November 29, 2023
For Immediate Release
Advance Residence Investment CorporationSecurities Code: 3269
1-105 Kanda-Jinbocho, Chiyoda-ku, TokyoWataru Higuchi, Executive Director
Asset Management Company:
ITOCHU REIT Management Co., Ltd.
Junichi Shoji, Representative Director,
President & CEO
Inquiries:
Isao Kudo, Executive Officer
Tel. +81-3-6821-5483
Notice Concerning Disposition of Real Estate Trust Beneficiary Interest in Japan(RESIDIA Kita-Shinagawa)
ITOCHU REIT Management Co., Ltd. (IRM), the asset management company to which Advance Residence
Investment Corporation (ADR) entrusts the management of its assets, today announced its decision to dispose ofassets (hereafter, the “Disposition”) as detailed below pursuant to the asset management targets and policies
stipulated in the Articles of Incorporation of ADR, based on comprehensive consideration of matters including
stable earnings and the state of the real estate market.
1. Details and Reason of the Disposition
We decided to sell this property after comprehensively taking into account the fact that there is a high risk ofloss of earnings stability in the future due to the approved urban planning project "Keihin Kyuko Main Line(between Sengakuji Station and Shimbamba Station) Continuous Elevated Intersection Project" in the area
including this property.We are considering retaining part of the gain on sale from the Disposition as reserves.
Property NameRESIDIA Kita-Shinagawa

Location

1-3-6 Kita-Shinagawa, Shinagawa-ku, Tokyo

Type of Specified Asset

Real estate trust beneficiary nterest

Disposition Price

2,900 million yen

Appraisal ValueNote1

2,870 million yen

NOI YieldNote2

4.6%Book ValueNote3

2,344 million yen

Difference between Disposition

555 million yen

Price and Book Value
Counterparty

Not disclosed

Scheduled Contract Date

November 29, 2023

Scheduled Disposition Date

April 1, 2024

Payment Method

Full payment on delivery

Note 1.

“Appraisal Value” is as of July 31, 2023.

Note 2.

“NOI Yield” is calculated based on disposition price as follows: “(Average actual annual NOI in the period from January
2021 to July 2023) ÷ estimated disposition price × 100.” The calculated yield is rounded to the second decimal place.

Note 3.

“Book value” is the estimated price as each of the Scheduled Settlement Date.

12. Summary of Disposition
Property Number
Property Name
Type of Specified Asset
Trustee
Trust Contract Period
Date of initial acquisition
Address

T-008
RESIDIA Kita-Shinagawa
Real estate trust beneficiary interest
Sumitomo Mitsui Trust Bank, Limited
Until February 28, 2025
November 30, 2007
1-3-6 Kita-Shinagawa, Shinagawa-ku, TokyoLand
Type of OwnershipArea

FAR/Building Coverage Ratio

Property ownership
777.25 ㎡
Neighborhood commercial district,
Category 1 residential districts
400%/80%, 300%/60%

Type of Ownership
Total Floor Area
Structure/Floors
Use
Construction Completion DateProperty ownership
3,891.12 ㎡
Reinforced concrete with flat roof/15 floors
Residence
February 2007

ZoningBuilding

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
Deposits, Guarantees, etc.

As of October 31, 2023
1120120
2,897.99 ㎡
2,897.99 ㎡
100.0%
12,106 thousand yen
12,610 thousand yen

Number of Units by Type (Excluding
Operational Rental Housing)SingleCompact
FamilyLarge
Other10614-

Number of Operational Rental Housing
Units-Other Relevant Information
The closing of the Disposition is the condition precedent that either (i) or (ii) below is donewith respect to the notification by ADR, the seller, to the Tokyo Metropolitan Government asof November 29, 2023 (scheduled).
(i) ADR does not receive a notice of purchase from the Tokyo Metropolitan Government as
stipulated in Article 67, Paragraph 2 of the Law until December 29, 2023.
(ii) ADR receives notice from the Tokyo Metropolitan Government that it will not purchasethis property.

2

3. Summary of Appraisal Report
T-008 RESIDIA Kita-ShinagawaAppraiser

As of July 31, 2023

Japan Real Estate Institute
Appraised value

Appraisal item

Income Capitalization
Approach Value
Direct CapitalizationPrice
Total Potential
IncomeAppraised value
Basis(Thousand yen)

2,870,000

152,148
150,876

Other Income
Total Effective
IncomeLosses from
Vacancies, etc.
Losses from
Delinquencies
Expenses from
Rental Business
Maintenance andManagement Fees

1,272

0Assuming that the current fixed-term building lease agreement will continue, the Occupancy rate foreach use is set at 100%, and no vacancy or other losses will be recorded.

