28 June 2018
To All Concerned Parties
REIT Securities Issuer
3-8-11 Kudan Minami, Chiyoda-ku, Tokyo
Sakura Sogo REIT Investment Corporation
Representative Makoto Muranaka,
Executive Director:(Securities Code 3473)
Asset Management Company:
Sakura Real Estate Funds Management, Inc.
Representative Makoto Muranaka,/ Inquiries
Representative Director andPresident
Mayumi Kobiki,
Chief Financial Officer
Tel: +81-3-6272-6608

Notice Concerning Disposition of Domestic Trust Beneficiary Right(Confomall Sapporo)

Sakura Sogo REIT Investment Corporation (hereinafter the “Investment Corporation” or “SKR”)
announces that Sakura Real Estate Funds Management, Inc. (hereinafter “SREFM”), its asset
management company, has passed a resolution to dispose of an asset (hereinafter referred to as the“Disposition”) as outlined below:
1. Overview of the Disposition
Disposition asset
Name of asset
Contract date
Disposition date
Disposition price1
Acquisition price2
Appraisal value3
Book value4
Net realized gain5
Purchaser
Settlement method
1:::
:
:
::
:
:
:
:

100% beneficiary interest in Trust
Confomall Sapporo
28 June 2018
28 June 2018
¥1,640 million¥1,400 million¥1,440 million¥1,429 million¥133 million
Please refer to 4. Profile of the Purchaser below
Payment in full on settlement

Disposition price as agreed to and indicated in the Purchase and Sale Agreement (Excluding disposition related costs,
consumption tax and local consumption tax). The same applies below.

2

Acquistion price as agreed to and indicated in the Purchase and Sale Agreement (Exclusive of disposition related costs
and consumption tax) when acquired by SKR on 9 September 2016

3Appraisal value indicated in the appraisal report provided by Daiwa Real Estate Appraisal Co., Ltd. with effective date of
28 February 2018. The same applies below.

45Book value as at 31 May 2018. The same applies below.
Difference in value between the above disposition price and the above book value less related costs. The difference isdifferent from the actual net realilzed gain on sale. The same applies below.

1
Disclaimer: This press release is for public announcement in regards to the Investment Corporation’s disposition, and has not been prepared for the purpose of solicitation of investment.

2. Reasons for the Disposition
SREFM, is focused on implementing initiatives that enhance both SKR diversified portfolio
characteristics and unitholder value. This includes exploring opportunities to dispose of assets where it
can do so at an attractive premium to book value and reinvest those proceeds to enhance portfolio
characteristics. Taking into consideration the portfolio’s NOI yield post depreciation, average building
age, weighting by location strategy, etc., SKR decided to sell the Confomall Sapporo from the viewpointof strategic asset replacement to improve unitholder value.

3. Description of the Disposition Asset
Property name – OT-03 Confomall Sapporo
ZoningAsset typeType of Specified Asset
Trustee
Trust term
Location
AccessCompletion Date
Structure / Number of Stories
Site Area
Gross Building Area
Building Coverage Ratio
Floor Area Ratio
Property Management Company
Seismic Risk (PML)
Acquisition Price
Dispostion PriceBook Value
Estimated Net Realized Gain
Appraisal value
Appraisal Firm
Total number of tenants (As at 30
April 2018)
Appraisal NOI
Security and Guarantee Deposits
Total Leasable Floor Space
Total Leased Floor Space (As at 30
April 2018)
Historical Occupancy Rate (Byquarter)
Special Comments

Commercial
Mixed Use (retail, fitness club and 45-residential units)
100% beneficiary interest in Trust
Mitsubishi UFJ Trust Bank, Ltd.
From 4 February 2005 until 8 September 2026
1005-4 Minami 4-jo Nishi 10-chome, Chuo-ku Sapporo-shi,
Hokkaido
Nishi 11 Chome Station (approximately 7-minute walk) Tozai
subway line
10 March 2003
Steel framed reinforced concrete structure / B1/10F
2,742.6 square meters
13,366.3 square meters
80%400%Japan Property Solutions Co., Ltd.
2.8%
1,400 million yen
1,640 million yen
1,429 million yen
133 million yen
1,440 million yen
Daiwa Real Estate Appraisal Co., Ltd.
4381,125,325 yen
116,457 thousand yen
5,941.81 square meters
5,630.60 square meters
30 Jun 201730 Sep 2017 31 Dec 2017
96.5%
93.1%
96.5%
There are no applicable matters.

