March 11, 2020
For Immediate Release
Real Estate Investment Trust Securities Issuer
Sakura Sogo REIT Investment Corporation
Representative:
Toru Sugihara, Executive Director(Code: 3473)
Asset Management Company
Star Asia Investment Management Co., Ltd.
Representative:
Atsushi Kato, President and CEO
Inquires:
Akiko Kanno, Director and CFO
TEL: 03-5425-1340

Notice Concerning Convocation of General Meeting of Unitholders
for Approval of the Merger Agreement Etc.
Sakura Sogo REIT Investment Corporation (“SSR”), by resolution of its board of directors meeting held today,
decided to propose each of the agenda items described below at SSR’s 4th general meeting of unitholders
scheduled to be held on March 30, 2020(the “Unitholders’ Meeting”).
The following matters shall come into effect upon passing of the resolutions at the Unitholders’ Meeting.
Furthermore, SSR resolved at its board of directors meeting held today to object to all of the unitholder
proposals submitted by GALAXY JREIT PTY LIMITED (“Galaxy”), which are proposed agenda items 9 to 15(hereinafter “Agenda Items Proposed by a Unitholder”) described below.

1.

Agenda Items proposed by SSR
SSR has resolved to present before the Unitholders’ Meeting the following proposed agenda items 1
through 8 (“SSR Proposed Agenda Items”) as proposals of SSR.
Proposed Agenda Item 1: Appointment of One Executive Director
Proposed Agenda Item 2: Appointment of Two Supervisory Directors
Proposed Agenda Item 3: Partial Amendments to the Articles of Incorporation (to Change theMaximum Number of Executive Directors and Supervisory Directors that
may be Appointed)
Proposed Agenda Item 4: Partial Amendments to the Asset Management Agreement
Proposed Agenda Item 5: Approval of Agreement on Absorption-Type Merger with Star Asia
Investment Corporation
Proposed Agenda Item 6: Termination of Asset Management Agreement (subject to consummationof the Merger)
Proposed Agenda Item 7: Partial Amendments to the Articles of Incorporation (for change to end of
fiscal period)
Proposed Agenda Item 8: Partial Amendments to the Articles of Incorporation (for change of head
office location)
General explanation of the reasons for the SSR Proposed Agenda Items is provided below. For details,
please refer to the “Convocation Notice of the 4th General Meeting of Unitholders”.
➢ Proposed Agenda Items 1 & 2
Given that the term of office of SSR’s executive director and supervisory directors (collectively the

1

➢

➢

➢

➢

“Directors”) will expire at the end of May 2020, in order to adjust the term of office, the Directors
expressed their desire to once resign at the beginning of the Unitholders’ Meeting and then to bereappointed.
Proposed Agenda Item 3This agenda item proposes to amend a part of the articles of incorporation to allow for one
executive director and two supervisory directors to be appointed. This proposal was included in
the Agenda Items Proposed by a Unitholder (for details, please refer to the press release dated
February 3, 2020 entitled “Notice Concerning Receipt of Unitholder Proposal Right Exercise Form”),
however, SSR has decided to submit it as SSR’s proposal.
Proposed Agenda Item 4Star Asia Investment Management Co., Ltd. (the “Asset Manager”), to which SSR entrusts its asset
management, is also the asset manager for Star Asia Investment Corporation (“SAR”), and also
there is an overlap between SSR and SAR in the target asset class to which they invest. Therefore,
the contract period of the asset management agreement is proposed to be amended in order togive unitholders the opportunity to determine periodically whether entrustment of asset
management to the Asset Manager is appropriate.
Proposed Agenda Items 5, 6, and 7
As stated in the press release dated March 2, 2020, “Notice Concerning Execution of a Merger
Agreement by and between Star Asia Investment Corporation and Sakura Sogo REIT Investment
Corporation”, SSR and SAR have agreed to undertake an absorption type merger, to take effect on
August 1, 2020, where SAR will be the surviving corporation and SSR will be the dissolving
corporation (the “Merger”), and have signed a Merger Agreement with respect to the Merger. This
agenda item is submitted to the Unitholders’ Meeting in order to receive approval for such Merger
Agreement. Furthermore, together, SSR’s articles of incorporation is to be amended so that theasset management agreement currently executed by SSR will be terminated at the time when the
Merger takes effect, and the day before the effective date of the Merger is to be defined as theend of SSR’s final fiscal period.
Proposed Agenda Item 8
Since the head office of the Asset Manager is located in Minato ward, the provision within SSR’s
articles of incorporation regarding location of head office is to be amended.