0Considering the situation of the lessee and other factors, the Company decided not to record a bad debtloss.

18,8893,310
2,000

Leasing Expenses

629

Repair Costs

2,558

Other Expenses
Net OperatingIncome

749

1,800
7,645
198

126

Capital Expenditures

5,969

Terminal Cap Rate

Maintenance and Management Fees are recorded with reference to actual amounts from previous years
and similar properties, and taking into consideration the individual characteristics of the subject
property.
Utilities Costs are recorded with reference to actual amounts from previous years and similar properties,
and taking into consideration the individual characteristics of the subject property.
Recorded in consideration of the individual characteristics of the subject property with reference to theremuneration rates based on the contract terms and conditions, etc., and with reference to the
remuneration rates at similar properties.
Taxes and Public Dues are recorded by taking into consideration the contents of the data related to taxes
and public dues, etc., and the burden adjustment measures.
Recorded in consideration of premiums based on insurance policies and premium rates for similar
properties.
Assuming that the current fixed-term lease contract will be re-signed on the same terms and conditions
at the expiration of the contract term, such re-signing fee is appraised and recorded equally over thecontract period, which is the contract term, and recorded.
Recorded in repair costs, the actual repair and maintenance expenses of previous years, the level ofsimilar properties, and the annual average amount of repair and maintenance expenses in engineering
reports were taken into account. In addition, in recordedthe repair expenses, the amount of actual repair
expenses in previous years, the level of similar properties, and the average annual amount of repair andrenewal expenses in the engineering report were taken into consideration.
Cable TV usage fees are recorded.

133,259

Earnings fromDeposits

DCF Price
Discount Rate

Calculated the standardized estimated rental income and common area fee income of the subject
property based on the rent level of the current contract, the new rent level of similar properties in thesame demand/supply zone and its trend and taking into account the subject property's competitivenessin the medium to long term.
Base station fees, vending machine revenues, and Utilities Costs revenues expected in the medium tolong term.

152,148

Utilities Costs
Management
Commission Fees
Taxes and PublicDues
Non-life InsurancePremiums

Cap Rate

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.

2,900,000

Rent Income

Net Cash Flow

2,870,000 thousand yen

Recordedthe number of months of stable deposit over the medium term based on the number of monthsof deposit under the current lease terms, and multiply this amount by the Occupancy rate, and thenmultiply the result by the investment yield to assess and appraise the investment income on the lumpsum payment.
Appraised and recorded, 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.

127,4164.4%
2,830,000
4.2%
4.6%

Appraised by adding/subtracting the spread that attributes to the subject property's location, building
conditions, and other conditions to the standard yield, and also by taking into account futureuncertainties and transaction yields on similar properties, etc.
Appraised by comprehensively taking into account the individual characteristics of the subject property,etc., with reference to the investment cap rate, etc. of similar properties.
Appraised by comprehensively taking into account future trends in investment yields, riskiness of thesubject property, general forecasts of future economic growth rates, and trends in real estate prices andrents, etc., with reference to the transaction yields of similar properties.

Cost Approach Value
Land Ratio
Building Ratio

1,830,00072.0%
28.0%
Other Matters for Consideration
This property may offer land and buildings in the future as the urban planning project "Keihin Kyuko Main Line (betweenSengakuji Station and Shimbamba Station) Continuous Elevated Intersection Project" progresses.

34. Financial Impact on ADR in the Event of Failure to Fulfill Forward Commitment, etc.
The real estate sales transaction agreement (hereafter, the “Agreement”) for the sold property constitutes aforward commitment, etc.Note6 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 buyer violates a provision of the Agreement, the counterparty has
the right to terminate the Agreement and claim an amount equivalent to 20% of the transaction price of the soldproperty as penalty.
However, ADR is not obliged to pay penalties to the buyer for the expiration or cancellation of the Agreement
except where ADR is at fault.
Note 4.

Refers to a postdated transfer agreement under which payment and property delivery shall be made at least one month after
the conclusion of the agreement, or any other agreement similar thereto.

5. Counterparty Profile
The counterparty for RESIDIA Kita-Shinagawa is a domestic listed company whose details are not disclosed
according to its wishes. It does not constitute a party with any particular vested interest in ADR or IRM.
6. Property Titleholder (for transactions with parties with special interest)
Omitted. Property not acquired from parties with special interest.

7. Future Outlook
The effect of the Disposition on the management performance forecasts for the fiscal period January 2024 (27thFiscal Period: August 1, 2023 to January 31, 2024) is minor. Therefore, the forecasts remain unchanged.

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/

4