September 30, 2013
For Translation Purpose Only
MID REIT, Inc.
1-4-4 Dojimahama, Kita-ku, Osaka
Tomoyuki Goto
Executive Director(Securities Code: 3227)
MID REIT Management Co., Ltd.
Tomoyuki Goto
President and CEO
Hirotaka Saito
Managing Director
General Manager, Finance & Planning Division
TEL. +81-6-6456-0700
E-mail:midrm-info@mid.co.jp

Notice Regarding Acquisition of Property(Dormy Inn Hakata Gion)
MID REIT, Inc. (hereafter “MID REIT”) announces its decision today to acquire property, as
detailed below.
1. Overview of Acquisition(1) Asset to be Acquired: Trust beneficiary interest in entrusted real estate in Japan (Real estate
trust beneficiary interest)(2) Property name:
Dormy Inn Hakata Gion
(3) Location:
1-12 Reisenmachi, Hakata-ku, Fukuoka-shi, Fukuoka (Indicated forresidence)(4) Acquisition price:¥2,280 million (Excluding various acquisition expenses, property taxes,
city planning taxes, consumption taxes, etc.)(5) Contracted date:
September 30, 2013
(6) Acquisition date:
September 30, 2013(7) Seller:
MID Urban Development Co., Ltd. (See “4. Seller Overview” below)(8) Acquisition funding: Cash on hand
Hereafter, the aforementioned asset to be acquired is referred to as the “Asset” and the Asset’s trust
property is referred to as the “Property.”
2. Reason for Acquisition
MID REIT has investment focused on office buildings in the Osaka area (Osaka Prefecture,
Hyogo Prefecture and Kyoto Prefecture) under the basic policy of managing assets in pursuitof securing stable revenue and achieving steady growth of its assets under management overthe medium to long term. At the same time, from the standpoint of diversified investment,
MID REIT’s targeted investment regions also include the Tokyo metropolitan area, as well as
government-designated cities (excluding the Osaka area) and other major cities, and similarly
MID REIT’s targeted investment real estate uses also include real estate, etc. for other thanoffice building use.

In addition to the standpoint of diversified investment described above, MID REIT concluded
that acquisition of the Asset would be optimal for MID REIT in light of the following threepoints:(1) The Asset is a property developed by MID REIT’s sponsor MID Urban Development Co.,
Ltd. and acquisition of the Asset will be conducted with the support of the sponsor(2) The Asset is a property from which stable revenue can be expected, because of a longterm fixed-term building lease agreement(3) As for the hotel section, the tenant side engages in the running of the facility in the formof being leased in its entirety which has low management risks for MID REIT
Furthermore, the following points were evaluated in particular in the decision to acquire theAsset.
(1) Location
The Property is located an approximate two-minute walk from Gion Station on the Fukuoka City
Subway Kuko Line and along Kokutai-doro, which is an arterial road. Gion Station is one station
away by subway in the Tenjin direction from Hakata Station. There are two prime commercial areasin Fukuoka City, the Hakata Station area and the Tenjin area. Hakata Station, which is at the centerof the Hakata Station area and the gateway to Kyushu, is a combined terminal serviced by the two
Shinkansen lines Sanyo Shinkansen and Kyushu Shinkansen, JR conventional lines, a subway line,
buses, etc. JR Hakata City, which is a retail complex that opened in line with Kyushu Shinkansen
becoming fully operational in March 2011, houses Hankyu Department Store, Tokyu Hands, etc. as
tenants, leading to enhancement of the station’s potential as a hub and ability to attract customers
and further progress in commercial accumulation of the Hakata Station area. The Property’s easy
access to both the Hakata Station area and the Tenjin area by the Subway Kuko Line and also
excellent access to Fukuoka Airport, as well as close proximity to Canal City Hakata and Nakasu
and other commercial areas, suggest that the location is one that can expect accommodation
demand not only from business guests but also tourists, etc. from within and outside of Japan.
(2) Building Features
Constructed in January 2009, the Property is a hotel specialized mainly for accommodation. It isrelatively new among nearby competitive facilities, and the range of guest rooms center on doublebed guest rooms with floor area of approximately 15m2 and can respond to the various needs ofguests, such as twin beds or mixed Japanese and Western style rooms. In addition, hotel facilities
include a natural hot spring public bath on the 2F and hotel operations include a breakfast menu
using local ingredients and free-of-charge late-night snack service (noodles), providing enriched
services to make the stay comfortable for overnight guests. These features make Dormy Inn ahighly-competitive brand in Fukuoka City. Although hotels specialized mainly for accommodation
have been newly opening one after another in the Hakata Station vicinity in recent years, theProperty has maintained a stable occupancy rate since opening and is thought to continue retaining
high market competitiveness in the concerned area.
3. Details of Property for Acquisition
Dormy Inn Hakata Gion
Trust beneficiary interest in entrusted real estate in Japan (Real estate trust
beneficiary interest)
Sumitomo Mitsui Trust Bank, Limited
September 30, 2013 to September 30, 2023
46 Reisenmachi, Hakata-ku, Fukuoka-shi, Fukuoka