We kindly ask all Unitholders to support and approve the SSR Proposed Agenda Items.
2.

Agenda Items Proposed by a Unitholder
As stated in the press release dated February 3, 2020 entitled “Notice Concerning Receipt of Unitholder
Proposal Right Exercise Form” (in Japanese language only), Galaxy, who is a minority unitholder of SSR, hasmade certain unitholder proposals with respect to the Unitholders’ Meeting. Of the Agenda Items Proposedby a Unitholder, those which will be presented before the Unitholders’ Meeting as agenda items proposedby a unitholder’s proposals are as follows.
Of the Agenda Items Proposed by a Unitholder, “Proposal for partial amendment of the articles ofincorporation of the investment corporation (1)” is already submitted as SSR’s Proposed Agenda Items in“Partial Amendments to the Articles of Incorporation (to Change the Maximum Number of Executive
Directors and Supervisory Directors that may be Appointed)” as mentioned in 1. above. Furthermore, withrespect to “revocation of the resolution to approve execution of the asset management agreement”, as
Galaxy does not satisfy the conditions for making the request as stated in its unitholder proposal right
exercise form, it will not be presented to the Unitholders’ Meeting.

2

Proposed Agenda Item 9: Dismissal of Executive Director Toru Sugihara
Proposed Agenda Item 10: Appointment of One Executive Director
Proposed Agenda Item 11: Dismissal of Supervisory Director Shigeru Kaneda
Proposed Agenda Item 12: Appointment of One Supervisory Director
Proposed Agenda Item 13: Termination of Asset Management Agreement with Star Asia
Investment Management Co., Ltd.
Proposed Agenda Item 14: Execution of Asset Management Agreement
Proposed Agenda Item 15: Partial Amendment of the Articles of Incorporation(For details of each proposed agenda item, please refer to the attached “Convocation Noticeof the 4th General Meeting of Unitholders”.)

SSR’s Board of Directors have unanimously resolved to object to all of the proposed agenda items 9through 15 stated above.
For details of the objection opinions of SSR’s Board of Directors, please refer to the attached“Convocation Notice of the 4th General Meeting of Unitholders”.)

3.

Schedule of Unitholders’ Meeting
March 11, 2020
Proposed Agenda Items for the Unitholders’ Meeting approved by the Board.
March 11, 2020
Send out Convocation Notice for the Unitholders’ Meeting
March 30, 2020
Unitholders’ Meeting (scheduled)<Attachment>
Convocation Notice of the 4th General Meeting of Unitholders<For Reference>
February 3, 2020
March 2, 2020

“Notice Concerning Receipt of Unitholder Proposal Right Exercise Form”(in Japanese language only)
Notice Concerning Execution of a Merger Agreement by and between Star Asia
Investment Corporation and Sakura Sogo REIT Investment Corporation＊ Sakura Sogo REIT Investment Corporation website address:

http://sakurasogoreit.com/en/

This is an English translation of the announcement in Japanese dated March 11, 2020. However, no assurance
or warranties are given for the completeness or accuracy of this English translation.

3

<Attachment>
To unitholders in the United States:
The merger described in this document involves securities of a foreign company. The offer is subject
to disclosure requirements of a foreign country that are different from those of the United States.
Financial information included in this document, if any, was excerpted from financial statements
prepared in accordance with foreign accounting standards that may not be comparable to thefinancial statements of United States companies. In addition, it may be difficult for you to enforce
your rights and any claim you may have arising under the U.S. federal securities laws, since theissuer is located in a foreign country and all of its officers and directors are residents of a foreigncountry. You may not be able to sue a foreign company or its officers or directors in a foreign court
for violations of the U.S. securities laws. It may be difficult to compel a foreign company and its
affiliates to subject themselves to a U.S. court’s judgment.
You should be aware that the issuer may purchase securities otherwise than under the merger, suchas in the open market or through privately negotiated purchases.
This document has been translated from the Japanese-language original document for reference
purposes only. In the event of any conflict or discrepancy between this document and the Japaneselanguage original, the Japanese-language original shall prevail in all respects.

