August 29, 2019

For Immediate Release
Advance Residence Investment CorporationSecurities Code：3269
1-105 Kanda-Jinbocho, Chiyoda-ku, Tokyo
Takeshi Takano, Executive Director

Asset Management Company:

AD Investment Management Co., Ltd.
Takeshi Takano, President

Inquiries:

Hiroshi Kawakami, Managing Director, CFO
TEL. +81-3-3518-0480

Notice Concerning Acquisition of Investment Asset (RESIDIA Tsutsujigaoka-Koen)

AD Investment Management Co., Ltd. (ADIM) the asset management company to which Advance Residence
Investment Corporation (ADR) entrusts the management of its assets announced its decision today to have ADR
acquire an asset located in Japan (hereafter, the “Acquisition”) as detailed below as part of ADR`s growth strategy.
1. Details of the Acquisition
ADIM decided on the following acquisition pursuant to the target and policy of asset management as
stipulated in the Articles of Incorporation of ADR, to build a portfolio that earns stable income throughdiversified investment in all regions and in all apartment unit types.

Proposed Acquisition Price (Price / Appraisal ratio) (Note 2)

RESIDIA Tsutsujigaoka-Koen(Beneficiary Interests in Trust)
740,000 thousand yen (95.5%)

Real Estate Appraisal Value (Note 3)

775,000 thousand yen

Name of The Asset-To-Be-Acquired (Note 1)

NOI Yield(Note 4)

Yield after Depreciation
Building Age

5.6%(Note 5)

4.3%

(Note 6)

13.5yearSellerHoosiers Asset Management Co., Ltd.

Scheduled Contract Date

August 29, 2019
December 19, 2019 or a date to be separately agreed
upon with the Counterparty(no later than December 27, 2019)
Cash-on-hand (Full payment on delivery)

Scheduled Acquisition DateAcquisition Financing (Payment Method)
Collateral(Note 1)(Note 2)
(Note 3)(Note 4)(Note 5)(Note 6)None

The name of the property is scheduled to be changed after the acquisition is completed to the name listed.
The name of the property is currently「M’s Court Tsutsujigaoka」“Proposed acquisition price” indicates the purchase price for the property entered in the real estate transaction agreement, which isexclusive of the various expenses required in the acquisition of the property (taxes and public dues, etc)
Appraisal Date is June 30, 2019
The “NOI Yield” is calculated using the figures in the acquisition appraisal of the asset-to-be-acquired. The calculation is as follows;“Total annualized NOI ÷ Total acquisition price × 100”. The calculated yields are rounded at the second decimal point.
The “Yield after depreciation” is calculated using the figures in the acquisition appraisal of asset-to-be-acquired. The calculation is asfollows; “(Annualized NOI listed on the appraisal at the time of acquisition – depreciation) ÷ acquisition price × 100”.
The calculated yield is rounded at the second decimal point. Depreciation of the asset-to-be-acquired is calculated using same straightline method as the portfolio and expect depreciation of 9,691 thousand yen per annum.
The building age is the age of the building as of today, rounded at the second decimal point.

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The real estate acquisition market continues to be very competitive with prices inflated and new supply
of good quality properties in good location limited, especially, for centrally located properties in major cities
where stable rental demands can be expected.

Under such an environment, ADR has succeeded in acquiring a property for singles and DINKS locatedin Sendai, Miyagi by using ADIM’s own sourcing network.
On deciding to acquire the asset, ADR highly rated the attributes of the asset as listed below.
・The property is a 10-minute walk from JR Senseki Line Tsutsujigaoka station and has a good access tothe city center of Sendai.
・There are convenient living facilities such as supermarkets, convenience stores, and hospitals in thesurrounding area, making it a good residential neighborhood.
2. Map of the Asset-To-Be-Acquired (144 Haranomachi Minaminome, Miyagino-ku, Sendai-city, Miyagi
prefecture )©Google2

3. Photos of the Asset-To-Be-Acquired34. Summary of The Asset-To-Be-Acquired
Property Number
Name of The Asset-To-Be-Acquired
Address

R-78
RESIDIA Tsutsujigaoka-Koen
144 Haranomachi Minaminome, Miyagino-ku, Sendai-city, Miyagi prefecture

Land
Type of Ownership
Site Area
ZoningFAR / Building Coverage Ratio

Proprietary ownership
610.96m2
Commercial zone
400% / 80%

Type of Ownership
Total Floor Area
Structure / Floors
Use
Construction Completion Date
Building Inspector
Building Designer
Structural Engineer
Construction Contractor

Proprietary ownership
2,302.34 m2
Reinforced concrete with flat roof / 10 floors
Multi-family housing
February, 2006
Miyagi Prefectural Architecture and Housing Center
M's Planning and Design Co., Ltd.
Structural Planning Co., Ltd.
Hasekura Architecture Planning Co., Ltd.

