCity made the decision to acquire the asset based on its potential contribution to improve theportfolio quality, which is obtainable by increasing the asset size and reducing risk through diversified
investment. In addition, since assumed NOI Yield after Depreciation of M-City Edogawabashi Bldg. (3.5%)
exceeds the level of the average NOI Yield after Depreciation of the portfolio for the fiscal period ended
December 31, 2018 (3.3%), MCUBS MidCity has considered that this acquisition would contribute to reinforce
earnings capacity of the portfolio and to enhance the unitholder value, which is represented by distribution
per unit over a medium-to long-term.
For acquisition of the asset, MCUBS MidCity evaluated the following: .
Location Characteristics
・Three-minutes’ walk from Edogawabashi Station on the Tokyo Metro Yurakucho Line・High visibility as the property is standing on a corner lot along Shin-Mejiro-Dori・Meets the demand from tenants seeking good traffic accessibility at affordable rent level
・The head office of the printing companies and universities are concentrated, and high demand frombranches of such companies can be expected.
Property Characteristics
・High-grade exterior and the entrance hall・Efficient and flexible as floors are regular-shaped and pillars-free・Ceiling height 2,600 mm, OA floor 75 mm, individual air conditioning, 32 mechanical parking spaces
availableNotes:
The “Tokyo metropolitan area” represents Tokyo, Kanagawa, Chiba and Saitama; the “Osaka metropolitan area” represents Osaka, Kyoto and Hyogo; and the “Nagoya metropolitanarea” represents Aichi.

23.

Property Summary
Type of Specified Asset

Trust beneficiary interest in real estate

Planned Acquisition Price¥4,070,000 thousand

Trustee

Mitsubishi UFJ Trust and Banking Corporation

Planned Acquisition Date

March 19, 2019

Trust Period

March 19, 2019 – December 31, 2025

Appraisal Value

Location(Indicated for Residence)

1-44-10, Sekiguchi, Bunkyo-ku, Tokyo

AppraiserLand(Note1)

Building(Note1)Site Area

911.25 ㎡

ArchitectZoningCommercial zone, Semi-industrial zone

Builder
Agency Authorizing
Building Construction

Type of Ownership Fee simple
Floor-Area Ratio/
Building-to-Land
Ratio (Note 2)

475.98％∕95.19％

Structure/ Floors

S/SRC with flat roof, 8F

Total Floor Area

4,487.41 ㎡

Type of Ownership Fee simple
UseOffice, Retail

JLL Morii Valuation &Advisory K.K.
Institute of New
Architecture Inc.
Obayashi Corporation
Building official of
Bunkyo-ku, Tokyo
4.8%

PML (Note 1)

OverviewofLeasing¥4,240,000 thousand

Rentable Area

3,472.70 ㎡

Rental Area

3,472.70 ㎡

Occupancy Rate
Total Tenants

100.0%2(Note3)

Completion Date
Property ManagementConsignee
Building ManagementConsignee
Special Notations

September 30, 1992

Total Annual Rent

¥183,861 thousand

Jones Lang LaSalle K.K. (planned)

Security Deposit/ Guarantee, Etc.

¥119,168 thousand

Jones Lang LaSalle K.K. (planned)