Property Name
Type of Specified Asset
Trustee
Trust Period
Location(Note 1)

Lot Number
Indicated
Residencefor

1-12 Reisenmachi, Hakata-ku, Fukuoka-shi, Fukuoka

Transportation
Completion Date (Note 1)
Use (Note 1)
Structure (Note 1)
PML (Note 2)

Two-minute walk from Gion Station on the Subway Kuko Line from JR Hakata
StationJanuary 29, 2009
Hotel
RC with flat roof, 10F
0.4% (Based on the earthquake risk analysis report (detailed) dated July 22, 2013,
created by Engineering and Risk Services Corporation and OYO RMS
Corporation.)
Kajima Corporation
Kajima Corporation
Kajima Corporation

Architect
Structural Designer
Builder
Agency Authorizing Building
Japan ERI Co., Ltd.
ConstructionLand
1,002.27 ㎡
Area(Note 1)
Building
5,633.28 ㎡
Land
Fee simple
Type ofOwnership Building
Fee simple
Floor-Area Ratio / Building-to556％／100％
Land Ratio (Note 3)
Mortgage
None
Special Instructions
None
Acquisition Price¥2,280 million¥2,430 million
Appraisal Value(Appraisal date: July 19, 2013)(Appraiser: The Tanizawa Sogo Appraisal Co., Ltd.)
Status of Tenants (as of September 30, 2013) (Note 4)
Total Tenants (Note 5)
2
Total Annual Rent
― (fixed rent) (Note 6)
Security Deposit / Guarantee, Etc. ― (Note 6)
Rentable Area (Note 7)
5,554.91 ㎡
Rental Area (Note 8)
5,554.91 ㎡
Occupancy Rate (Note 9)
100.0％

Notes:
1. “Location (Lot Number),” “Completion Date,” “Use,” “Structure” and “Area” are listed based on recorded registration.
2. “PML” is translated as “Probable Maximum Loss” in the real estate/insurance industries and is used as a rating index for earthquake risk in buildings.
From the risk curve, which shows the relationship between loss and annual exceedance probability as calculated by Engineering and Risk Services
Corporation and OYO RMS Corporation, divide the “probable loss for a building with a recurrence interval of 475 years” by the “replacement cost”
and calculate the percentage. The result of this calculation defines “Probable Maximum Loss (PML)” herein. A 475-year recurrence interval is theequivalent of a 10% certainty of an event occurring during the 50-year period of building use.
3. “Floor-Area Ratio” is as stipulated in Article 52 of the Building Standards Law and is the ratio of floor area to site area, and the value specified in urban
planning based on zoning and other factors is listed. “Building-to-Land Ratio” is as stipulated in Article 53 of the Building Standards Law and is theratio of building area to site area, and the value specified in urban planning based on zoning and other factors is listed.
The building-to-land ratio of the Property’s land was originally 80%, because the location was within a commercial zone, but because it was a fireproof
building in a fire zone, its ratio was increased, and its applicable building-to-land ratio came to 100%.
4. “Status of Tenants” is based on data and information provided by the seller. The status factors in the tenants whose lease periods have alreadycommenced as at September 30, 2013.
5.“Total Tenants” is based on the assumption that the lessee on the master lease agreement has agreed to serve as the lessor. The figure cited is the sumof the number of end-tenants who are subleasing from the lessee on the master lease agreement and the number of end-tenants who have signed leaseagreements as at September 30, 2013. Not included are end-tenants whose leases or scheduled leases are limited to such items as storage and parking
spaces.
6.“Total Annual Rent” and “Security Deposit / Guarantee, Etc.” are not disclosed, as permission to disclose such information has not been obtained
from the lessee.
7. “Rentable Area” lists the rentable area of the Property’s building (excluding storage space, parking space, etc.).
8. “Rental Area” lists the area (room area only) displayed on the lease agreement, etc. with end-tenants.
9. “Occupancy Rate” lists the percentage, rounded to the nearest first decimal place, obtained by dividing rental area by rentable area.

4. Seller Overview
Name

MID Urban Development Co., Ltd.