BuildingTrustee

Mitsubishi UFJ Trust and Banking Corporation (Planned)
From December 19, 2019 to December 31, 2029 (Planned)
HASEKO LIVENET, Inc. (Planned)
HASEKO LIVENET, Inc. (Planned)
Pass-throughTrust Contract Period
Property Manager
Master Lessee
Master Lease type

Summary of Building Conditions Investigation Report
Investigator
Investigation Date
Emergency Repair Costs
Short-term Repair Costs (within 1 year)
Long-term Repair Costs (next 12 years)
Building Replacement Price

Tokio Marine & Nichido Risk Consulting Co., Ltd.
May 28, 2019
¥ 60,084 thousand¥ 562,000 thousand

Earthquake PML

2.7%

Lease Conditions
Point in Time
Total Tenants
Leasable Units
Leased Units
Leasable Floor Area
Leased Floor Area
Occupancy Rate (based on floor area)
Monthly Rent (including common service charges)
Deposits, Guarantees, etc.

as of July 31, 2019
16360
1,970.19 m2
1,888.53 m2
95.9 %¥ 4,167 thousand¥ 4,153 thousand

Number of Units by Type
SingleCompactFamily
Large
Dormitory
Other45
180000Special Notation
None* Please refer to “Notes and definitions on items on the tables in the press releases for asset acquisition” on ADR`s website for details on items on the above table(https://www.adr-reit.com/financial/bukken/)45. Appaisal Report Summary
Name of Property
Appraiser

RESIDIA Tsutsujigaoka-Koen

Appraisal Date

June 30, 2019

JLL Morii Valuation & Advisory K.K

Appraisal Value

775,000 thousand yen

Appraised
Value

Appraisal ItemsIncome Capitalization Approach Value

Basis

775,000

Direct Capitalization Price

789,000

Total Potential Income

56,338

Income capitalization approach value was appraised using both DCF method anddirect capitalization method.

Rent Income

55,042Estimated from average rent based on the current lease agreement and from mid tolong-term stabilized rent.

Other Income

1,296

Estimated using historical figures.

53,433

Total Effective Income
Losses from Vacancies, etc.

2,905

Losses from Delinquencies-Expenses from Rental Business

Estimated using standard vacancy rate but adjusted for specific characteristicsof the property.
Not applicable. Secured through guarantee deposit.

12,112

Maintenance and Management Fees

1,709

Estimated using historical figures and by referring to the cost of comparable property.

Utilities Costs

1,144

Estimated using historical figures and by referring to the cost of comparable property.

Management Commission Fees

1,568

Estimated by referring to the cost of comparable property.

Taxes and Public Dues

3,044

Assessed using historical figures adjusted for depreciation.

Non-life Insurance Premiums

130

Estimated based on the insurance premium for the property.

Leasing Expenses

1,533

Referred to regional practices, turnover rate of the property and estimated by looking at how
much is needed in leasing to new tenants.

Repair Costs

2,876

Repair costs are estimated as 30% of repair fees assumed in the engineering report.
Restoration fees are estimated using historical figures and turnover rated and referring tothe level of expenditures in comparable properties.

Other Expenses

108

Net Operating Income

41,321

Earnings from Deposits

40

Capital Expenditures

3,505

Net Cash Flow DCF Price
Cap Rate
DCF Price

Estimated using historical figures includes non-premises parking lot rental fee.

Assumed 1% per annum, by taking into consideration both investment yield and financing
cost.
70% of normalized capital expenditure estimated in the engineering report.

37,856
4.8%

Discount rate adjusted by risk on changes in future net income and principal value.

