Ichigo Preserves and Improves Real Estate[Provisional Translation Only]
This 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.

June 28, 2017
IssuerIchigo Green Infrastructure Investment Corporation (“Ichigo Green,” 9282)
1-1-1 Uchisaiwaicho, Chiyoda-ku, Tokyo
Representative: Mami Nagasaki, Executive Director
www.ichigo-green.co.jp
Asset Management Company
Ichigo Investment Advisors Co., Ltd.
Representative: Wataru Orii, President
Inquiries: Hiroto Tajitsu, Head of Business Administration
Tel: +81-3-3502-4854

Acquisition of Two Solar Power Plants
Ichigo Investment Advisors (“IIA”), the asset management company of Ichigo Green,
today decided to acquire two solar power plants (panel output: 3.6MW).
Because the acquisition of the Ichigo Yamaguchi Aionishi ECO Power Plant involves
acquisition of real estate from a related party as defined in the Investment Trust andInvestment Corporation Law of Japan (the “Investment Law”) and its internal rules on
related-party transactions, IIA obtained the necessary consent from Ichigo Green’s
directors at a board meeting held on June 28, 2017.
1. Acquisition Rationale
Ichigo Green primarily invests in solar power plants, taking full advantage of Ichigo’s
track record and expertise in renewable energy production. The mission of Ichigo Green
is to provide stable long-term returns for investors while contributing to thedevelopment of Japan’s sustainable society. Today’s acquisition of two solar power
plants will support Ichigo Green in its goal to maximize shareholder value via a
portfolio that offers both return stability due to its long-term, stable cash flows andgrowth potential.
The two solar power plants are located in Yamaguchi Prefecture and match theinvestment criteria set forth in Ichigo Green’s Articles of Incorporation. To support EPS
growth, Ichigo Green will finance the acquisitions with bank loans and cash-on-hand.
As Ichigo Green currently does not have any solar power plants in Japan’s Chugoku
Region, today’s acquisition will further diversify its portfolio, minimize weather-related
earnings volatility, and increase the stability of its dividend.

12. Solar Power Plant Summary(JPY million)
No.

E-14

E-15

Name

Location

Acquisition
Appraisal
Price1Value(JPY million) (JPY million)

IchigoYamaguchi
Aionishi

Yamaguchi
City,
Yamaguchi
Prefecture544

IchigoYamaguchi
SayamaYamaguchi
City,
Yamaguchi
Prefecture

925

Panel
Output(MW)2

470-637

FIT(JPY/kWh)3

1.24

40

SellerSolar power plant:
Ichigo Yamaguchi
Aionishi ECOPower Plant GK
Land:
Ichigo ECOEnergy785-1,050

a. Contract Date

June 28, 2017b. Closing Date

July 3, 2017c. Seller

Please refer to section 4 below.

d. Financing Method

New loans and cash-on-hand4e. Settlement Method

Lump-sum payment

2.35

36

Ichigo Yamaguchi
Sayama ECOPower Plant GK

1

Acquisition price excludes incidental expenses such as property, city planning, andconsumption taxes.
2
Panel Output is derived by multiplying the maximum output of a single solar panel by
the total number of panels, and truncated to the nearest hundredth. Therefore, the sumof panel output for each solar power plant does not match the total panel output for theentire portfolio.
3
FIT (Feed-In Tariff) excludes consumption and local taxes as indicated in therespective Power Purchase Agreements for each solar power plant.
4
For details, please refer to today’s release “New Loans.”
3. Solar Power Plant Details
The details of each solar power plant are shown in the following tables.
Definitions of Terms and Notes for the Following Tables
a. Appraisal Value is from the Valuation Report that PricewaterhouseCoopers
Sustainability LLC (“PwC Sustainability”) has produced for each solar power plant at
the request of Ichigo Green pursuant to the Investment Law, rules set by theInvestment Trusts Association, Japan, and the by-laws of Ichigo Green. Appraisal
Value is shown as a range, with the upper-end using a WACC-based discount rate
and the lower-end using an IRR-based discount rate. PwC Sustainability does nothave any capital, personnel, or business relationship of note with Ichigo Green orwith its asset manager.
b. Agreements(1)Power Purchase Agreement describes the specific agreement for each solar power
plant. FIT excludes consumption and local taxes.

2

(2)

Unless specified otherwise, Electric Power Producer refers to any party using
renewable energy facilities to produce electricity and is not limited to electric
power producers prescribed in Article 2, Paragraph 1, Item 15 of the Electricity
Business Act.

c. Location refers to the registered address of the land on which each solar power plant
has been built.
d. Land(1) Street Address is the registered street address.
(2) Area is the registered area and may not match the actual area.
(3) Property Right refers to the specific type of right Ichigo Green holds with respect
to the land on which each solar power plant has been built.
e. Equipment(1)