(Securities Code: 3473)
March 11, 2020
To Our Unitholders
3-8-11, Kudan Minami, Chiyoda-ku, Tokyo
Sakura Sogo REIT Investment Corporation
Toru Sugihara, Executive Director

Convocation Notice of the 4th General Meeting of Unitholders
We hereby give notice of and cordially request your attendance at the 4th General Meeting ofUnitholders (the “General Meeting of Unitholders”) of Sakura Sogo REIT Investment
Corporation (“SSR”), which will be held as described below.
If you are unable to attend the General Meeting of Unitholders, you may exercise your voting
rights by proxy or by using the Voting Rights Exercise Form. As SSR has kindly requested for
you to exercise your voting rights by proxy, please consider the “Reference Documents for the
General Meeting of Unitholders” set out below and the enclosed “Request for Exercise of
Voting Rights by Proxy”, and complete and return the proxy form enclosed herewith, together
with the Voting Rights Exercise Form, by using the self-addressed stamped envelope, so that itreaches Star Asia Investment Management Co., Ltd. by 6:00 P.M. on Friday, March 27, 2020.
If you wish to exercise your voting rights by using the Voting Rights Exercise Form, pleaseindicate your approval or disapproval on the Voting Rights Exercise Form, and return it so thatit reaches SSR by 6:00 P.M. on Friday, March 27, 2020.
Galaxy JREIT Pty Limited (the “Proposing Unitholder”), which is a unitholder of SSR, hassubmitted proposals (from Proposal 9 to Proposal 15) to the General Meeting of Unitholders,and SSR’s Board of Directors is opposed to all of those proposals. For further details, pleaserefer to pages 22[sic] to 35[sic] of the Reference Documents for the General Meeting ofUnitholders.
We would like any unitholder who agrees with the view of SSR’s Board of Directors to exercise
his/her voting rights to approve Proposals 1 to 8 and reject Proposals 9 to 15.
Furthermore, SSR has set forth the provisions regarding “deemed approval” in Article 17,
Paragraphs 1 and 2 of SSR’s current Articles of Incorporation, in accordance with Article 93,
Paragraph 1 of the Act on Investment Trusts and Investment Corporations (the “Investment
Trusts Act”). Therefore, you should take careful note that if you are unable to attend the General
Meeting of Unitholders and do not exercise your voting rights by proxy or by using the Voting
Rights Exercise Form, the number of voting rights held by you may be included in the numberof voting rights of unitholders present thereat that are deemed as having approved each of the
proposals submitted to the General Meeting of Unitholders.
<Excerpt from SSR’s Current Articles of Incorporation>
Article 17 Deemed Approval
1. In the event that a Unitholder neither attends a general meeting of unitholders nor exercises
his/her voting rights, said Unitholder shall be deemed to have agreed to the proposals
submitted to said general meeting of unitholders (excluding those proposals which conflictwith each other in cases where multiple proposals are submitted).
2. The number of voting rights of Unitholders who are deemed to have agreed to proposals
pursuant to the provisions of the preceding paragraph shall be included in the number ofvoting rights of Unitholders in attendance.
Meeting Details
Date and Time:

10:00 A.M. on Monday, March 30, 2020
(The reception desk is scheduled to open at 9:00 A.M.)

Location:

Bellesalle Onarimon Tower, Sumitomo Fudosan Onarimon Tower 3rd
floor, 1-1-1, Shibakoen, Minato-ku, Tokyo(Please refer to the “Map to the Location of the General Meeting ofUnitholders” at the end of this document.)

Purpose of the General Meeting of Unitholders:Matters to be Resolved[Proposals by SSR (from Proposal 1 to Proposal 8)]
Proposal 1:
Appointment of One Executive Director
Proposal 2:
Appointment of Two Supervisory Directors
Proposal 3:
Partial Amendments to the Articles of Incorporation (to Change theMaximum Number of Executive Directors and Supervisory Directors that
may be Appointed)
2

Proposal 4:
Proposal 5:

