August 7, 2019
For Immediate Release
Real Estate Investment Trust Securities Issuer
Star Asia Investment Corporation
Representative: Atsushi Kato, Executive Officer(Code: 3468)
Asset Management Company
Star Asia Investment Management Co., Ltd.
Representative:
Atsushi Kato
President and CEO
Contact:
Akiko Kanno
Director and CFO
TEL: +81-3-5425-1340

Star Asia Group Announces Detailed Proposal for Merger between Sakura Sogo REIT and Star Asia
Investment Corporation
Star Asia Investment Corporation (“SAR”) and Star Asia Investment Management Co., Ltd., the asset manager
for SAR (the “Asset Manager”), received a notice today from Lion Partners GK (“LPGK”, Representative Director:Toru Sugihara), an affiliate of Star Asia Group. LPGK is the largest unitholder of Sakura Sogo REIT Corporation(“SSR”) holding 5.1% of the total investment units of SSR (as of August 6, 2019/on a trade basis). Details are asfollows:
1.

Star Asia Group’s Purpose of Announcing the Merger Ratio
As announced in the “Notice Concerning Proposal for Merger between Sakura Sogo REIT Investment
Corporation and Star Asia Investment Corporation” on May 10, 2019, Star Asia Group, as one of the largest
unitholders of SSR,firmly believes that the merger between SSR and SAR (hereinafter referred to as “theProposed Merger”) will “maximize value for all unitholders”.
As of August 6, 2019, Star Asia Group, holds 16,896 investment units (approximately 5.1%) of SSR and
97,000 investment units (approximately 17.9%) of SAR.Upon completion of the Proposed Merger between SARand SSR, Star Asia , is expected to become the largest unitholder of the combined company(hereinafterreferred to as “Post-Merger REIT”)(Based on the merger ratio stated below, it is calculated that Star Asia Groupwill hold 13.4% of the Post-Merger REIT after the merger.)Star Asia Group, as the largest unitholder of the Post-Merger REIT, is fully aligned with all unitholders and isunquestionably committed to the continued successful growth of the Post-Merger REIT.

2.

Star Asia Group’s Announces the Merger Ratio between SSR and SAR
Star Asia Group has calculated the merger ratio between SSR and SAR for the Proposed Merger is
indisputably more advantageous for SSR unitholders as compared to the proposal made by MIRAI Corporationfor a merger between it and SSR. The merger ratio has been calculated by incorporating various data points
and considerations from various perspectives, such as the historical trend in the price of SSR investment units,
Star Asia Group’s assessment of SSR’s portfolio, and the assumed distribution payments (per unit) on acruising basis (see Note) after the merger between SSR and SAR.
(Note) Distribution payments (per unit) on a cruising basis means equalized distribution payments (per 1 investment unit)
after excluding temporary factors such as gains on sale of properties. The same applies below. In some cases, it may be1

written as “distribution payments per unit (cruising basis)” instead of “distribution payments (per unit) on a cruising basis”.

The main items calculated by Star Asia Group are described below. For details, please refer to“Supplementary Explanatory Material Regarding Today’s Timely Disclosure - Proposal for Merger between
Sakura Sogo REIT Investment Corporation and Star Asia Investment Corporation”. The merger ratio anddistribution payments per unit on a cruising basis which Star Asia Group has disclosed in the “Proposal forMerger between Sakura Sogo REIT Investment Corporation and Star Asia Investment Corporation – The Way ofThinking behind the Merger Ratio” are contents which have been confirmed by each director of SAR and havebeen approved as information to be provided to SSR unitholders.
<Merger Ratio> 1: 0.88 or more
➢ Based on the assumed merger ratio described above and the investment unit price of SAR, the unit
price for SSR unitholders is calculated as 101,728 yen per unit. Below are reference indicators.
Investment Unit Price
Ratio as of the Relevant Period
Ratio against the(Note 1)
Adopted Calculation Period
Merger Ratio (Note2)
Closing price on August 5, 2019
0.85+3.4%
Most recent 5 business days
0.84+4.3%
average
Most recent 1-month average
0.81+8.1%
Most recent 3-month average
0.80+9.7%
Most recent 6-month average
0.80+9.8%(Note 1) The SSR investment unit Price during the relevant period, when the SAR investment unit priceis calculated as 1 during the same period.