30 Apr 2018
94.8%

4. Profile of the Purchaser
Company Name
Hokkaido Syokuryosangyo Co., Ltd.
Head Office
19 Minami 2-7 Hondori, Shiroishi-ku, Sapporo-shi, Hokkaido
Representative
Satoru Toyota, Representative Director and President
Principal Business
General wholesale tradeCapital (As at 30 April 2018)
40 million yen
Established
31 August 1956
Relationships with SKR and/or SREFM
CapitalThere is no capital relationship to report
Personal
There is no personal relationship to report
2Disclaimer: This press release is for public announcement in regards to the Investment Corporation’s disposition, and has not been prepared for the purpose of solicitation of investment.

Business
Related Party Status

There is no business relationship to report
The Purchaser does not fall under the definition of a related partyof SKR or SREFM

5. Overview of Brokerage
Company Name
Mitsui Fudosan Realty Co., Ltd.
Head Office
3-2-5 Kasumigaseki, Chiyoda-ku, Tokyo
Representative
Yasuhiko Yamashiro, President and Chief Executive Officer
Principal Business
Real estate brokerage
Capital (As at 31 March 2018)20 billion yen
Established
15 July 1969
Relationships with SKR and/or SREFM
CapitalThere is no capital relationship to report
Personal
There is no personal relationship to report
Business
There is no business relationship to report
Related Party Status
The Broker does not fall under the definition of a related party of
SKR or SREFM
Notes
The Broker would not allow broker fee to be disclosed

6. Use of proceeds
The net realized gain on sale from the Disposition is planned to be distributed as profit distribution.
The residual amount will be retained as cash on hand and anticipated to be allocated to part fundfuture acquisitions of assets, related expenses or part repayment of existing borrowings. Details offuture acquisition properties or the repayment of existing borrrowings will be announced once
determined.

7. Future Outlook
SREFM is currently investigating potential reinvestment options for the proceeds from the Disposition
including those from pipeline support partners. Forecasts for performance and distribution per unit
for the fiscal periods ending 30 June 2018 (hereinafter “FP4”) and 31 December 2018 (hereinafter“FP5”) will be affected by implementation and the details of such reinvestment, therefore, revised
forecasts will be announced promptly once such reinvestment is determined or it becomes clear thatsuch reinvestment will not be made. Further, if any, or all of these reinvestment options are notcompleted, certain costs may be expensed in FP4.

8. Overview of Appraisal Report
Unit: ¥ mil

Property Name
Appraisal Value
Appraiser
Effective Date
Item
Indicated value by income approach

Indicated value by direct capitalization
methodConfomall Sapporo
1,440
Daiwa Real Estate Appraisal Co., Ltd.
28 February 2018
Details
Description
1,440 Both the direct capitalization method and DCF
method were applied, but it was judged that the value
based on the DCF method which determined valueby specifying the fluctuation of future net profit wasmore convincing. Also verified from the value by thedirect capitalization method and calculated the value
by the income approach.
1,450 Assessed by adopting appraised cap rates fromsimilar properties based on analysis of market trends
and appropriate rents.
3Disclaimer: This press release is for public announcement in regards to the Investment Corporation’s disposition, and has not been prepared for the purpose of solicitation of investment.

(i) Operating revenue ((a)-(b))(a) Gross potential income

142
146(b) Vacancy loss etc.

4(ii) Operating expenses
Maintenance andmanagement fee
Utilities expense

61
9Repair expenses

4

Property management fee
Tenant leasing costs, etc.