Partial Amendments to the Asset Management Agreement
Approval of Agreement on Absorption-Type Merger with Star Asia
Investment Corporation
Proposal 6:
Termination of Asset Management Agreement (subject to consummation of
the Merger)
Proposal 7:
Partial Amendments to the Articles of Incorporation (for change to end of
fiscal period)
Proposal 8:
Partial Amendments to the Articles of Incorporation (for change of head
office location)[Proposals by the Proposing Unitholder (from Proposal 9 to Proposal 15)]
Proposal 9:
Dismissal of Executive Director Toru Sugihara
Proposal 10: Appointment of One Executive Director
Proposal 11: Dismissal of Supervisory Director Shigeru Kaneda
Proposal 12: Appointment of One Supervisory Director
Proposal 13: Termination of Asset Management Agreement with Star Asia Investment
Management Co., Ltd.
Proposal 14: Execution of Asset Management Agreement
Proposal 15: Partial Amendment of the Articles of Incorporation<Requests>▪ When attending the General Meeting of Unitholders, please submit the Voting Rights
Exercise Form enclosed herewith to the reception desk at the venue.
▪ If you exercise your voting rights by using the Voting Rights Exercise Form without
indicating your approval or disapproval for each proposal, you will be deemed to haveapproved the proposals by SSR and rejected the proposals by the Proposing Unitholder.
▪ If you exercise your voting rights both by proxy and by using the Voting Rights Exercise
Form, only your exercise of voting rights by proxy will be counted as valid.
▪ When exercising your voting rights by proxy, another unitholder holding the voting rights in
SSR may attend the General Meeting of Unitholders as your proxy, in accordance with
Article 13, Paragraph 1 of SSR’s Articles of Incorporation. In such a case, please submit adocument certifying the authority of the proxy together with the Voting Rights Exercise
Form to the reception desk at the venue (and a Voting Rights Exercise Form for the proxyhimself/herself would also be necessary). Please note that a person who is not a Unitholder
entitled to exercise his/her voting rights, such as a proxy who is not a Unitholder or any
accompanying person, is not permitted to enter the venue.
▪ If you wish to exercise your voting rights diversely, please give a notice to that effect andthe reason therefor in writing to SSR no later than three days before the General Meeting ofUnitholders.
<Special Points to Note Concerning Proposals for Appointment of Directors>▪ For Proposal 1 and Proposal 10, you may indicate your approval for only one person out of
the candidates for both proposals, and if you indicate your approval for more than one
candidate, the exercise of your voting rights for both proposals will be deemed invalid as awhole.
▪ For Proposal 2 and Proposal 12, you may indicate your approval for up to two persons in
total out of the candidates for both proposals, and if you indicate your approval for more3

than two candidates in total, the exercise of your voting rights for both proposals will bedeemed invalid as a whole.
<Notice>▪ If any amendment is made to the Reference Documents for the General Meeting ofUnitholders before the day immediately preceding the General Meeting of Unitholders, theamended version will be posted on http://www.sakurasogoreit.com/.

4

Reference Documents for the General Meeting of Unitholders
Proposals and Reference Matters[Proposals by SSR]
Proposal 1

Appointment of One Executive Director

Since the executive director, Toru Sugihara has offered to resign at the opening of the General
Meeting of Unitholders for purposes of adjusting the term of office of the executive directorship,
SSR is submitting a proposal for the appointment of one executive director.
If this proposal is approved, the term of office of the new executive director will be the period
ending at the conclusion of the General Meeting of Unitholders at which an executive director
is proposed to be appointed within thirty days from the day following the second anniversaryof appointment of the existing executive director, pursuant to the proviso in Article 22,
Paragraph 1 of the current Articles of Incorporation of SSR. This proposal regarding
appointment of an executive director has been resolved to be submitted to the General Meetingof Unitholders with the unanimous consent of the Supervisory Directors at the meeting of theBoard of Directors of SSR held on March 11, 2020.
The candidate for executive director is as follows.
Since Toru Sugihara has extensive experience and a wide network in the real estate sector inJapan, particularly in the J-REIT field, and has the knowledge and experience necessary as
executive director of SSR, SSR has concluded that Toru Sugihara is qualified to be an executive
director of SSR.
Name
Career, Position at SSR and Material Concurrent Positions(Date of Birth)

Toru Sugihara

April 1991

Nomura Securities Co., Ltd.

October 2006

Barclays Securities Japan Limited

July 2012

Kenedix, Inc.

February 2015

Tokyo branch of Star Asia Management
Japan Ltd.

June 2015

Seconded to Star Asia Investment
Management Co., Ltd.
Representative Director and CFO(May 19, 1968)
August 2015

Director and CFO of Star Asia
Investment Management Co., Ltd.

April 2019

Representative Director of Lion Partners
GK

August 2019

Executive Director
Sakura Sogo REIT (Present)

5

Number ofUnits in SSR
Owned

100

・There is no special relationship between the executive director candidate above and SSR.
・The candidate for executive director above currently manages the business of SSR as SSR’s
executive director.
・The provisions of Article 99, Paragraph 2 of the Act on Investment Trusts shall apply to theterm of office of the executive director candidate above.