(Note 2)

Based on the Ratio as of the Relevant Period, the differential ratio against the merger ratio
calculated by Star Asia Group.

➢➢The current assessment value of SSR’s portfolio as evaluated by Star Asia Group is JPY 63 billion, andbased on such assessment value, the NAV per unit calculated by Star Asia Group is 104,000 yen perunit.
The final merger ratio will be determined after completing due diligence and taking into accounttrends in the investment unit price etc. and based on calculations, etc. made by hiring third-party
financial advisors.

< Distribution Payments per Unit (cruising basis) of SSR after the Merger> 2,539 yen➢ Star Asia Group has taken into consideration the short-term cost reductions described below and has
prepared estimated financial statements of the Post-Merger REIT based on the above stated merger
ratio and has calculated the distribution payments on a cruising basis of the Post-Merger REIT to be
2,886 yen per unit.
Reduction of asset management fees
Approximately 40,000 thousand yen/ period
Lowering of rental business costs
Approximately 40,000 thousand yen/ period
Reduction of other management costs
Approximately 20,000 thousand yen/ period➢➢

Total of short-term cost reductions
Approximately 100,000 thousand yen/ periodSuch distribution payments on a cruising basis recalculated per SSR investment unit held by SSR
unitholders is 2,539 yen as stated above.
The amount of 2,539 yen per unit exceeds the expected distribution payment per unit for the fiscal
period ending December 2019 (disclosed by SSR on February 14, 2019) of 2,427 yen, by more than 100yen.

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3.

Growth Strategy of the Post-Merger REIT
Star Asia Group’s view of the growth strategy of the Post-Merger REIT is as follows.
<Strong Pipeline of Already Secured Acquisitions>➢ As of today, SAR holds preferential negotiation rights for 10 properties (3 office properties, 1commercial facility property, 4 residential properties, and 2 student residence properties).
➢ Of these 10 properties, 5 properties (1 office property, 1 commercial facility property, and 3 residentialproperties) have stable operations and thus can be incorporated immediately.
Indicators related to the above stated 5 properties.
Total of minimum purchase prices
JPY 13.6 billion (Note 3)
Average NOI Yield
4.9% (Note 4)
Average NOI Yield after depreciation
4.3% (Note 5)(Note 3) The total of the appraisal values for properties which have calculated appraisal values and,the acquisition prices by Star Asia Group where no appraisal values have been calculated.

(Note 4)The yield derived by dividing the total amount of NOI assumed by Star Asia Group. based on
the cash flow status of each property as of the end of June 2019, by the “total amount of theminimum purchase prices etc.”(Note 5)The yield derived by dividing the amount obtained by deducting the depreciation cost foreach property assumed by Star Asia Group. from the above stated assumed NOI, by the“total amount of the minimum purchase prices etc.”➢We believe that it will be possible to implement various initiatives which will contribute to the increasein value for unitholders of the Post-Merger REIT, by utilizing the properties for which SAR holds
preferential negotiation rights including the above mentioned 5 properties as well as the properties
currently managed by Star Asia Group.
(1) Early expansion of asset size(2) Implementing active replacement of assets – if gains on sale are realized, make special dividends
to Post-Merger REIT unitholders(3) Consider replacement of assets at SSR prior to the merger
As an option for before the merger, if the Asset Manager becomes the asset managementcompany for SSR, replacement of above mentioned 5 properties with the assets held by SSR
will be considered. In the case where asset replacements are conducted prior to the merger,
the merger ratio may differ from the above stated merger ratio due to changes to the portfolio
constitution and realization of gains on sale etc. In such case, a merger ratio which properlyreflects the results of the asset replacements will be adopted giving consideration to fairness toall SAR and SSR unitholders.