Headquarters Location
Name and Title ofRepresentative
Primary Business

1-4-4 Dojimahama, Kita-ku, Osaka
Ryoichi Hanai, President, Member of the Board
Building business and housing business

Capital¥100 million

Date of Establishment

April 1, 1999

Relationship with MID REIT or Asset Management Company
The seller is a unitholder holding MID REIT investment units (5.01%) (at the endof the fiscal period ended June 30, 2013).
In addition, the seller is a shareholder holding all of the shares issued of MID
REIT’s asset management company MID REIT Management Co., Ltd. (hereafter
Capital Ties
the “Asset Management Company”) and thus falls under the category of aninterested person, etc. of the Asset Management Company as defined in the Act
on Investment Trusts and Investment Corporations (hereafter the “Act”).
There are no personnel ties to be stated between the seller and MID REIT.
1 director concurrently serves the seller and the Asset Management Company, andPersonnel Ties
24 directors/employees of the Asset Management Company are seconded fromthe seller.
MID REIT acquired 1 property (acquisition price: ¥3,000 million) from the seller
Business Ties
in the fiscal period ended June 30, 2013. In addition, MID REIT transferred 1
property (transfer price: ¥6,120 million) to the seller in the same fiscal period.
The seller does not fall under the category of a related party of MID REIT.
The seller is a shareholder holding all of the Asset Management Company shares
Status of Classification as
issued and outstanding and thus falls under the category of a related party of theRelated Party
Asset Management Company.

5. Transactions with Interested Persons, Etc.
The Asset Management Company has formulated internal regulations that provide guidelines fortransactions with related parties of its sponsors with the aim of eliminating potential conflicts ofinterest and thereby enabling it to appropriately perform asset management to the benefit of MID
REIT’s unitholders. Under the internal regulations, the seller listed above falls under the category ofa sponsor related party.
In addition, MID REIT will outsource property management operations for the Asset to MID
Property Management Co., Ltd. and that outsourcee also falls under the category of a sponsor
related party under the internal sponsor related party transaction regulations. Building
management operations are outsourced to an outsourcee selected by the end-tenants of theAsset and there is thus no contractual relationship between MID REIT and that outsourcee.
Accordingly, upon entering into any agreement with the seller and the outsourcee, the AssetManagement Company followed certain procedures stipulated in the aforementioned internal
regulations, including the following: deliberation and approval by its Compliance Committee;
deliberation and decision by its Investment Committee; and deliberation and resolution by its
Board of Directors. Members of the Compliance Committee and the Investment Committee
include outside experts.

6. Status of Property Buyers, Etc.
The seller of the Asset falls under the category of an interested person, etc. as defined in the Act
of MID REIT. Accordingly, the status of property buyers, etc. is presented.
Property Name

Dormy Inn Hakata Gion
Land

Status of
Property Owners,
Etc.
Name
Relationshipwith Parties
havingParticular
VestedInterest
Backgroundand Reasonfor
Acquisition
Acquisition
Price(Including
Other
expenses)Acquisition
Date

Previous Owner

Previous, Previous Owner

Previous, Previous,
Previous Owner

MID Urban Development
Co., Ltd.

MID Facility Management
Co., Ltd.

Other than a party having
particular vested interest

See 4. above

Consolidated subsidiary of
the parent company of the―Asset Management Company

Sales purpose

Parking lot business purposes ―¥1,129 million

Ownership by the previous,
previous owner exceeds one
year and the price is thus
omitted.

―

Sep. 2013

Mar. 2003―

Building
Status of Property
Owners, Etc.
Name
Relationshipwith Parties
havingParticular
VestedInterest
Backgroundand Reasonfor
Acquisition
Acquisition
Price(Including
Other
expenses)Acquisition
Date

Previous Owner

Previous, Previous Owner

MID Urban Development
Co., Ltd.

None

See 4. above―

Property developed by theprevious owner―

Ownership by the previous
owner exceeds one year andthe price is thus omitted.

―

Jan. 2009―

Acquisition of the Asset leverages sponsor support from MID Urban Development Co., Ltd.,
involving MID Urban Development Co., Ltd. acquiring fee simple ownership of the site of theAsset, which was leased land, from MID Facility Management Co., Ltd. to thereby obtain absolute
ownership of the Asset’s land and building combined and then MID REIT acquiring that in theform of trust beneficiary interest within the same day. Acquisition in the above manner does notundermine the interests of MID REIT.