Certification Date refers to the date on which each solar power plant has beencertified.
(2) Production Start Date refers to the date on which each solar power plantcommenced energy production, excluding any test runs, and began supplying
energy in accordance with respective power purchase agreements.
(3) Remaining FIT Period refers to the difference between the acquisition date and thelast day of the power procurement period for each respective solar power plant,
truncated to the nearest month.
(4) Last Day of FIT period refers to the day on which the FIT period ends for each
respective solar power plant.
(5) FIT refers to the electric utility operator’s purchase price for the electricity
produced by each solar power plant (i.e., the solar power plant’s electricity saleprice), excluding consumption and local taxes.
(6) Property Right refers to the specific type of right Ichigo Green holds with respect
to the solar power equipment.
(7) Panel Type refers to the type of photovoltaic module for each solar power plantand is based on the technical report produced by E&E Solutions.
(8) Number of Panels refers to the number of photovoltaic modules used in each solar
power plant and is based on the technical report produced by E&E Solutions.
(9) Panel Maker refers to the manufacturer of the photovoltaic modules used in eachsolar power plant and is based on the technical report produced by E&E Solutions.
(10) Inverter Supplier refers to the manufacturer of the inverters used in each solar
power plant and is based on the technical report produced by E&E Solutions.
(11) EPC (Engineering, Procurement, and Construction) Contractor refers to thecompany contracted to work on the construction of each solar power plant.
(12) Power Output refers to the smaller of the photovoltaic module capacity and theinvertor capacity of each solar power plant and is based on the technical report
produced by E&E Solutions.
(13) Power Factor Control in Grid Connection refers to the power factor control value
in connecting to the grid and is based on the technical report produced by E&E
Solutions.
(14) Projected Power Generation Capacity Utilization refers to the expected annual
utilization rate of the total production capacity at each solar power plant shown asa probability of exceedance (P50) derived from a statistical analysis of 20 years of
daylight data from nearby meteorological offices and is based on the technicalreport produced by E&E Solutions. Specifically, the projected values for the firstyear, 10th year, and 20th year of operation are shown.
(15) Projected Annual Energy Production refers to the expected annual energy
production at each solar power plant shown as a probability of exceedance (P50)
derived from a statistical analysis of 20 years of daylight data from the relevantmeteorological offices and is based on the technical report produced by E&E
3Solutions. Specifically, the projected values for the first year, 10th year, and 20thyear of operation are shown.
(16) Solar Module Array Structure refers to the structure of photovoltaic modules on
the mounting racks and is based on the technical report produced by E&E
Solutions.
f. Operator refers to the company contracted to operate each solar power plant.
g. Maintenance Service Provider refers to the contracted maintenance company of eachsolar power plant as of the date of acquisition.
h. Items of Special Note includes information that is considered important with respect
to the rights, operation, appraisal, profitability, and disposal of each solar power
plant, and is as of June 21, 2017.
i. Lease Details show a summary of the terms contained within the solar power plantlease contracts and project contracts that Ichigo Green has executed as of today.
j. Valuation Report Details shows a summary of the valuation reports for each solar
power plant produced by PwC Sustainability at the request of Ichigo Green pursuant
to the Investment Law, rules set by the Investment Trusts Association, Japan, and theby-laws of Ichigo Green. PwC Sustainability does not have any capital, personnel, or
business relationship of note with Ichigo Green or with its asset manager.
k. The Ichigo Yamaguchi Aionishi ECO Power Plant Appraisal Report shows asummary of the content of the real estate appraisal report produced by Daiwa Real
Estate Appraisal at the request of Ichigo Green and pursuant to the Act on Real EstateAppraisal, real estate appraisal standards, and the considerations with respect to using
such standards set by the Ministry of Land, Infrastructure, Transport and Tourism.
Daiwa Real Estate Appraisal does not have any capital, personnel, or business
relationship of note with Ichigo Green or with its asset manager.
l. Meteorological Details show the meteorological conditions of each solar power plantand is produced based on the technical report produced by E&E Solutions, thevaluation reports produced by PwC Sustainability, the real estate appraisal reports
produced by Daiwa Real Estate Appraisal, and in certain cases information that has
been directly obtained by Ichigo Green’s asset manager. This item does not reflect
any changes in meteorological conditions after the publication of each respective
source.
m. Prior Year’s Earnings include figures and information for each solar power asreceived from current owners. Electric Power Generation is the value measured as ofeach month’s metering day and is based on the Notice of Purchased Power publishedby the purchasing electric utility operator. Operating Revenue is calculated as the
product of power generation measured as of each month’s metering day and therelevant FIT (excluding taxes), plus any rental income and insurance premium
received. Operating Expense is the sum of depreciation, maintenance fees, electricity
bills, telecommunication fees, repair fees, insurance premium payments, taxes,
outsourcing fees, and any other fee related to the operation of the solar power facility.
Operating Profit is the difference of operating revenue and operating expense for eachsolar power plant.
Prior Year’s Earnings have not been calculated using J-GAAP and may be based on
expense assumptions, accounting standards, and other assumptions that differ fromthose used by Ichigo Green. As such, Prior Year’s Earnings may vary significantly
from future power generation, operating revenue, and operating expenses, and should
not be taken as any measure or guarantee of future performance. Furthermore, Prior
Year’s Earnings are un-audited and presented as received from the previous owners,
and therefore may be incomplete and inaccurate.

4

Individual Solar Power Plant Details
E-14

Ichigo Yamaguchi Aionishi ECO Power Plant (including underlying land)

Acquisition Date

Acquisition PriceAppraisal Value

July 3, 2017Type
Renewable Energy
Producer

JPY 544 million

JPY 470 million to JPY 637
millionSolar Power Plant

Power
Purchase
Agreement

Electric Utility Operator(Power Purchaser)
FIT

Last Day of FIT

Ichigo Yamaguchi
Aionishi ECO Power Plant
GK
Chugoku Electric PowerJPY 40 per kWh
The day immediately
before the metering day inJanuary 2036 after
December 7, 2015
(inclusive)(Appraisal Date)(May 31, 2017)

Location

Aza-Minami Yokohama, Aionishi, Yamaguchi City, Yamaguchi Prefecture

Land

StreetAddress
Area
Form of
Right
CertificationDate

3330-1Panel Type

Poly-Crystal Silicon

19,815.38m2

Number of Panels

Freehold

Panel Maker

4,872
Yingli Green Energy
Holding
Toshiba MitsubishiElectric Industrial Systems
Corporation
Toshiba Plant Systems &Services Corporation
1,000.00kW

Invertor Supplier
March 12, 2013
EPC Contractor

Equipment

Production
Start Date

December 7, 2015

Remaining
FIT Period

18 years and 5 months

Last Day of
FIT Period

December 6, 2035

Equipment

FIT

JPY 40 per kWh

Property
Right

Freehold

Collateral
Operator

Compliance with Risk
Management Policy

Power Output
Power Factor Control in
Grid Connection
Projected
First YearPower
Generation 10th Year
Capacityth
Utilization 20 year
Projected
AnnualEnergyProduction