6

Proposal 2

Appointment of Two Supervisory Directors

Since the supervisory directors, Shigeru Kaneda and Hirotaka Isayama have both offered toresign at the commencement of the General Meeting of Unitholders for purposes of adjusting
the term of office of supervisory directors, SSR is submitting a proposal for the appointment of
two supervisory directors.
If this proposal is approved, the term of office of the new supervisory directors will be theperiod ending at the conclusion of the General Meeting of Unitholders at which supervisory
directors are proposed to be appointed within thirty days from the day following the second
anniversary of the appointment of the existing supervisory directors, pursuant to the proviso in
Article 22, Paragraph 1 of the current Articles of Incorporation of SSR.
The candidates for supervisory directors are as follows. Shigeru Kaneda and Hirotaka Isayama
have deep expertise as an attorney and a certified public accountant respectively, and have
served as supervisory directors of SSR for nearly 4 years since 2016. They also have a deep
understanding of SSR’s business, are well versed in the real estate business, and have theknowledge and experience appropriate to the office of supervisory director of a listed real estate
investment corporation. Additionally, both of them, as members of a special committee
established to ensure fairness for the Merger (as defined in Proposal 5; hereinafter the same
shall apply), have carefully evaluated the Merger. Therefore, if the Merger is approved at theGeneral Meeting of Unitholders, they would be the most appropriate persons to supervise themanagement of SSR until the Merger becomes effective. Accordingly, SSR has concluded thatboth are qualified as supervisory directors of SSR.

7

Candida
te No.

Name
Career, Position at SSR and Material Concurrent Positions(Date of Birth)

Shigeru Kaneda
1(December 27, 1970)

Hirotaka Isayama
2

April 1996

Supreme Court Legal Research andTraining Institute (judicial apprentice50th term)

April 1998

Mori Sogo Law Offices (currently Mori
Hamada & Matsumoto)

September 2004

Rothwell, Figg, Ernst & Manbeck, P.C.
(training)

September 2005

Garvey Schubert Barer (training)

September 2005

Mori Hamada & Matsumoto

April 2012

Extraordinary Member,
Dispute Reconciliation Committee for
Nuclear Damage Compensation(Mediator, Nuclear Damage
Compensation Dispute Resolution Centre(Present) )July 2015

URYU & ITOGA (Present)

April 2016

Supervisory Director
Sakura Sogo REIT (Present)

June 2019

SECOM General Insurance Co., Ltd.,
Outside Auditor (Present)

April 2000

International Division
Century Ota Showa & Co. (Currently
Ernst & Young Shin Nihon LLC)

February 2008

Representative
Isayama Certified Public Accountant
Office (Present)

April 2016

Supervisory Director
Sakura Sogo REIT (Present)(March 24, 1975)

8

Number ofUnits in SSR
Owned

0

0

・There is no special relationship between either of the supervisory director candidates above
and SSR.
・Both supervisory director candidates above, as supervisory directors of SSR, currently
supervise the executive director of SSR in the general execution of his duty.
・One of the supervisory director candidates above, Shigeru Kaneda, is concurrently holding
the positions of Mediator of the Compensation Dispute Resolution Centre, Outside Auditor of
SECOM General Insurance Co., Ltd., and partner of URYU & ITOGA.
・One of the supervisory director candidates above, Hirotaka Isayama, is concurrently holding
the position of Representative of Isayama Certified Public Accountant Office.

9

Proposal 3
Partial Amendments to the Articles of Incorporation (To Change theMaximum Number of Executive Directors and Supervisory Directors that may be Appointed)
1．Reason for Amendments
SSR’s Articles of Incorporation currently provide for one or more executive directors and two
or more supervisory directors to be appointed. However, since the remuneration for executive
directors and supervisory directors are borne by unitholders, we believe it preferable tominimize such costs. SSR is able to carry out its business with minimal personnel since SSR,
being a registered investment corporation, is required to entrust its asset management businesswith an asset management company (Article 198, Paragraph 1 of the Act on Investment Trusts
and Investment Corporations). Therefore, we hereby propose to amend Article 20 of SSR’s
current Articles of Incorporation to limit the number of its executive directors to one, and, inline with this, to change the number of its supervisory directors to two, which is the minimum
number of supervisory directors required under law.
This proposal is the same as one of the proposals by the Proposing Unitholder (that is, (Partial
Amendment of the Articles of Incorporation(1))) , and the Proposing Unitholder has made sucha proposal for the same reason stated above. For your reference, the reason for such proposalby the Proposing Unitholder is stated in 3. below.
2．Details of Amendments
Details of the amendments are as follows. (The underlined parts indicate the amendments.)
Current Articles of Incorporation