760,000

Discount Rate

4.6%

Estimated by taking account of market trend, locality and specific feature of the property.

Terminal Cap Rate

5.0%

Added a premium on future risks.

Cost Approach Value

438,000

Land Ratio

49.6%

Building Ratio

50.4%
Other Matters of Consideration
None5

6. Financial Impact on ADR in the Event of Failure to Fulfill Forward Commitment or Similar Agreement
Real estate sales transaction agreement (hereafter, “the Agreement”) for the assets-to-be-acquired will
constitutes a forward commitment or similar agreement (Note 7) by an investment corporation as stipulatedin ”The Comprehensive Guidelines for Supervision of Financial Instruments Business Operators, etc.” by theFinancial Services Agency.
In the event of a violation of provisions in the Agreement by ADR or the seller, the counterparty shallhave the right to terminate the Agreement and claim an amount equivalent to 20% of the purchase price ofthe property as penalty.
However, under the Conveyance Agreement there is a condition precedent whereby ADR is required toprocure funds for acquiring the asset-to-be-acquired. Therefore, if ADR cannot procure the acquisition fundthe Conveyance Agreement will be annulled or can be terminated by ADR notifying the seller, and except
where ADR is at fault, ADR is not obliged to pay the penalty.
(Note 7) Refers to a postdated purchase and sales agreement under which payment and property delivery shall be made at least 1 month after
the conclusion of the agreement, or any other agreement similar thereof.

7. Seller Profile
Trade name

Hoosiers Asset Management Co., Ltd.

Head Office location

4-3-16 Nihonbashi Muromachi, Chuo-ku, Tokyo

Representative

Fujii Yukio, President and Chief Executive Officer

Principal business

Investment, development, and leasing of real estate

Capital10 million yen

Date of the establishment February 7, 2000
Total Assets

21,698 million yen (as of March, 2019)

Net Assets

3,149 million yen (as of March, 2019)

Total Net Assets

3,149 million yen (as of March, 2019)

Large shareholder

Hoosiers Holdings (as of March, 2019)

Relationship with ADR or ADIM
Equity, Personnel and There are no equity, personnel or business relations between the seller and ADR
Business Relations
or ADIM required to be stated.
Related parties status

The seller and its related persons or companies do not apply as a related party toADR or to ADIM.

8. Property Titleholder (for transactions with parties with special interest)
Omitted. Property is not acquired from parties with special interest.

69. Matters Concerning Earthquake Resistance
The validity of structural calculation document on the asset-to-be-acquired has been examined by a thirdparty inspector, Tokio Marine & Nichido Risk Consulting Co., Ltd. ADR has obtained the inspection results
stating that no intentional manipulations, falsifications or other corruptions in the structural calculation
document were found and that the structural calculation is deemed to have been performed in accordance withthe law.
Third-party inspector Profile
Trade name

Tokio Marine & Nichido Risk Consulting Co., Ltd.

Head Office location

1-5-1 Otemachi, Chiyoda-ku, Tokyo

Representative

Shimakura Taizo, President and Chief Executive Officer

Capital

100 million yen

Large shareholder

Tokio Marine Holdings, Inc.

Principal businessbuilding inspection and soil environmental assessment, etc.

Relationship with ADR or ADIM
Equity, Personnel and There are no equity, personnel or business relations between the seller and ADR
Business Relations
or ADIM required to be stated.
Related parties status

The seller and its related persons or companies do not apply as a related party toADR or to ADIM.

10. Broker ProfileBroker was not employed in the transaction..
11. Future Outlook
The effect of the Acquisition on the management performance forecasts for fiscal periods ending January 2020is negligible. Therefore, the forecasts remain unchanged.

About Advance Residence Investment Corporation
Advance Residence Investment Corporation is the largest residential J-REIT, investing in over 260 rental apartments locatedmostly in central Tokyo and in other major cities throughout Japan (AUM over 400 billion yen). ADR can be expected have astable dividend in the long-term and can be considered as a defensive J-REIT, on back of the stable income from residential
assets and with the largest dividend reserve among J-REITs.
ADR’s website: https://www.adr-reit.com/en/[Provisional Translation Only]
English translation of the original Japanese document is provided solely for information purposes.
Should there be any discrepancies between this translation and the Japanese original, the latter shall prevail.

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