91%
13.96%
13.27%
12.57%First Year

1,519.680MWh

10th Year

1,443.696MWh

20th Year

1,367.712MWh

Solar Module Array
Structure

Concrete Foundation

None
Toshiba Plant Systems &Services Corporation
Risks such as operational risk, market trends, macroeconomic conditions, demand trends of electricutility operators and power producers, credit risk, liquidity risk, regulatory change risk, conflicts ofinterest, risks pertaining to Ichigo Green’s asset manager simultaneously managing other funds, andrisks pertaining to the liability associated with renewable energy facilities are controlled andmanaged appropriately in accordance with Ichigo Green’s risk management policy.
Ichigo ECO Energy

Maintenance Service Provider

5Social Contribution

This power plant contributes to Japan’s green energy self-sufficiency and reducing its dependence
on energy imports by providing safe renewable energy generation. It also contributes to thedevelopment of a low-carbon society by providing renewable energy that produces fewer greenhousegas emissions during the power generation process compared to thermal combustion of fossil fuels.

Items of Special Note
While part of the site is used as a pathway by nearby residents, this does not affect power generation, because the pathway is outside
the fence surrounding the solar power plant.

■ Lease Details
Leaseholder
Lease
PeriodIchigo Yamaguchi Aionishi ECO Power Plant GK
July 3, 2017 to December 6, 2035
1. The leaseholder shall pay a base fee plus a performance-linked fee in each calculation period for the power plant
and the land as agreed in the Power Generation Facility Lease Contract (hereinafter the “Lease Contract”).
The Lease Contract defines the first calculation period as July 3, 2017 to June 30, 2018, subsequent calculation
periods as July 1 of each year to June 30 of the following year, and the final calculation period as the latest
occurring July 1 prior to the last day of the lease period to the end of the lease period.
Technical Report refers to the June 2017 operational due diligence report of the Ichigo Yamaguchi Aionishi ECOPower Plant produced by E&E Solutions.
PP refers to the specific procurement price, excluding consumption and local consumption taxes, of JPY 40 per
kWh applicable to this solar power facility.
Administrative expense categorically refers to the following:

Lease Feea. Fees pertaining to the operation, maintenance, and repair of this solar power facility
b. Fees paid to the operator of this solar power facilityc. Insurance premiums borne by the leaseholder
d. Administrative expenses of the leaseholder (including administrative outsourcing fees and taxes)
e. Taxes
f. In addition to the above, any expense related to the operation, facilities, land, and leaseholder, including liabilities
borne by third parties and the operator of this solar power facility that may arise during the course of executing its
responsibilities set out in the Lease Contract or in the Project Contract
2. The base fee (R1) of each calculation period is calculated as shown in the following formula, with amounts
smaller than JPY 1 truncated. However, if the leaseholder suffers a loss of income or an increase in expense as aresult of any failure, delay, or lack of cooperation by Ichigo Green with respect to its repair obligation, then thebase fee shall be reduced by the amount of lost income or increased expense.
R1 = X1 - Y1
X1: Projected revenue from electric power sales, in each calculation period, calculated as follows
X1 = PP * x1
x1: Projected energy production, in units of kWh, of this solar power facility for the corresponding
calculation period, which is based on the probability of exceedance (P85) forecasted energy production
shown in the Technical Report.
Y1: Projected administrative expense for each calculation period, defined as the total reported administrative
expense of the leaseholder that has been disclosed on its business plan and approved by Ichigo Green.
However, for the purpose of calculating the base fee, operator fees are fixed at the amount that would beincurred assuming this power plant produces exactly the probability of exceedance (P85) forecasted
energy production.

6

3. The performance-linked fee (R2) for each calculation period is calculated as shown in the following formula,with amounts smaller than JPY 0 set to equal JPY 0.
R2 = (X2 - Y2) - R1
X2: Sum of the actual monthly measured revenues (MX2) from electric power sales during the calculation
period (JPY)
MX2: Actual monthly measured revenue from electric power sales, calculated as follows:
MX2=PP * mx2+MC+MI
mx2: Monthly power sales of the solar power facility as measured by the monitoring system of theoperator
MC: Amount of output suppression compensation reported in a given month
MI: Profit insurance payment receipts reported in a given month
Y2: Actual administrative expense for each calculation period reported by the leaseholder. However, incalculating the performance-linked fee, the actual fee paid to the operator shall be used.
4. Notwithstanding 2 above, if output suppression not entailing compensation occurs in any given calculation
period, then the base fee may be adjusted subject to discussion between Ichigo Green and leaseholder. Any
adjustment of the base fee must be agreed between Ichigo Green and leaseholder within 20 days of the end ofeach calculation period and settled before the settlement date set in the Lease Contract.
5. Notwithstanding 3 above, if a discrepancy between the actual power sales measured by the monitoring system
and measured on the metering date occurs, then the performance-linked fee may be adjusted subject to discussion
between Ichigo Green and leaseholder. Any adjustment of the performance-linked fee must be agreed between
Ichigo Green and leaseholder within 20 days of the end of the relevant half-term (January to June and July to
December), and settled within two months from the end of the relevant half-term and in accordance with theterms of the Lease Contract.
With respect to the Project Contract, Ichigo ECO Energy is jointly and severally liable for base fee payment
obligations borne by Ichigo Yamaguchi Aionishi ECO Power Plant GK in relation to the Lease Contract ofIchigo Green.
Deposits/
Guarantees
Contract
Renewal at
Maturity

