February 28, 2024

For Immediate Release
Real Estate Investment Trust Securities Issuer:
Advance Residence Investment Corporation(Securities Code：3269)
1-105 Kanda-Jinbocho, Chiyoda-ku, Tokyo
Representative: Wataru Higuchi, Executive Director
Asset Management Company:
ITOCHU REIT Management Co., Ltd.
Representative: Junichi Shoji, Representative Director,
President & CEO
Inquiries:
Isao Kudo, Executive Officer(TEL. +81-3-6821-5483)
Notice Concerning Acquisition of Real Estate Trust Beneficiary Interest in Japan(RESIDIA Bunkyo-HongoⅣ)
ITOCHU REIT Management Co., Ltd. (IRM), 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`sgrowth strategy.
1. Summary of the Acquisition
IRM decided on the following acquisition pursuant to the target and policy of asset management as
stipulated in the Articles of Incorporation of ADR, for steady increase in asset size, diversification andenhancement of the portfolio.
Property Name
(Type of asset)
Acquisition Price (Note 1)(Price / Appraisal ratio)
Appraisal Value (Note 2)
NOI Yield (Note 3)
Yield after Depreciation (Note 4)
Building Age (Note 5)
SellerBroker Availability
Scheduled Contract Date
Scheduled Acquisition Date
Acquisition Financing(Payment Method)

RESIDIA Bunkyo-HongoⅣ(Beneficiary Interests in Trust)
2,252 million yen (90.8%)
2,480 million yen
4.1%
3.4%
6.1years
ITOCHU Corporation (quasi co-ownership interests 60%,
Acquisition Price 1,351 million yen)
ITOCHU Property Development, Ltd. (quasi co-ownershipinterests 40%, Acquisition Price 900 million yen)None
February 28, 2024
April 18, 2024ora date to be separately agreed upon with the seller
Borrowings and cash on hand
(Lump-sum payment on delivery)(Note 1)“Acquisition Price” refers to the purchase price written in the beneficiary transfer agreements for the asset-to-be-acquired and does not include various
expenses needed for the acquisition such as taxes and public dues.

(Note 2)

“Appraisal Value” of the asset-to-be-acquired is as of December 1, 2023.

(Note 3)“NOI Yield” is calculated as follows: annualized NOI written in the appraisal document at the time of the acquisition of the asset-to-be acquired and calculatedusing direct capitalization method / acquisition price x 100. The calculated yield is rounded at the second decimal point.

(Note 4)

“Yield after Deprecation” is calculated as follows: (annualized NOI written in the appraisal document at the time of the acquisition of the asset-to-be-acquiredand calculated using direct capitalization method – annual depreciation cost) / acquisition price x 100. The calculated yield is rounded at the second decimal
point. As in the case with the existing portfolio of ADR, the depreciation cost of the assets-to-be-acquired is calculated by ADR, using the straight-line method1under certain assumptions and estimated at 15,784 thousand yen a year.
(Note 5)

“Building Age” is the age of the building as of the date of this document and is rounded at the second decimal point.

2. Reason for the Acquisition
IRM decided on the following acquisition pursuant to the target and policy of asset management as stipulated in
the Articles of Incorporation of ADR, for steady increase in asset size and diversification and enhancement of theportfolio. The decision to acquire this property was based on an evaluation of Features of the Property, etc., as statedin “3. Summary of the Asset-To-Be-Acquired”.
In the real estate trading market, the supply of new, high-quality rental housing in good locations is limited, andthe trading prices of properties in central metropolitan areas, where stable rental demand can be expected, continue toremain high, creating a difficult acquisition environment.
In this environment, ADR has decided to acquire the property developed by IRM's sponsors, ITOCHU Corporation
and ITOCHU Property Development, Ltd. The Building Age of the Asset-To-Be-Acquired is 6.1 years, which ismuch lower than the average Building Age of the entire portfolio of 17.0 years (Note6) as of the fiscal period ended
January 31, 2024.
(Note 6)The Average Building Age for the entire portfolio is the weighted average Building Age of the properties in the portfolio, weighted
by Acquisition Price and rounded to the second decimal place.