21

Property taxes

19

Insurance premiums

1

Other expenses

4(iii) Net operating income(NOI = (i)-(ii)(iv)
Financialinterestsdeposits(v) Capital expenditures

8122on(vi) Net cash flow
(NCF = (iii)+(iv)-(v))(vii) Capitalization rate
Indicated value of DCF method

Adopted terms of planned service agreement which
are judged consistent with market terms.
Based on the actual amounts, utilities expenses wereassessed as ¥1,000 yen/tsubo per month for rentablearea.
Based on repair expenses of similar real estate,assessed equivalent to 0.12% of building
replacement cost. The maintenance cost of the rentalroom accompanying the past was assessed as¥6,000/tsubo, taking into consideration the tenant's
reinstatement expenses.
Applied rate of 1.3% of existing agreement.
Adopted leasing costs based on actuals fromcomparable properties and referencing historical
data. Based on the tenant leasing costs of similar
properties, a fee of 1.0 months rent were assessed.
Land: assessed based on actual 2017 taxes, land
value trends. Building: adopted 2017 actuals.
Adopted terms of current insurance which are judged
consistent with market terms.
For other expenses such as miscellaneous
expenses, expendable items, etc. it was assessed as¥80/tsubo per month per rentable area.

1

Appraised investment return of 1.0%

7

Appraised by reference to the renewal expenses inthe ER and expenses of comparable properties at
0.28% of replacement value of the building.

75
5.2%
1,430

Discount rate

5.0%

Terminalrate

5.4%

capitalization

Mid to long term stabilized income from retail andresidential rent revenue, car park, signage.
Assessed based on a vacancy rate considered stablein the medium to long term.

Indicated value by cost approach

1,790

Ratio of land
Ratio of building
Other matters of consideration

51.1%
48.9%

Assessed by assuming current lease agreement
terms and conditions and tenant characteristics,
appropriately reflecting the change in future cash
flows and terminal value.
Assessed based on discount rates of comparative
real estate transactions and comparing with yields ofother financial products.
Assessed taking into consideration the marketabilityof the subject real estate at the end of the DCF
analysis period.
Assessed by applying depreciation price correction
to the replacement cost as well as taking themarketability of the land and building as a single
piece of real estate into consideration.
Regarding the appraisal value, it is necessary toreconsider the selection, consideration and utilizationof materials, suitability of utilization in accordancewith the principle on real estate prices in a timely
manner, analysis of general factors, compliance withregionalanalysisandindividualanalysis.
Consistency of the judgment on price formation
factor common to all the relationships between theunit price and the total amount was reviewed again.
Furthermore, from the viewpoints of the compatibility
4Disclaimer: This press release is for public announcement in regards to the Investment Corporation’s disposition, and has not been prepared for the purpose of solicitation of investment.

of the results of regional analysis and individualanalysis concerning the target real estate with eachmethod, the characteristics of the materials adopted
in the application of each method and the relative
reliability due to limitations, etc., the persuasive
power of each trial price is considered and decided
according to conscience as a professional
occupation.

Reference Materials
・ Reference Material 1 Portfolio List after the Disposition
・ Reference Material 2 Summary of Engineering Report and Earthquake Risk Analysis after theDisposition

The original Japanese version of this press release is distributed to the press club of the Tokyo Stock
Exchange (Kabuto Club), the press club of the Ministry of Land, Infrastructure, Transport and Tourism,
and the press club for construction trade publications of the Ministry of Land, Infrastructure, Transportand Tourism.
Sakura Sogo REIT Investment Corporation website address: http://sakurasogoreit.com/en/

5Disclaimer: This press release is for public announcement in regards to the Investment Corporation’s disposition, and has not been prepared for the purpose of solicitation of investment.

Reference Material 1. Portfolio List after the Disposition
Property
No.