Lease Fee
Revisions

Cancellation
BeforeMaturity
Lease
Property
Purchase
OptionPenalties
Method forContract
RenewalN/A
If Ichigo Green or the leaseholder wishes to renew the lease with respect to the solar power plant and the underlying
land, then this must be communicated to the other party at least six months before the last day of the lease period. Insuch a case, Ichigo Green and leaseholder shall discuss, in good faith, the need for contract renewal and specificcontract terms, and execute a new contract if agreed upon.
If inflation results in a reduction in the real value of the lease fees, then upon request from Ichigo Green, theleaseholder must consider a change in the lease fees. In making such a request, Ichigo Green must reasonably
consider any changes or expected changes in the FIT. If a change in the electric utility operator, which purchases
the power plant’s electricity, occurs then the leaseholder and Ichigo Green shall discuss, in good faith, an increasein fees taking into consideration such change and any change in the FIT as well as general price trends andmacroeconomic conditions.
1. Ichigo Green and leaseholder may, in writing, request a cancellation of contract to be effective any time beyond
July 3, 2027. However, in order to be deemed effective, such request must be received by the other party no later
than January 2, 2027, or in the case that this is not a business day for either party, then before the immediately
preceding business day.
2. If a request for cancellation is made beyond the date specified immediately above, then Ichigo Green andleaseholder shall discuss, in good faith, the need for such cancellation and any specific terms.
On any date starting one year before the last day of the lease period, the leaseholder may acquire the leased property
from Ichigo Green by paying an amount equivalent to the fair market value of the solar power plant and the land asof such termination date. Ownership of the solar power plant shall be transferred from Ichigo Green to theleaseholder immediately upon settlement of such amount in full.
N/A
N/A

7

■ Valuation Report Details
Plant Name
Appraisal Value
Appraiser
Appraisal Date

Ichigo Yamaguchi Aionishi ECO Power Plant
JPY 470 million to JPY 637 million
PwC Sustainability
May 31, 2017
A weighted average of the cost of equity (estimated based on the respective
Discount Rate (WACC)
2.1%
beta values of TSE-listed REITs between June 2012 and May 2017) and thecost of debt during the appraisal period
Calculated using a DCF method (income approach) to discount future expectedAppraisal ValueJPY 637 million
free cash flows by a risk-adjusted discount rate as of the date of acquisition of
the solar power plant by Ichigo Green
Calculated taking the mid-point of METI’s expected IRR for solar power
Discount Rate (IRR)
6.0%
plants under the FIT in its Opinion on Procurement Prices (2015) and theactual realized IRR’s on currently operating solar power plants under the FIT
Calculated using a DCF method (income approach) to discount future expectedAppraisal Value
JPY 470 million
free cash flows by a risk-adjusted discount rate as of the date of acquisition of
the solar power plant by Ichigo Green
Other Factors Considered by the Appraiser in its
N/A
Appraisal■ Real Estate Appraisal Report
Plant Name

Ichigo Yamaguchi Aionishi ECO Power Plant

Appraisal Value (Land)1

JPY 63.5 million

Appraiser

Daiwa Real Estate Appraisal

Date of Appraisal

May 31, 2017
AmountValue via DCF Method(Equipment + Land)2

JPY 481 million

Discount Rate

5.0%

Terminal Cap Rate

7.9%

Value via Cost Approach(Equipment + Land)2
Land Value as % of Total Value
Notes
1
2

Note
–
Based on transactions of similar and nearby J-REIT assets and theyields of financial assets with the asset’s individual characteristics
taken into account
Assessed taking into consideration the possibility of increased capex
due to aging of the solar power plant, uncertainty of market prices forthe land and power generation facilities, and marketability of the landat the time of termination of operation

JPY 484 million

–

13.2%

–
–

Appraisal Value is calculated as follows: Value via DCF Method * Land Value as % of Total Value.
Value via Cost Approach and Value via DCF Method show the aggregate value of land and equipment.

8

■ Meteorological Details
Meteorological data used to calculate power production was obtained as follows:
Closest meteorological weather station: Hofu
Location used in METPV-11 (hourly solar radiation data on an inclined surface): Hofu
Meteorological office used to obtain annual variability of daylight and depth of snow fall: Shimonoseki
Hours of Sunshine
Aggregate annual hours of sunshine for Hofu are 2,031.9 hours, which is greater than the national average of 1,896.5 hours forprefectural capitals.
Wind Speed
The maximum recorded wind speed for Hofu is 25m/s recorded on September 27, 1991, compared to the maximum for Japan of
39.6 m/s recorded on August 25, 2015.
Snow Fall Depth
Average snow fall in Shimonoseki is 4cm. Maximum recorded depth is 39cm recorded in 1900, and therefore has a relatively low
risk of snow.
Lightning Strikes
The area in which this solar power plant operates experienced between 3,001 and 6,000 individual lightning strikes and 81 and 120
days of strikes during 2012 through 2016, and therefore has an average risk of lightning strikes.
Prior Year’s Earnings
Jun 2016

Jul 2016

Aug 2016

Sep 2016

Oct 2016

Nov 2016

Power Generation (kWh)149,472

162,468

202,068

121,608

96,696

102,492

Operating Revenue (JPY)5,978,880

6,498,720

8,082,720

4,864,320

3,867,840

4,099,680

Operating Expense (JPY)

2,610,361

2,210,731

2,286,809

2,287,780

2,289,109

2,293,930

Operating Profit (JPY)

3,368,519

4,287,989

5,795,911

2,576,540

1,578,731

1,805,750

Dec 2016

Jan 2017

Feb 2017

Mar 2017

Apr 2017

May 2017

Power Generation (kWh)75,06094,716111,204

129,384

146,736

154,471

Operating Revenue (JPY)3,002,400

3,788,640

4,448,160

5,175,360

5,869,440

6,178,852

Operating Expense (JPY)

2,271,866

2,317,969

2,221,626

2,225,562

2,271,489

2,294,916

Operating Profit (JPY)730,534

1,470,671

2,226,534

2,949,798

3,597,951

3,883,936

9

E-15

Ichigo Yamaguchi Sayama ECO Power Plant

Acquisition Date
Acquisition PriceAppraisal Value

July 3, 2017

Type

JPY 925 million

JPY 785 million to JPY
1,050 million

Power
Purchase
Agreement

Solar Power Plant
Renewable Energy
ProducerElectric Utility Operator(Power Purchaser)
FIT
Last Day of FIT(Appraisal Date)(May 31, 2017)