3. Summary of the Asset-To-Be-Acquired
Property NameRESIDIA Bunkyo-HongoⅣ

Property Number

Type of asset

Beneficiary Interests in Trust

Trustee

Sumitomo Mitsui Trust Bank, Limited (planned)

Trust Contract Period

From April 18, 2024 to April 30, 2034 (planned)

Address

7-2-2 Hongo, Bunkyo-ku, Tokyo

T-190

Type of Ownership

Ownership

ZoningCommercial district

Land Area

315.43 ㎡

FAR / Building Coverage
Ratio

600%/80%

Structure / Floors

Reinforced concrete structure with a flat-topped roof; 15 stories

Type of Ownership

Ownership

Use

Apartment, store

Total Floor Space

1,633.73 ㎡

Construction Completion
Date

January 12, 2018

Building Designer

KAI Architects & Associates Inc.

Structural Engineer

Beams Design Consultant Co.,ltd.

Construction
Contractor

Daiichikogyo Co.,ltd. Tokyo Branch

Building Certification
Agencyj.e.support Co.,ltd.

Building Inspection
Agencyj.e.support Co.,ltd.

Appraisal dateas of December 1, 2023

Land

Building

Collateral

None

Appraisal value

2,480,000 thousand yen

Appraiser

Japan Real Estate Institute

Property Management Company

ITOCHU Urban Community Co., Ltd.(planned)

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ITOCHU Urban Community Co., Ltd.
(planned)

Master Lease typePass-throughTotal Tenants

1

Point in Time

As of January 31, 2024

Leasable Units

38

Leased Units

38

Leasable Floor Area

1,503.39 ㎡

Leased Area

1,503.39 ㎡

Occupancy Rate (basedon floor area)

100%

Total Monthly Rent

9,180 thousand yen

Deposits, Guarantees, etc.
Number of Units by Type
（Excluding Operational Rental
Residence）

16,440 thousand yen

Master Lessee
Lease Conditions

Number of Operated Rental
Residence

SingleCompact

Family

Large

Other

9

23

5

0

1

0

Features of the Property
・This property is located a 2-minute walk from Hongo Sanchome Station on the Toei Oedo Line and a 4-minute walk from Hongo
Sanchome Station on the Tokyo Metro Marunouchi Line, and has good access to major terminals such as Shinjuku Station and Tokyo
Station, so it is expected to attract wide demand from single adults, DINKs and families who work in the area.
・The first floor of this property is occupied by a convenience store, making the property convenient for daily life.
Other Relevant Information
None
Summary of Building Conditions Investigation Report
Investigator

Tokio Marine dR Co., Ltd.

Emergency Repair Costs-

Short-term Repair Costs(within 1 year)-

Long-term Repair Costs(within 12 years)

28,449 thousand yen

Building Replacement Price

425,000 thousand yen

Investigation Report
Date

January 22, 2024

Investigation Report
Date

January 22, 2024

Summary of Earthquake Risk Analysis
Investigator

Tokio Marine dR Co., Ltd.

Probable Maximum Loss
Ratio（PML)

4.9%

Matters concerning Earthquake Resistance, etc.
This property has been notified of the structural calculation conformity assessment by the designated structural calculation inspection
institute in accordance (Away Building Evaluation Network Inc.) with the revision of the Building Standard Act that came into effect inJune 2007.
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/en/ir/news/)

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4. Financial Impact on ADR in the Event of Failure to Fulfill Forward Commitment, etc.
Beneficiary Interests in Trust transfer agreements (hereafter, the “Agreement”) for the asset-to-be-acquired
constitutes a forward commitment, etc.(Note) by an investment corporation defined in the Comprehensive Guidelines forSupervision of Financial Instruments Business Operators, etc. published by the Financial Services Agency.
The Agreement provides that if ADR or the seller violates a provision of the Agreement, the counterparty has theright to terminate the Agreement and claim an amount equivalent to 20% of the transaction price of theasset-to-be-acquired as penalty.
However, ADR is not obliged to pay penalties to the seller for the expiration or cancellation of the Agreement except
where ADR is at fault.
(Note) Refers to a postdated sales agreement under which payment and property delivery shall be made at least one month after the conclusion of theagreement, or any other agreement similar thereto.

5. Summary of the Seller（1）ITOCHU Corporation（quasi co-ownership interests 60%）
Trade Name

ITOCHU Corporation

Location

3-1-3 Umeda, Kita-ku, Osaka-shi, Osaka

Representative

Keita Ishii, President and Chief Operating Officer

Principal business

ITOCHU is involved in domestic trading, import/export, and overseas trading of various
products such as textile, machinery, metals, energy, chemicals, food, general product, realty,
information, insurance, logistics, construction, and finance, as well as business investment inJapan and overseas.

