May 30, 2019

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

Asset Management Company:

AD Investment Management Co., Ltd.
Kenji Kousaka, President

Inquiries:

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

Notice Concerning Acquisition of Investment Asset (RESIDIA Shin-Osaka II)

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 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.
Name of The Asset-To-Be-Acquired (Note 1)
Proposed Acquisition Price (Price / Appraisal ratio)
Real Estate Appraisal ValueNOI Yield

RESIDIA Shin-Osaka II (Real Estate)(Note 2)

(Note 3)

Building Age

5.0%(Note 5)

4.3%

(Note 6)

11.3yearSellerIndividual (Not disclosed)

Scheduled Contract Date

May 30, 2019

Scheduled Acquisition Date

May 31, 2019

Acquisition Financing (Payment Method)

Cash-on-hand (Full payment on delivery)

Collateral(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 5)(Note 6)(92.3%)

701,000 thousand yen(Note 4)

Yield after Depreciation

647,058 thousand yen

None

The name of the property is scheduled to be changed after the acquisition is completed to the name listed above.
The name before the change is「PREGIO Shin-mido」“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 March 12, 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 4,557 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 located in Osaka at
92.3% of the appraisal price, by using ADIM’s own sourcing network.
In recent years, rents in Osaka area as a whole have been declining. However, rental apartments aroundShin-Osaka Station, a Tokaido-Sanyo Shinkansen (bullet train) station, where the property is located, show
steady demand from business transferees who commute to Osaka’s major business areas such as Umeda andthe rents in this area including this property have been stable over the past few years. Therefore, unlike otherareas of Osaka, we believe the area around Shin-Osaka Station has not a lot to worry about weakening rents.
In addition, the property is located very close to Shin-Osaka Station, it is only a 5 minute walk and consistsof studio and one bedroom units, which fit the needs of volume segment tenants, single-person transferees.
Hence, we belive the property to be competitive within the area.
2. Map of the Asset-To-Be-Acquired (1-13-9 Miyahara, Yodogawa-ku, Osaka)©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-77
RESIDIA Shin-Osaka II
1-13-9 Miyahara, Yodogawa-ku, Osaka-city, Osaka prefecture

Land
Type of Ownership
Site AreaZoning
FAR / Building Coverage Ratio

Proprietary ownership469.15m2
Commercial zone
600% / 80%

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

Proprietary ownership
1,252.09 m2
Reinforced concrete with flat roof / 8 floors
Multi-family housing
February, 2008
Nihon Confirmation and Inspection Center
FKO Archi Design
Hojo Structure Research InstituteShiohama Industry Corp.

Building

TrusteeTokyu Housing Lease Corp.
Tokyu Housing Lease Corp.
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.
March 12, 2019
¥ 31,864 thousand¥ 309,000 thousand

Earthquake PML

8.9%

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 April 30, 201913534
1,037.47 m2
1,001.60 m2
96.5 %¥ 3,022 thousand¥ 1,304 thousand

Number of Units by TypeSingleCompactFamily
LargeDormitory
Other21140000Special 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 Shin-Osaka II

Appraisal Date

March 12, 2019

JLL Morii Valuation & Advisory K.K

Appraisal Value701,000 thousand yen

AppraisedValue

Appraisal Items
Income Capitalization Approach Value

Basis701,000

Direct Capitalization Price

714,000

Total Potential Income

43,723

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

Rent Income

42,377

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

Other Income

1,346

Estimated using historical figures.

41,303

Total Effective Income
Losses from Vacancies, etc.

2,420

Losses from Delinquencies

0Expenses from Rental Business

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

8,778

Maintenance and Management Fees

1,488

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

Utilities Costs

716

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

Management Commission Fees

1,218

Estimated by referring to the cost of comparable property.

Taxes and Public Dues

1,989

Assessed using historical figures adjusted for depreciation.

Non-life Insurance Premiums

68

Estimated based on the insurance premium for the property.

Leasing Expenses

1,067

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

1,427

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

805

Net Operating Income

32,525

Earnings from Deposits

27

Capital Expenditures

1,859

Net Cash Flow DCF Price
Cap Rate
DCF PriceEstimated using historical figures.

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

30,693
4.3%

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

687,000

Discount Rate

4.1%

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

Terminal Cap Rate

4.5%

Added a premium on future risks.

Cost Approach Value

467,000

Land Ratio

71.6%

Building Ratio

28.4%
Other Matters of ConsiderationThe major reason for the significant difference between income capitalization approach value and cost approach value isbecause, in the cost approach, the fact that the property still retained high profitability after eleven years after completion
could not be fully factored in the depreciation adjustment.

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6. Seller Profile
The seller of the property is an indivisual whose name and details are not disclosed according to theseller’s wishes.
7. Property Titleholder (for transactions with parties with special interest)
Omitted. Property is not acquired from parties with special interest.

8. 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.
9. Broker Profile
The broker of the property is a domestic real estate company whose name and details are not disclosedaccording to their wishes. The broker does not constitute a party having particular vested interest in ADR orADIM.
10. Future Outlook
The effect of the Acquisition on the management performance forecasts for fiscal periods ending July 2019
and January 2020 is 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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