Location

Aza-Hamafuni, Sayama, Yamaguchi City, Yamaguchi Prefecture

Land

StreetAddress
Area
Form of
Right
Certification
Date

Single-Crystal Silicon

43,621.00m2

Number of Panels

9,072

N/A

Panel Maker

Toshiba Corporation

Invertor Supplier
March 17, 2014

April 6, 2016

Remaining
FIT Period

18 years and 9 months

Last Day of
FIT Period

April 5, 2036

Equipment

FIT

JPY 36 per kWh

Property
Right

Freehold

Operator

Compliance with Risk
Management Policy

Social Contribution

JPY 36 per kWh
The day immediately
before the metering day in
May 2036 after April 6,2016 (inclusive)

Panel Type

Production
Start Date

Collateral

Chugoku Electric Power2460-4EPC Contractor

Equipment

Ichigo Yamaguchi Sayama
ECO Power Plant GK

Power Output
Power Factor Control in
Grid Connection
Projected
First YearPower
Generation 10th Year
Capacityth
Utilization 20 year
Projected
AnnualEnergyProduction

Toshiba MitsubishiElectric Industrial Systems
Corporation
Toshiba Plant Systems &Services Corporation
1,680.00kW
100%
14.15%
13.44%
12.74%First Year2,923.940MWh

10th Year2,777.743MWh

20th Year

2,631.546MWh

Solar Module Array
Structure

Pre-Fab Driven Piles(Concrete)None
Toshiba Plant Systems &Services Corporation
Risks such as operational risk, market trends, macroeconomic conditions, demand trends of electricutility operators and power producers, credit risk, liquidity risk, regulatory change risk, conflicts ofinterest, risks pertaining to Ichigo Green’s asset manager simultaneously managing other funds, andrisks pertaining to the liability associated with renewable energy facilities are controlled andmanaged appropriately in accordance with Ichigo Green’s risk management policy.
Ichigo ECO Energy

Maintenance Service Provider

This power plant contributes to Japan’s green energy self-sufficiency and reducing its dependence
on energy imports by providing safe renewable energy generation. It also contributes to thedevelopment of a low-carbon society by providing renewable energy that produces fewer
greenhouse gas emissions during the power generation process compared to thermal combustion offossil fuels.

Items of Special Note
The warranty on the photovoltaic modules supplied by Toshiba becomes invalid if the photovoltaic modules are sold or pledged ascollateral.

10

■ Lease Details
Leaseholder
Lease
PeriodIchigo Yamaguchi Sayama ECO Power Plant GK
July 3, 2017 to April 5, 2036
1. The leaseholder shall pay a base fee plus a performance-linked fee in each calculation period for the power plant
as agreed in the Power Generation Facility Lease Contract (hereinafter the “Lease Contract”).
The Lease Contract defines the first calculation period as July 3, 2017 to June 30, 2018, subsequent calculation
periods as July 1 of each year to June 30 of the following year, and the final calculation period as the latest
occurring July 1 prior to the last day of the lease period to the end of the lease period.
Technical Report refers to the June 2017 operational due diligence report of the Ichigo Yamaguchi Sayama ECOPower Plant produced by E&E Solutions.
PP refers to the specific procurement price, excluding consumption and local consumption taxes, of JPY 36 per
kWh applicable to this solar power facility.
Administrative expense categorically refers to the following:a. Fees pertaining to the operation, maintenance, and repair of this solar power facility
b. Fees paid to the operator of this solar power facility
c. Rent paid for the land on which this solar power facility has been built
d. Insurance premiums borne by the leaseholdere. Administrative expenses of the leaseholder (including administrative outsourcing fees and taxes)
f. Taxes
g. In addition to the above, any expense related to the operation, facilities, land, and leaseholder, including
liabilities borne by third parties and the operator of this solar power facility that may arise during the course of
executing its responsibilities set out in the Lease Contract or in the Project Contract.
2. The base fee (R1) of each calculation period is calculated as shown in the following formula, with amounts
smaller than JPY 1 truncated. However, if the leaseholder suffers a loss of income or an increase in expense as aresult of any failure, delay, or lack of cooperation by Ichigo Green with respect to its repair obligation, then thebase fee shall be reduced by the amount of lost income or increased expense.

Lease Fee

R1 = X1 - Y1
X1: Projected revenue from electric power sales, in each calculation period, calculated as follows
X1 = PP * x1
x1: Projected energy production, in units of kWh, of this solar power facility for the corresponding
calculation period, which is based on the probability of exceedance (P85) forecasted energy production
shown in the Technical Report.
Y1: Projected administrative expense for each calculation period, defined as the total reported administrative
expense of the leaseholder that has been disclosed on its business plan and approved by Ichigo Green.
However, for the purpose of calculating the base fee, operator fees are fixed at the amount that would beincurred assuming this power plant produces exactly the probability of exceedance (P85) forecasted
energy production.
3. The performance-linked fee (R2) for each calculation period is calculated as shown in the following formula,with amounts smaller than JPY 0 set to equal JPY 0.
R2 = (X2 - Y2) - R1
X2: Sum of the actual monthly measured revenues (MX2) from electric power sales during the calculation
period (JPY)
MX2: Actual monthly measured revenue from electric power sales, calculated as follows:
MX2 = PP * mx2 + MC + MI
mx2: Monthly power sales of the solar power facility as measured by the monitoring system of theoperator
MC: Amount of output suppression compensation reported in a given month
MI: Profit insurance payment receipts reported in a given month
Y2: Actual administrative expense for each calculation period reported by the leaseholder. However, incalculating the performance-linked fee, the actual fee paid to the operator shall be used.