7. Overview of BrokerageNone.
8. Settlement Method
MID REIT has settled the acquisition by making a single payment of the entire amount of theacquisition price to the seller using cash on hand at the time the Asset is handed over (September 30,2013).
9. Schedule for Acquisition
September 30, 2013
Decision to acquire
September 30, 2013
Conclusion of an agreement concerning the transfer of the trust beneficiaryinterest
September 30, 2013
Acquisition of the trust beneficiary interest in real estate
10. Outlook
There is no revision to the outlook of the business results for the fiscal period ending December 31,
2013 (July 1, 2013 to December 31, 2013) and the fiscal period ending June 30, 2014 (January 1,
2014 to June 30, 2014) as the impact of the acquisition of the Asset will be minimal.
<Attachments>
Attachment 1: Appraisal Summary
Attachment 2: Assumed NOI of the Asset
Attachment 3: Property Portfolio after Acquisition of the Asset
Attachment 4: Photograph of Dormy Inn Hakata Gion
Attachment 5: Map of Dormy Inn Hakata Gion

Attachment 1
Appraisal Summary
Unit: Thousands of yen
Appraiser

The Tanizawa Sogo Appraisal Co., Ltd.

Final Appraisal Value

2,430.000

Appraisal Date

July 19, 2013

Value Calculated Using Direct Capitalization (DC) Method2,450,000

Net Cash Flows (NCF)

147,088

Overall Capitalization Rate

6.0%

Value Calculated Using Discount Cash Flow (DCF) Method

2,420,000

To March 31, 2019

6.0%

After April 1, 2019
Terminal Capitalization Rate

6.1%
6.2%

Discount
Rate

Value Calculated Using the Cost Method

1,800,000

Ratio of Land Price

43.3%

Ratio of Building Price

56.7%

Attachment 2
Assumed NOI of the Asset
Assumed NOI (Note)¥148 million a year
(MID REIT’s estimated figures for time of steady stable occupancy)(Note) Assumed NOI (Net Operating Income) is the estimated amount of property leasing revenue, less property leasing expenses, assuming theburden of property taxes and city planning taxes for the full year based on the lease agreement terms and conditions, etc. on the planned
acquisition date. The Property’s guest room occupancy rate at time of steady stable occupancy is assumed to be 100%.

Depreciation and amortization¥39 million a year
(MID REIT’s estimated figures for time of steady stable occupancy)

The figures above are not the forecast figures for the current period or subsequent periods.

Attachment 3
Property Portfolio after Acquisition of the AssetType

OfficeAcquisition
Price(Millions ofYen)

Investment
Ratio
(%)
(Note 1)

Acquisition Date

Twin 21 (Note 2)

68,70043.6

Aug. 31, 2006

Matsushita IMP Bldg.

24,60015.6

Aug. 31, 2006

Midosuji MID Bldg.

8,290

5.3

Aug. 31, 2006
Oct. 31, 2007

MID REIT Kyobashi Bldg.

2,300

1.5

Aug. 31, 2006

MID Imabashi Bldg.

3,270

2.1

Apr. 3, 2007

MID Midosujikawaramachi
Bldg.

2,000

1.3

May 16, 2007

Kitahama MID Bldg.

10,800

6.8

Apr. 24, 2008

MID Nishihommachi Bldg.

3,550

2.3

Oct. 30, 2008

Higobashi MID Bldg.

3,000

1.9

June 21, 2013

126,510

80.2

2,780

1.8

Aug. 31, 2006

26,10016.6

Aug. 31, 2006

2,280

1.4

Sep. 30, 2013

31,16019.8

157,670

100.0

RegionProperty Name

Osaka area

properties

Subtotal (9 properties)
Osaka area

Konami Sports Club
KyobashiTokyo metropolitanarea, Government- AEON MALL Tsudanuma
Non-officedesignated cities(excluding theproperties
Dormy Inn Hakata Gion
Osaka area) andother major cities
Subtotal (3 properties)
Total (12 properties)

Notes:
1. Investment ratios presented in the table above have been rounded to the nearest first decimal place. Accordingly,
the sum of the investment ratio figures may not add up to 100.0%.
2. Data for Twin 21 includes the trust beneficiary interest of Twin 21 (partial ownership of leased land).
3. In addition to the assets listed in the table above, MID REIT had acquired silent partnership interests in a silent
partnership operated by Sakura Dori Development Limited Liability Company, the developer of Sakura DoriMID Building. The silent partnership sold Sakura Dori MID Building in August 2013 and liquidation of the silent
partnership interests is scheduled for mid-November 2013.

Attachment 4
Photograph of Dormy Inn Hakata Gion

Attachment 5
Map of Dormy Inn Hakata Gion８