Capital253,448 million yen

Data of establishment

December 1, 1949

Total assets

13,111,652 million yen (as of March 31, 2023)

Total capital

5,463,627 million yen (as of March 31, 2023)

Large shareholders andShareholding ratio

The Master Trust Bank of Japan, Ltd. (16.25%) etc. (as of March 31, 2023)

Relationship with ADR or IRM
Capital relations
Personnel relations
Business relations
Relatedstatusparties’

As of the end of January 2024, the said company owns 2.4% of ADR's outstanding investment units.
In addition, the said company is a shareholder of IRM and falls under the category of an interested
party, etc. of ADR as defined in the Law Concerning Investment Trusts and Investment Corporations.
As of today, one IRM's executives and employees is seconded from the said company.
The following is a summary of specified asset sales transactions, etc. for the fiscal period ended
January 31, 2024.
Bought amount 2,862 million yen /Sold amount 0 yen
The said company is not a related party of ADR. The said company is the parent company of IRM andfalls under the category of a related party.

（2）ITOCHU Property Development, Ltd.（quasi co-ownership interests 40%）
Trade Name

ITOCHU Property Development, Ltd.

Location

2-9-11 Akasaka, Minato-ku, Tokyo

Representative

Norio Matsu, President

Principal business

Apartment and house construction and sales, real estate operation, management, and consulting,etc.

Capital10,225 million yen

Data of establishment

December 1, 1997

Total assets-

Total capital-

Large shareholders and

ITOCHU Corporation (100%)4

Shareholding ratio
Relationship with ADR or IRM
Capital relations
Personnel relations
Business relations
Related parties’
status

The said company holds 20.0% of IRM's outstanding shares and is a support line company of ADR.
As of today, one IRM's executives and employees is seconded from the said company.
The following is a summary of specified asset sales transactions, etc. for the fiscal period ended
January 31, 2024.
Bought amount 5,781 million yen / Sold amount 0 yen
The said company is not a related party of ADR. The said company is the subsidiary of parent
company ITOCHU Corporation (100%) and falls under the category of a related party.

6. Status of seller
Status of Property Owners,

Previous owner, etc.

etc.

The time before last owner, etc.

ITOCHU Corporation
Company Name / Name（quasi co-ownership interests 60%）
ITOCHU Property Development, Ltd.

Other than those with a special interest（quasi co-ownership interests 40%）
Special Interests.
Relationship with aInterested parties as defined in theinternal rules of IRM

certain person
Background and reason-

for acquisition, etc.

Rental residence
development objectives-

Acquisition Price

Omitted for development purposes-(Land)
Acquisition period

September 2015
(Building)-January 2018

7. Interest of IRM in the Asset-To-Be-Acquired(1) In conducting transactions with interested parties as described in 6. Seller Status (Acquisition of properties fromparties with special relationships) above, IRM has followed the required procedures in accordance with theprovisions of IRM's internal rules "Rules on Transactions with Interested Parties.
(2) Of the above assets-to-be-acquired, ADR has agreed that, the master lease and property management services
will be entrusted to ITOCHU Urban Community Co., Ltd. which is an interested party of the IRM. Therefore,
necessary procedures are scheduled to be taken in accordance with internal rules regarding the conclusion of abuilding lease and management operation consignment agreement, etc. with the company.

8. Broker Profile
Not applicable.

9. Outlook

The impact of this Acquisition on the earnings forecasts for the 28th fiscal period (from February 1, 2024 toJuly 31, 2024), published in the Brief Summary of Kessan Tanshin (Financial Report) dated September 12,
2023, will be negligible, and no change will be made to the forecast.

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10.

Summary of the Appraisal Report

Property nameRESIDIA Bunkyo-HongoⅣ

Appraisal Value

2,480,000 thousand yen

Appraiser

Japan Real Estate Institute

Appraisal dateas of December 1, 2023
（thousand yen）

Items

Value

Summary
Estimated the income value of the subject property by relating the income value obtained by the
DCF method to the income value obtained by the direct capitalization method.