Mortgage

None

None

Notes:
1.
“Land (Site Area),”, “Building (Structure/Floors)”, “Building (Total Floor Area),” “Building (Use),” and “Building (Completion Date)” are based on what is indicated in the registry.
“Land (Zoning)” represents types of zoning stipulated in Article 8 paragraph 1 item 1 of the City Planning Act. “Land (Floor-Area Ratio)” represents the ratio of the total floor areaof a building to the site area, as stipulated in Article 52 of the Building Standards Act, and indicates the figure applicable to individual trust property in accordance with thezoning, etc. (known as Base volume ratio). “Land (Building-to-Land Ratio)” represents the ratio of the building area to the site area, as stipulated in Article 53 of the BuildingStandards Act, and indicates the figure applicable for each individual real estate in trust in accordance with the zoning, etc. (known as Standard Building Coverage Ratio). “PML(Probable Maximum Loss)” is defined as “probable loss for a building with a recurrence interval of 475 years” based on the risk curve showing the relationship between loss andannual exceedance probability as calculated by Engineering and Risk Services Corporation and OYO RMS Corporation. The probable loss for a building with a recurrence intervalof 475 years represents “loss of 10% of exceedance probability over 50 years” under the BELCA's guidelines.
2.
The entire property spans both commercial and semi-industrial zones, for which the mandated floor area ratios differ, namely, they are 500% and 400%, respectively. Taking this
into account, floor area ratio for the entire property is determined on a weighted average basis that reflects the proportions of the two parts. In addition, the building to land ratio
for commercial zone is 80%, and semi-industrial zone is 60%. However, as the property is fire-resistant in a fire zone, increased ratios of 100% and 70% apply respectively.
Taking this into account, building to land ratio for the entire property is determined on a weighted average basis that reflects the proportions of the two parts.
3.
“Overview of Leasing” indicates the content of the lease agreement effective as of the end of January 2019, based on the figures and information provided by the seller of the asset.
“Overview of Leasing (Rentable Area)” indicates the rentable area of the building of the real estate in trust for the asset (or total rentable area of respective buildings in the casewhere there are multiple buildings for the property; limited to the rental spaces, and not including the areas of warehouses, halls and parking lots, etc. However, it includes thearea of the common area and parking lot area etc, if such area is leased.). “Overview of Leasing (Rental Area)” indicates the total area presented in the lease agreements, etc. withend tenants that are effective as of the end of January 2019 (limited to the rental spaces, and not including the areas of warehouses, halls and parking lots, etc. However, itincludes the area of the common area and parking lot area etc., if such area is leased). “Overview of Leasing (Total Tenants)” does not include the number of the end tenants thatleases warehouses, halls, and parking lots, etc. only in the calculation. “Overview of Leasing (Total Annual Rent)” and “Overview of Leasing (Security Deposit/Guarantee, Etc.)”
indicate the total amount of the monthly rent, monthly common area charge, parking lot usage fee, warehouse rent and facility usage fee, etc. (excluding utilities revenue)stated in
the lease agreements that are effective as of the end of January 2019, multiplied by 12, and the balance of security deposits and guarantees (including those for the rental spaces,
parking lots and warehouse lots, etc.), with amounts less than thousand yen rounded down, respectively.

4. Overview of Seller
While the seller is a domestic non-financial corporation, its name and overview, etc. are not disclosed
because the seller’s approval has not been obtained. There is no capital, personal or transactional ties to bestated between each buyer and MCUBS MidCity or the Asset Management Company. There is no capital,
personal or transactional ties to be specified between the related parties/related companies of MCUBS MidCityor the Asset Management Company and the related parties/related companies of each buyer. Any of the buyeror the related parties/related companies of the buyer do not fall under the related party of MCUBS MidCity orthe Asset Management Company.
5.

6.

Status of the Property Owner
The seller has no particular vested interest with MCUBS MidCity or the Asset Management
Company.
Overview of Brokerage
Not applicable.
37.

8.

9.

Settlement Method, etc.
MCUBS MidCity will cover the cost of the acquisition with funds procured through a third-party allotment
and part of the funds from disposition of 45% quasi co-ownership of trust beneficiary interests in Matsushita
IMP Bldg.
For details on the third-party allotment and disposition of 45% quasi co-ownership of trust beneficiaryinterests in Matsushita IMP Bldg., please refer to “Notice Concerning Determination of Number of New
Investment Units to be Issued through Third-Party Allotment” dated March 7, 2018 and “Notice Regarding
Completion of Disposition of Trust Beneficiary Interests in Domestic Real Estates (Matsushita IMP Bldg. (45%quasi co-ownership))” dated March 8, 2019, respectively.
With regard to the settlement method, MCUBS MidCity plans to settle the acquisition by making a single
payment of the entire amount of the acquisition price upon delivery of the property.
Schedule for Acquisition
Decision to Acquire Date

March 15, 2019

Agreement Date (planned)

March 18, 2019

Acquisition Date (planned)

March 19, 2019

Payment Date (planned)

March 19, 2019

Outlook
There will not be major impact on the business results for the fiscal period ending June 30, 2019 (the 26thfiscal period: January 1, 2019 to June 30, 2019) and December 31, 2019 (the 27th fiscal period: July 1, 2019 toDecember 31, 2019) due to this acquisition and the outlook of the business results will remain unchanged.

410.

Overview of Appraisal Report
Appraiser
Final Appraisal Value
Appraisal Date

JLL Morii Valuation & Advisory K.K.
¥4,240,000 thousand
January 31, 2019

ItemRevenue price
Value Calculated Using Direct Capitalization(DC) Method
Operating revenues
Potential gross revenue
Vacancy loss, etc.
Operating expenses
Maintenance expenses
Utility expenses

Details(thousand yen)
4,240,000 4,460,000 239,475
251,509
12,034
52,796
9,657
14,489Repair expenses
PM fees
Tenant solicitation expenses, etc.
Real estate taxes
Insurance premiums
Other expenses
Net operating income (NOI)
Gain on management of income fromlump-sum payment
Capital expenditures
Net Cash Flows
Overall Capitalization Rate
Value Calculated Using Discount Cash Flow(DCF) MethodDiscount Rate
Terminal Capitalization Rate
Cost method value
Ratio of Land Price
Ratio of Building Price

Other items considered by real estate appraisal
agent upon appraisal

Overview, etc.