11

4. Notwithstanding 2 above, if output suppression not entailing compensation occurs in any given calculation
period, then the base fee may be adjusted subject to discussion between Ichigo Green and leaseholder. Any
adjustment of the base fee must be agreed between Ichigo Green and leaseholder within 20 days of the end ofeach calculation period and settled before the settlement date set in the Lease Contract.
5. Notwithstanding 3 above, if a discrepancy between the actual power sales measured by the monitoring system
and measured on the metering date occurs, then the performance-linked fee may be adjusted subject to discussion
between Ichigo Green and leaseholder. Any adjustment of the performance-linked fee must be agreed between
Ichigo Green and leaseholder within 20 days of the end of the relevant half-term (January to June and July to
December), and settled within two months from the end of the relevant half-term and in accordance with theterms of the Lease Contract.
With respect to the Project Contract, Ichigo ECO Energy is jointly and severally liable for base fee payment
obligations borne by Ichigo Yamaguchi Sayama ECO Power Plant GK in relation to the Lease Contract of Ichigo
Green.
Deposits/
Guarantees
Contract
Renewal at
Maturity

Lease Fee
Revisions

Cancellation
BeforeMaturity
Lease
Property
Purchase
OptionPenalties
Method forContract
RenewalN/A
If Ichigo Green or the leaseholder wishes to renew the lease with respect to the solar power plant, then this must be
communicated to the other party at least six months before the last day of the lease period. In such a case, Ichigo
Green and leaseholder shall discuss, in good faith, the need for contract renewal and specific contract terms, andexecute a new contract if agreed upon.
If inflation results in a reduction in the real value of the lease fees, then upon request from Ichigo Green, theleaseholder must consider a change in the lease fees. In making such a request, Ichigo Green must reasonably
consider any changes or expected changes in the FIT. If a change in the electric utility operator which purchases thepower plant’s electricity occurs, then the leaseholder and Ichigo Green shall discuss, in good faith, an increase infees taking into consideration such change and any change in the FIT as well as general price trends andmacroeconomic conditions.
1. Ichigo Green and leaseholder may, in writing, request a cancellation of contract to be effective any time beyond
July 3, 2027. However, in order to be deemed effective, such request must be received by the other party no later
than January 2, 2027, or in the case that this is not a business day for either party, then before the immediately
preceding business day.
2. If a request for cancellation is made beyond the date specified immediately above, then Ichigo Green andleaseholder shall discuss, in good faith, the need for such cancellation and any specific terms.
On any date starting one year before the last day of the lease period, the leaseholder may acquire the leased property
from Ichigo Green by paying an amount equivalent to the fair market value of the solar power plant as of suchtermination date. Ownership of the solar power plant shall be transferred from Ichigo Green to the leaseholder
immediately upon settlement of such amount in full.
N/A
N/A

12

■ Valuation Report Details
Plant Name
Appraisal Value
Appraiser
Appraisal Date

Ichigo Yamaguchi Sayama ECO Power Plant
JPY 785 million to JPY 1,050 million
PwC Sustainability
May 31, 2017
A weighted average of the cost of equity (estimated based on the respective
Discount Rate (WACC)
2.1%
beta values of TSE-listed REITs between June 2012 and May 2017) and thecost of debt during the appraisal period
Calculated using a DCF method (income approach) to discount future expectedAppraisal Value
JPY 1,050 million free cash flows by a risk-adjusted discount rate as of the date of acquisition of
the solar power plant by Ichigo Green
Calculated taking the mid-point of METI’s expected IRR for solar power
Discount Rate (IRR)
6.0%
plants under the FIT in its Opinion on Procurement Prices (2015) and theactual realized IRR’s on currently operating solar power plants under the FIT
Calculated using a DCF method (income approach) to discount future expectedAppraisal ValueJPY 785 million
free cash flows by a risk-adjusted discount rate as of the date of acquisition of
the solar power plant by Ichigo Green
Other Factors Considered by the Appraiser in its
N/A
Appraisal■ Meteorological Details
Meteorological data used to calculate power production was obtained as follows:
Closest meteorological weather station: Hofu
Location used in METPV-11 (hourly solar radiation data on an inclined surface): Hofu
Meteorological office used to obtain annual variability of daylight and depth of snow fall: Shimonoseki
Hours of Sunshine
Aggregate annual hours of sunshine for Hofu are 2,031.9 hours, which is greater than the national average of 1,896.5 hours forprefectural capitals.
Wind Speed
The maximum recorded wind speed for Hofu is 25 m/s recorded on September 27, 1991, compared to the maximum for Japan of
39.6 m/s recorded on August 25, 2015.
Snow Fall Depth
Average snow fall in Shimonoseki is 4cm. Maximum recorded depth is 39cm in 1900, and therefore has a relatively low risk ofsnow.
Lightning Strikes
The area in which this solar power plant operates experienced between 3,001 and 6,000 individual lightning strikes and 81 and 120
days of strikes during 2012 through 2016, and therefore has an average risk of lightning strikes.

13

Prior Year’s Earnings
Jun 2016

Jul 2016

Aug 2016

Sep 2016

Oct 2016

Nov 2016

Power Generation (kWh)234,108

340,956

329,004

211,140

213,624

181,836

Operating Revenue (JPY)

8,427,888

12,274,416

11,844,144

7,601,040

7,690,464

6,546,096

Operating Expense (JPY)

4,129,487

3,829,414

3,618,283

3,620,073

4,020,442

3,623,180

Operating Profit (JPY)

4,298,401

8,445,002

8,225,861

3,980,967

3,670,022

2,922,916

Dec 2016

Jan 2017

Feb 2017

Mar 2017

Apr 2017

May 2017

Power Generation (kWh)178,308

214,992

213,768

287,136

284,724

288,039

Operating Revenue (JPY)

6,419,088

7,739,712

7,695,648

10,336,896

10,250,064

10,369,407

Operating Expense (JPY)

3,605,536

4,126,345

4,111,654

4,449,585

4,211,350

4,248,199

Operating Profit (JPY)

2,813,552

3,613,367

3,583,994

5,887,311

6,038,714

6,121,208

14

Operator Details
Ichigo ECO Energy is the operator of the two solar power plants.
Name

Ichigo ECO Energy

Location

1-1-1 Uchisaiwaicho, Chiyoda-ku, Tokyo

Representative

Paid-In Capital

Eiichiro Gotoh, President
・Generation and provision of renewable energy
・Provision of engineering and consulting services with respect
to environmental conservation
・Other consulting services such as LED deployment
JPY 100 million (as of February 28, 2017)

Established

November 28, 2012

Net Assets

JPY 729 million (as of February 28, 2017)

Total Assets

JPY 3,664 million (as of February 28, 2017)

Major Shareholder

Ichigo Inc. (100%)

Business

Relationship to Ichigo Green and its Asset Manager
CapitalThe Operator is a subsidiary of Ichigo Inc., the parent of Ichigo
Green’s Asset Manager, and is a related party as defined in theInvestment Law.