<Increase in Amount of Distributable Profits due to Further Cost Reductions Etc.>➢ Reduction of borrowing costs of bank borrowings etc.
➢ Reduction of management fees etc. leveraging on economies of scale due to increase in the number ofproperties.
➢ Improvement of profitability of properties by implementing active management by SSR.
< Star Asia Group Commits to Growth of the Post-Merger REIT>➢ Star Asia Group maintains “Client First” at the top of its Code of Conduct and, as a real estate fundmanager, has sustained a clear objective to execute on investments which surpass the expectations ofinvestors.

3➢➢➢Since Star Asia Group has continued to meet investors’ expectations over many years and possesses astrong investment track record.
Star Asia Group manages real estate investment vehicles whichhave a high degree of investment flexibility, and by leveraging such flexibility, it has uncovered a wide
range of investment opportunities including equity and debt backed by real estate properties. Star Asia
Group has realized attractive returns on these investments.
Star Asia Group commits, to support the Post Merger REIT with all of its Group resourcesgiven that thePost Merger REIT will be the one and only investment corporation within the Group.
Star Asia Group’s ‘same boat’ investment ratio in the Post-Merger REIT REIT, is 13.4 %, which underpins
the promise for support and strong alignment with all unitholders.

For details, please refer to “Supplementary Explanatory Material Regarding Today’s Timely Disclosure Notice Concerning Proposal for Merger between Sakura Sogo REIT Investment Corporation and Star Asia
Investment Corporation”.
4.

SSR’s general meetings of unitholders of SSR to be held on August 30, 2019
On August 30, 2019, the SSR general meeting of unitholders convened by LPGK and a SSR general meetingof unitholders convened by SSR are scheduled to be held.
<Background leading to holding of two SSR general unitholders meetings on the same day>➢ On May 10, 2019, LPGK made a request to convene a general meeting of unitholders to take up thefollowing proposed agenda items, however, SSR rejected holding such general meeting of unitholders.
Proposed Agenda Item 1 Removal of Executive Director Makoto Muranaka
Proposed Agenda Item 2 Appointment of Executive Director Toru Sugihara
Proposed Agenda Item 3 Cancellation of the asset management entrustment agreement withSakura Real Estate Funds Management, Inc.
Proposed Agenda Item 4 Enter into an asset management entrustment agreement with Star
Asia Investment Management Co., Ltd.
➢ On May 16, 2019, LPGK files an application to the Kanto Finance Bureau to receive permission to holda general meeting of unitholders convened by unitholders.
- SSR consistently continues to reject the holding of the general meeting of unitholders.
➢ On June 28, 2019, the Director General of the Kanto Finance Bureau gives permission to LPGK to hold ageneral meeting of unitholders convened by unitholders.
- As soon as the permission to convene the unitholders’ meeting was received, SSR immediately
announces holding of a separate general meeting of unitholders called by SSR itself.
➢ On June 29, 2019, a public announcement to hold the general meeting of unitholders convened by
LPGK and a public announcement to hold the general meeting of unitholders convened by SSR itself
are made.
SSR, while having rejected the request from LPGK as unitholder to hold a general meeting of unitholders,announced that it will hold a general meeting of unitholders called by itself, as soon as LPGK received
permission to hold the general meeting of unitholders called by it. Star Asia Group strongly asserts that SSR’s
behavior is solely based on prioritizing its self-protection, rather than to “maximize value for unitholders”
which Star Asia Group has continued to advocate.
According to materials disclosed by SSR, with respect to the process leading up to choosing to merge withMIRAI Corporation, SSR commented “In assessing each proposal, (SSR) consistently focused on which proposal
would contribute to maximize the unitholders’ value, and conducted calm and fair comparativeconsiderations”. However, as described above, the actions taken by SSR’s management and asset management