Property nameLocation

Acquisition Real estate
Investment
priceappraisalratio (%)2(¥m)
value (¥m)1
OF-01
Seishin Building
Shinjuku-ku, Tokyo
7,880
8,850
14.1
OF-02
NK Building
Chiyoda-ku, Tokyo
3,730
3,980
6.7
OF-03
Tsukasamachi Building
Chiyoda-ku, Tokyo
3,820
4,040
6.8
OF-04
Takadanobaba AccessShinjuku-ku, Tokyo
3,330
3,510
5.9
OF-05
Azabu Amerex Building
Minato-ku, Tokyo
2,020
2,270
3.6
OF-06
Hiei Kudan Building
Chiyoda-ku, Tokyo
1,960
2,090
3.5
OF-07
Shin Yokohama Nara Building
Yokohama-shi, Kanagawa
1,910
2,020
3.4
Office sub-total
24,65026,76044.0
RT-01
La Park Kishiwada
Kishiwada-shi, Osaka
6,460
6,640
11.5
RT-02
Suroy Mall Chikushino
Chikushino-shi, Fukuoka
7,670
7,790
13.7
RT-03
Seiyu Minakuchi
Koka-shi, Shiga
4,1504,220
7.4
RT-04
Suroy Mall Nagamine
Kumamoto-shi, Kumamoto
4,180
4,470
7.5
Retail sub-total
22,46023,12040.0
RS-01
Shiroi Logiman
Shiroi-shi, Chiba
2,180
2,160
3.9
RS-02
Matsuya Residence Sekime
Osaka-shi, Osaka
1,820
1,930
3.2
RS-04
Urban Plaza Imazato
Osaka-shi, Osaka
940
945
1.7
RS-05
Abode Yoyogi Parkside
Shibuya-ku,Tokyo
1,600
1,610
2.9
Residential sub-total
6,540
6,645
11.7
OT-01
Funabashi Hi Tech Park I
Funabashi-shi, Chiba
1,720
1,800
3.1
OT-02
Funabashi Hi Tech Park II
Funabashi-shi, Chiba
710
778
1.3
Other sub-total
2,430
2,578
4.3
Total Portfolio
56,08059,103100.0
1Appraisal value indicated in the appraisal reports provided by Daiwa Real Estate Appraisal Co., Ltd. with valuation effective dateof 28 February 2018.
2“Investment ratio” is the ratio of acquisition prices for each asset to the total of acquisition prices, rounded down to the firstdecimal place.

6Disclaimer: This press release is for public announcement in regards to the Investment Corporation’s disposition, and has not been prepared for the purpose of solicitation of investment.

Reference Material 2. Summary of Engineering Report and Earthquake Risk Analysis after theDispostion
Engineering
Firm

Engineering
ReportInvestigation DateShort term
repairexpenses1(thousandyen)

Medium tolong term
repairexpenses(thousandyen)2

PML
(%)3

Seishin Building
NK Building
Tsukasamachi Building
Takadanobaba Access Building
Azabu Amerex Building
Hiei Kudan Building
Shin Yokohama Nara Building

TRC4
TRC4
TRC4
TRC4
TRC4
TRC4
TRC45 October 20158 October 20158 October 2015
5 October 2015
5 October 20158 October 201516 October 2015

0000000

18,603
16,031
12,823
16,108
5,682
17,234
13,798

5.5
8.4
9.4
3.5
9.3
3.5
4.4

RT-01
RT-02
RT-03
RT-04

La Park Kishiwada
Suroy Mall Chikushino
Seiyu Minakuchi
Suroy Mall Nagamine

TRC4TRC4TRC4TRC45,6 October 2015
21,22 June 20169 October 2015
26 June 2016

0000

71,68430,314
14,05814,857

14.8
1.7
4.2
8.1

RS-01
RS-02
RS-04
RS-05

Shiroi LogimanMatsuya Residence Sekime
Urban Plaza Imazato
Abode Yoyogi Parkside

TRC4TRC4TRC4
JCIA513 October 20157 October 20157 October 2015
11 July 2017

0000

48,37422,752
7,993
642

3.6
11.6
12.0
7.3

OT-01
OT-02

Funabashi Hi Tech Park I
Funabashi Hi Tech Park II

TRC4
TRC4

16 October 201516 October 2015

00

1,901
3,123

4.6
4.6

Property
No.

Property name

OF-01
OF-02
OF-03
OF-04
OF-05
OF-06
OF-07

315,950
3.9”Short term repair expenses” are the expenses stated in the Engineering Report as expenses in need and repair required withinroughly one year, rounded to the nearest thousand yen.
2”Medium to long-term repair expenses” is the average amount per year of the repair and renewal expenses projected for the next
12 years stated in the Engineering Report, rounded to the nearest thousand yen.
3“PML” (“Probable Maximum Loss”) for the properties and overall PML is extracted from the Earthquake Risk Valuation Reportprovided by Tokio Marine & Nichido Risk in June 2018.
4
Tokio Marine & Nichido Risk Consulting Co., Ltd.
5JCIA (Japan Constructive Inspect Association
1

7Disclaimer: This press release is for public announcement in regards to the Investment Corporation’s disposition, and has not been prepared for the purpose of solicitation of investment.