Income Capitalization Approach Value

2,480,000

Direct Capitalization Price ((6)/(7))

2,500,000(1) Total Potential Income

109,630

Total Potential Income

113,908

Rental income

110,662

Appraised, taking into account the rent based on the current lease agreement and the rent thatwould be paid if the subject property were newly leased, etc.

Other income

3,246

Renewal fee income is recorded based on an assessment of the average annual turnover rate of
tenants and the average contract period.

Losses from Vacancies, etc.

4,278

Recorded after assessing a stable mid- to long-term Occupancy rate level based on the occupancy
status and supply-demand trends of similar properties, as well as the occupancy status and future
trends for the subject property.

Losses from Delinquencies

0(2) Expenses from rental business

The Company determined that no recording is required, taking into account the situation of thelessee and other factors.

17,969Maintenance and Management Fees

4,776

The amount is recorded in consideration of the individual characteristics of the subject property,
with reference to the actual amount in past fiscal years and the level of similar properties.

Utilities Costs

1,000

The amount is recorded with reference to the actual results of past fiscal years and taking into
consideration the level of similar properties and the individual characteristics of the subject
property.

Repair Costs

1,281

In addition to the restoration costs based on the level of restoration costs normally incurred andthe lessor's share of such costs, repair and maintenance costs were recorded by taking into
consideration the actual amounts in previous years, the level of similar properties, and the annual
average of repair and renewal costs in engineering reports, etc.

Property Manager Fees

1,863

Recorded with reference to the remuneration rate based on the terms of the scheduled contract,etc., and taking into consideration the remuneration rate for similar properties and the individual
characteristics of the subject property.

Leasing Expenses

3,542

Administrative fees required when recruiting new tenants, with reference to contract terms andlease terms of similar properties, and advertising expenses, etc., with reference to actual results ofprevious years, and renewal fees, etc., taking into account the average annual replacement rate
and occupancy rate, etc.

Taxes and Public Dues

4,287

Recorded based on tax and public dues related documents, etc.

Insurance Premium

90

Other Expenses

1,130(3) Net Operating Income (NOI, (1)-(2))

Recorded in consideration of premiums based on insurance policies and premium rates forbuildings similar to the subject building.
Internet usage fees, town council fees, etc. are recorded.

91,661(4) Earnings from Deposits

159

Appraised by multiplying the amount obtained by multiplying the occupancy rate by the numberof months of stable security deposits over the medium to long term, and then by the assumed
investment yield of 1.0%.

(5) Capital Expenditures

1,660

Appraised, taking into account the level of Capital Expenditures of similar properties, Building
Age, and the average annual amount of repair and renewal expenses in the engineering report, etc.

(6) Net Cash Flow DCF Price((3)+(4)-(5))

90,160
3.6%(7) Cap Rate
DCF price

Appraised by adding/subtracting the spread resulting from the subject property's location,building conditions, and other conditions to/from the standard yield of each area, and also by
taking into account future uncertainties and transaction yields on similar properties, etc.

2,450,000

Discount Rate

3.4%

Appraised by comprehensively taking into account the individual characteristics of the subject
property, etc., with reference to the investment yields, etc., in transactions with similar properties.

Terminal Cap Rate

3.7%

Appraised by comprehensively considering future trends of investment yields, riskiness of thesubject property as an investment, general forecasts of future economic growth rates, and trends
of real estate prices and rents, etc., with reference to the transaction yields of similar properties.

Cost Approach Value

1,700,000

Land ratio

76.1%

Building Ratio

23.9%

Other items considered by the appraiser in the appraisal

None

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Appendix
Appendix 1. Photos of the Asset-To-Be-Acquired

Appendix 2. Map of the Asset-To-Be-Acquired: 7-2-2 Hongo, Bunkyo-ku, Tokyo

About Advance Residence Investment Corporation
Advance Residence Investment Corporation is the largest J-REIT specializing in residential properties and is managed by ITOCHU REITManagement Co., Ltd. (IRM), the asset management company of the ITOCHU Group, investing in over 280 rental apartments located mostly
in central Tokyo and in other major cities throughout Japan (AUM over 480 billion yen). ADR can be expected have a stable dividend in thelong-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.
"Advance" is the common brand name of the real estate investment corporation managed by ITOCHU REIT Management Co., Ltd.
ADR’s website: https://www.adr-reit.com/en/
IRM’s website : https://www.itc-rm.co.jp/en/

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