Personnel

Although the Operator does not have any personnel relationshipof note with Ichigo Green or its Asset Manager, the parent
company of the Operator, Ichigo Inc., has personnel
relationships with the Asset Manager.

Transactions

The Operator has executed project agreements with Ichigo
Green and the respective sellers of the two power plants. The
Operator, Ichigo Green’s Asset Manager, and Ichigo Inc. have inplace an agreement that specifies the preferential provision of
relevant real estate information and negotiating rights.

Details of Related
Parties

The Operator is a related party to Ichigo Green and its AssetManager.
As stated above, the Operator is a related party of Ichigo
Green’s Asset Manager as defined in the Investment Law.

15

Solar Power Plant Technical Report Details
Ichigo Green has obtained a technical report from E&E Solutions that assesses eachplant’s solar power generation system, power generation capacity, various contracts
related to the solar power plants, and the sustainability of the solar power plants withrespect to functional degradation and environmental conditions.
E&E Solutions does not have any capital, personnel, or business relationship of notewith Ichigo Green or with its asset manager.

No.

Solar Power Plant

E-14

Ichigo Yamaguchi Aionishi
ECO Power Plant

E-15

Ichigo Yamaguchi Sayama
ECO Power Plant
1

Report Date

June 2017

Projected Annual Power
Generation (MWh)First Year

1,519.680 First Year

13.96

10th Year

1,443.696 10th Year

13.27

th

June 2017

Projected Power
Generation Capacity
Utilization (%)

th

20 Year1,367.712 20 Year

12.57

First Year2,923.940 First Year

14.15

th

th

10 Year

2,777.743 10 Year

13.44

20th Year

2,631.546 20th Year

12.74

Repair Costs are the aggregate expected cost of replacing critical components over a 20-year period
and are taken from the technical report produced by E&E Solutions.

Seismic Risk Assessment
As part of its due diligence process, Ichigo Green has obtained an assessment of seismic
risk with respect to the solar power plants from InterRisk Research Institute &Consulting.
Neither Ichigo Green nor its asset manager has any capital, personnel, or business
relationship of note with InterRisk Research Institute & Consulting.
No.

1, 2

Solar Power Plant

PML (%)1% of Occurrence2

E-14

Ichigo Yamaguchi Aionishi

0.21

5.2%

E-15

Ichigo Yamaguchi Sayama

0.21

Less than 1%

Expresses the expected loss amount and probability of occurrence assuming over a 475-year
period (i.e. a large-scale earthquake with an expected frequency of occurrence once every 475
years, or a 10% chance of occurrence within the next 50 years).

16

Forecast 20Year Repair
Costs (JPY
thousand)1
10,88021,706

4. Solar Power Plant Seller Details
E-14

Ichigo Yamaguchi Aionishi ECO Power Plant

Solar Power Plant:
SellerIchigo Yamaguchi Aionishi ECO Power Plant GK

Location

Business

1-1-7 Motoakasaka, Minato-ku, TokyoManaging Member: Ichigo ECO Power Plant 14 Ippan Shadan Hojin
Manager: Terumitsu Nosaka
Power Generation

Paid-In Capital

JPY 100,000 (as of January 31, 2017)

EstablishedMarch 5, 2015

Net Assets– (as of January 31, 2017)

Total Assets

JPY 402 million (as of January 31, 2017)

Major Shareholder

Ichigo ECO Power Plant 14 Ippan Shadan Hojin (100%)

Representative

Relationship to Ichigo Green and its Asset Manager
CapitalThe Seller does not have capital relationship of note with Ichigo
Green or its Asset Manager.

Personnel

The Seller does not have personnel relationship of note with Ichigo
Green or its Asset Manager.

Transactions

The Seller and Ichigo Green have executed a lease agreement. The
Seller, Ichigo Green, and Ichigo ECO Energy have executed a projectagreement.

Details of Related
Parties

N/A

Land:
SellerIchigo ECO Energy

Location

1-1-1 Uchisaiwaicho, Chiyoda-ku, Tokyo

Representative

Eiichiro Gotoh, President

Business

・Generation and provision of renewable energy
・Provision of engineering and consulting services with respect toenvironmental conservation
・Other consulting services such as LED deployment

Paid-In Capital

JPY 100 million (as of February 28, 2017)

Established

November 28, 2012

Net Assets

JPY 729 million (as of February 28, 2017)

Total Assets

JPY 3,664 million (as of February 28, 2017)

Major Shareholder

Ichigo Inc. (100%)17

Relationship to Ichigo Green and its Asset Manager
The Seller is a subsidiary of Ichigo Inc., the parent of Ichigo Green’s
CapitalAsset Manager, and is a related party as defined in the Investment
Law.
Although the Seller does not have any personnel relationship of notewith Ichigo Green or its Asset Manager, the parent company of the
Personnel
Seller, Ichigo Inc., has personnel relationships with the AssetManager.