6,287
3,350
2,778
15,026
1,000
186,679
1,774

Assessed based on the level of expenses of similar properties
Assessed based on the level of expenses of similar properties
Assessed as 30% equivalent of leveled amount with reference
to the estimate on the engineering report
Assessed based on the level of fees of similar properties
Assessed based on actual results, in consideration of volatility
Assessed based on the level of premiums of similar properties-14,670 Assessed as 70% equivalent of leveled amount with reference
to the estimate on the engineering report
1,027,474 3.9％ 173,783

4,150,000 3.7％
4.1％
3,020,000
87.3％
12.7％

-

Since the cost method value does not fully incorporate the additional incremental
value realized by the real estate being properly and efficiently managed, it isdetermined that the more persuasive price that reflects the actual market
conditions is the revenue price.

5<Reference>
Assumed NOI and depreciation of M-City Edogawabashi Bldg.
Assumed NOI (Note 1, 2)¥156 million per year

NOI Yield

3.9%

Depreciation¥14 million per year

(Note 2)NOI Yield after Depreciation

3.5%

Notes:
1.
Assumed NOI (Net Operating Income) is the estimated amount of property leasing revenue, less property leasing expenses, assuming the burden of property taxes and city
planning taxes for the full year based on the lease agreement terms and conditions, etc. on the planned acquisition date.
2.
MCUBS MidCity’s estimated figures for time of steady stable occupancy.

The figures above are not the forecast figures for the current period or subsequent periods.
Property Portfolio after Acquisition
TypeRegion

Acquisition Price(Planned)(Millions of Yen)

Property Name

Investment
Ratio

Acquisition Date(Planned)

Office Building

Tokyo
Metropolitan
Area

Osaka
Metropolitan
Area
Other

7,460
12,22017,1307,080
20,0502,705
8,700
10,800
4,000
9,200
4,205
22,1004,070
68,7003,270
10,8003,5503,000
5,500

2.9%
4.7%
6.6%
2.7%
7.7%
1.0%
3.3%
4.1%
1.5%
3.5%
1.6%
8.5%
1.6%
26.4%
1.3%
4.1%
1.4%
1.2%
2.1%

224,54086.2%

AEON MALL Tsudanuma

26,10010.0%

August, 2006

Konami Sports Club Kyobashi

2,780

1.1%

August, 2006

Dormy Inn Hakata Gion
Subtotal (3 properties)

2,280
31,1600.9%

September, 2013

12.0%

4,919

1.9%

Subtotal (1 asset)

4,919

1.9%

Total (23 properties)

260,619100.0%

Sumitomo Fudosan Ueno Bldg. No. 6
G-Square Shibuya DogenzakaShibuya Sakuragaoka Square
Yokohama Creation Square
Cube Kawasaki
Higashi-Nihombashi Green Bldg.
Sasazuka Center Bldg.
USC Bldg.
Yoshiyasu Kanda Bldg.
TOYOTA MOBILITY SERVICE Bldg.
M-City Akasaka 1-chome Bldg.
Yokohama i-land Tower
M-City Edogawabashi Bldg.
Twin 21 (Note)
MID Imabashi Bldg.
Kitahama MID Bldg.
MID Nishihonmachi Bldg.
Higobashi MID Bldg.
Sendai Capital Tower
Subtotal (19 properties)

May, 2015
August, 2015
August, 2015, etc.
August, 2015
August, 2015
December, 2015
March, 2017
April, 2017, etc.
February, 2018
March, 2018
March, 2018
September, 2018
March, 2019
August, 2006
April, 2007
April, 2008
October, 2008
June, 2013
February, 2017

Other than Office Building
Tokyo
Metropolitan
AreaOsaka
Metropolitan
Area
Other

Silent Partnership Interest for Office Building
NagoyaMetropolitan
Area

Nagoya Lucent Tower(Silent partnership interest)

Notes:
Data for Twin 21 includes the trust beneficiary interest in Twin 21 and Twin 21 (partial ownership of land with leasehold interest), collectively.

6August, 2015