4company were not in good faith and primarily focused on its self-protection as the first priority. Therefore, nocalm and fair comparative considerations were made, that would result in maximizing unitholders’ value. If
SSR was indeed “calm and fair”, it should have at the very least listened to the views of LPGK (as one of SSR’slargest unitholders) with an open-mind and in a sincere manner.
We kindly ask all SSR unitholders to make a “calm and fair” decision as to the proposal which will contributeto “maximizing the value for all unitholders”, by supporting the Proposed Merger made by Star Asia Group.

5.

Reference Information
Please also refer to the following press releases for further information.
May 10th, 2019
Notice Concerning Proposal for Merger between Sakura Sogo REIT
1
Investment Corporation and Star Asia Investment Corporation
May 10th, 2019
Supplementary Explanatory Material Regarding Today’s Timely Disclosure (1)2~Proposal Material from the Star Asia Group to all unitholders of Sakura Sogo
REIT Investment Corporation~
May 10th, 2019
Supplementary Explanatory Material Regarding Today’s Timely Disclosure (2)3~Explanatory Material to all unitholders of Star Asia Investment Corporation~
May 16th, 2019
Notice Concerning Application for Permission of Holding Sakura Sogo REIT
4Investment Corporation’s Unitholders’ Meeting by Star Asia Group
June 28th, 2019
Star Asia Group Receives Approval to Hold Unitholders’ Meeting of Sakura
5Sogo REIT Investment Corporation
July 1st, 2019
Notice Concerning Holding Unitholders' Meeting of Sakura Sogo REIT
6
Investment Corporation by Star Asia GroupJuly 4th, 2019
Lion Partners Files Petition with Tokyo District Court Seeking Injunction Given
Illegal Acts Conducted by the Executive Director of Sakura Sogo REIT (“SSR”).
7Also Takes Other Further Actions to Protect and Defend the Best Interests ofSSR Unitholders
July 5th, 2019
Supplementary Explanatory Material Regarding Timely Disclosure announced
8on July 4th, 2019
9July 17th, 2019
Lion Partners to Acquire Additional Investment Units of Sakura Sogo REIT
July 19th, 2019
Lion Partners－Further Increases Amount of Additional Acquisition of Sakura
10Sogo REIT Units－July 24th, 2019
Important Notice Regarding the Sakura Sogo REIT Unitholders’ Meeting to be
11
Convened by Lion Partners (Scheduled to begin from 10:00 am on Friday
August 30, 2019 )July 25th, 2019
Star Asia Group Supports Nippon Kanzai’s Views on Merger Star Asia Also
12
Strongly Believes Merger Between Star Asia REIT and Sakura Sogo REIT Is in
the Best Interest of All Unitholders
July 29th, 2019
(correction) Star Asia Group Supports Nippon Kanzai’s Views on Merger Star
13
Asia Also Strongly Believes Merger Between Star Asia REIT and Sakura Sogo
REIT Is in the Best Interest of All Unitholders
August 2, 2019
Notice Concerning Withdraw of Petition filed by LPGK for Injunction of Illegal
14Acts Conducted by the Executive Director of Sakura Sogo REIT
August 6, 2019
Notice Concerning Obtainment of Preferential Negotiation Rights Pertaining
15
to Acquisition of Assets

56. Future Policy
If circumstances should arise which warrant further disclosures, such matters shall be disclosed as deemed
appropriate in a timely manner.
＊ SAR HP URL: http://starasia-reit.com＊ Star Asia Group HP URL: http://starasiamanagement.com/＊ SAR official YouTube channel URL: https://www.youtube.com/channel/UCYasJn4xrns2fhyZFKMAELw

This is an English translation of the announcement in Japanese dated August 7, 2019. However, no assurance or warranties
are given for the completeness or accuracy of this English translation.

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