Transactions

Details of Related
Parties

E-15

The Seller has executed project agreements with Ichigo Green and therespective sellers of the two power plants. The Seller, Ichigo Green’s
Asset Manager, and Ichigo Inc. have in place an agreement thatspecifies the preferential provision of relevant real estate informationand negotiating rights.
The Seller is a related party to Ichigo Green and its Asset Manager.
As stated above, the Operator is a related party of Ichigo Green’s
Asset Manager as defined in the Investment Law.

Ichigo Yamaguchi Sayama ECO Power Plant

Solar Power Plant:
SellerIchigo Yamaguchi Sayama ECO Power Plant GK

Location

1-1-7 Motoakasaka, Minato-ku, Tokyo

Representative

Managing Member: Ichigo ECO Power Plant 14 Ippan Shadan Hojin
Manager: Terumitsu Nosaka

Business

Power Generation

Paid-In Capital

JPY 100,000 (as of January 31, 2017)

EstablishedMarch 24, 2015

Net Assets– (as of January 31, 2017)

Total Assets

JPY 800 million (as of January 31, 2017)

Major Shareholder

Ichigo ECO Power Plant 14 Ippan Shadan Hojin (100%)

Relationship to Ichigo Green and its Asset Manager
CapitalThe Seller does not have capital relationship of note with Ichigo
Green or its Asset Manager.

Personnel

The Seller does not have personnel relationship of note with Ichigo
Green or its Asset Manager.

Transactions

The Seller and Ichigo Green have executed a lease agreement. The
Seller, Ichigo Green, and Ichigo ECO Energy have executed a projectagreement.

Details of Related
Parties

N/A

Notes:
Because the acquisition of the Ichigo Yamaguchi Aionishi ECO Power Plant involves
acquisition of real estate from a related party as defined in the Investment Trust andInvestment Corporation Law of Japan (the “Investment Law”), pursuant to Article 201
Paragraph 2 of the Investment Law and its internal rules on related-party transactions,
IIA has obtained the necessary consent from Ichigo Green’s directors at a board meeting
held on June 28, 2017.
18

Because the acquisition of the Ichigo Yamaguchi Sayama ECO Power Plant involves
acquisition of a solar power plant from a related party as defined in its internal rules on
related-party transactions, pursuant to its internal rules, IIA has obtained the necessaryconsent from Ichigo Green’s directors at a board meeting held on June 28, 2017.
5. Solar Power Plant: Current and Prior Owner Details
Solar Power Plant

Ichigo Yamaguchi Aionishi ECO Power Plant (E-14)

OwnersName

Related Party
Details
Acquisition
Rationale
Acquisition Price1
Acquisition Date

Current Owner

Prior Owner

Solar Power Plant:
Ichigo Yamaguchi Aionishi ECOPower Plant GK

Solar Power Plant:
N/A

Land:
Ichigo ECO Energy

Land:
Non-related party

Please refer to “Solar Power Plant
Seller Details” in section 4.

N/A

Investment

N/A

–

N/A

March 2015 (Land)
December 2015 (Plant built)

N/A

Solar Power Plant

Ichigo Yamaguchi Sayama ECO Power Plant (E-15)

OwnersCurrent Owner
Ichigo Yamaguchi Sayama ECOPower Plant GK

Name
Related Party
Details
Acquisition
Rationale
Acquisition Price2
Acquisition Date

Prior Owner
N/A

Please refer to “Solar Power Plant
Seller Details” in section 4.

N/A

Investment

N/A

–

N/A

March 2016 (Plant built)

N/A

1

Current Owner Land Acquisition Price is not shown because it was acquired over a year ago.
Current Owner Solar Power Plant Acquisition Price is not shown because there was no prior owner.

2

Current Owner Acquisition Price is not shown because there was no prior owner.

6. Broker Details
There were no brokers involved in the acquisition of the two solar power plants.
7. Earnings Outlook
Ichigo Green’s earnings outlook for the June 2018 fiscal period through the June 2026
fiscal period is as disclosed in today’s announcement “Ten-Year Earnings and Dividend
Forecast Revision.”
8. Summary of the Opinion on Profitability of Infrastructure Investment Assets and theOpinion on the Earnings Sustainability of Infrastructure Investment Assets.
The two solar power plants to be acquired are not subject to these opinions.
19Appendix: Post-Acquisition Portfolio
No.

Solar Power Plant

Location

Acquisition
Price1(JPY
million)Panel
Output(MW)

FIT(JPY/kWh)

Portfolio
Weight(%)

E-01

Ichigo Kiryu Okuzawa

Gunma

489

1.33

40

4.26

E-02

Ichigo Motomombetsu

Hokkaido

495

1.40

40

4.31

E-03

Ichigo Muroran Hatchodaira

Hokkaido

467

1.24

40

4.07

E-04

Ichigo Engaru Kiyokawa

Hokkaido

398

1.12

40

3.46

Shikoku

471

1.23

40

4.10

Hokkaido

770

1.93

40

6.70

E-05
E-06

Ichigo Iyo Nakayamacho
Izubuchi
Ichigo Nakashibetsu
Midorigaoka

E-07

Ichigo Abira Toasa

Hokkaido

441

1.16

40

3.84

E-08

Ichigo Toyokoro

Hokkaido

434

1.02

40

3.78

E-09

Ichigo Nago Futami

Okinawa

3,425

8.44

40

29.82

E-10

Hokkaido

464

1.24

40

4.04

Shikoku

1,124

2.43

36

9.78

Kyushu

517

1.44

36

4.50

Aichi

523

1.80

32

4.55

E-14

Ichigo Engaru Higashimachi
Ichigo Takamatsu
Kokubunjicho Nii
Ichigo Miyakonojo Yasuhisacho
Ichigo Toyokawa Mitocho
Sawakihama
Ichigo Yamaguchi Aionishi

Yamaguchi

544

1.24

40

4.74

E-15

Ichigo Yamaguchi Sayama

Yamaguchi

925

2.35

36

8.05

11,487

29.43

38.6

100.00

E-11
E-12
E-13

Total
1

Acquisition Price excludes incidental expenses such as property, city planning, and consumption
taxes.

20