Amendment Proposal

Article 20 (Number of Directors and Composition

Article 20 (Number of Directors and Compositionof the Board of Directors)
The number of the Investment Corporation’s
Executive Directors shall be one or more, and thenumber of Supervisory Directors shall be two or
more (but always equal to or more than one added
to the number of Executive Directors), andExecutive Directors and Supervisory Directors(hereinafter collectively referred to as the“Directors”) shall constitute the Board of Directors.

of the Board of Directors)
The number of the Investment Corporation’s
Executive Directors shall be one, and the number ofSupervisory Directors shall be two, and Executive
Directors and Supervisory Directors (hereinaftercollectively referred to as the “Directors”) shallconstitute the Board of Directors.

3．Reference Information(Reason for Proposal by the Proposing Unitholder)
SSR’s current Articles of Incorporation provides that the number of executive director shall be
one or more and the number of supervisory director shall be two or more. However, since theremuneration for executive directors and supervisory directors are borne by unitholders, we
believe it preferable to minimize such costs.
SSR is able to carry out its business with minimal personnel since SSR, being a registeredinvestment corporation, is required to entrust its asset management business with an asset
management company (Article 198, Paragraph 1 of the Act on Investment Trusts andInvestment Corporations). Therefore, we hereby propose to limit the number of SSR’s executive
directors to one and, accordingly, to change the number of SSR’s supervisory directors to two,
which is the minimum number of supervisory directors required under law.

10

Proposal 4

Partial Amendments to the Asset Management Agreement

Given that Star Asia Investment Management Co., Ltd. (“SAIM”) is the asset managementcompany to which SSR has entrusted its asset management services and that Star Asia
Investment Management Co., Ltd. has also been entrusted to provide asset management
services for Star Asia Investment Corporation (“SAR”) (such that the classes of SSR’s
investment asset overlap with those of SAR), we hereby propose to amend the term of the AssetManagement Agreement dated February 18, 2020 between SSR and its asset managementcompany, i.e., SAIM, to end at the close of SSR’s general meeting of unitholders to be held on
or after March 1, 2022 without delay, as stated below. This is to give unitholders an opportunity
to determine whether it is appropriate to continue to entrust asset management services of SSR
to SAIM at every general meeting of SSR’s unitholders to be held without delay on or after
March 1 of every second year, pursuant to Article 9, Paragraph 1 of SSR’s current Articles ofIncorporation.
Current Agreement(omitted)

Amendment Proposal(omitted)

Article 6 (Term)
This Agreement shall come into effect on the date of
termination of the Asset Management Agreement
dated April 1, 2016 between SSR and Sakura Real
Estate Funds Management, Inc. and continue inforce so long as SSR continues to exist.

Article 6 (Term)
This Agreement shall come into effect on the date of
termination of the Asset Management Agreement
dated April 1, 2016 between SSR and Sakura Real
Estate Funds Management, Inc. and continue inforce until the close of SSR’s general meeting ofunitholders to be held pursuant to Article 9,
Paragraph 1 of the Articles of Incorporation of SSR(limited to such general meeting of unitholders to beheld on or after March 1, 2022).

(omitted)(omitted)

The asset management company with which SSR has entered into the agreement subject to theamendments proposed above is as follows:
Name
Address(Head Office)HistoryStar Asia Investment Management Co., Ltd.
Atago Green Hills Mori Tower 18F, 2-5-1, Atago, Minato-ku, Tokyo
June 22, 2015
July 31, 2015

Date of Incorporation
Obtained a licence for real estate brokerage business (Licence No.:
Governor of Tokyo (1) No. 98168)
November 10, 2015 Obtained approval for Entrustment-Based Agency Services forTransactions, etc. under the Real Estate Brokerage Act (ApprovalNo.: Minister of Land, Infrastructure, Transport and Tourism
Approval No. 95)
November 20, 2015 Registered as a financial instrument business operator (Registration
No.: Director General of the Kanto Finance Bureau (Kin Sho) No.
2874)
December 17, 2015 Joined the Investment Trust Association, Japan11

Proposal 5
Approval of Agreement on Absorption-Type Merger with Star Asia
Investment Corporation
1. Reason of the absorption-type merger
SSR and SAR, based on the Memorandum of Understanding Regarding Merger executed
between SAR and SSR on January 30, 2020 (the “MOU”), resolved to execute an absorptiontype merger, with August 1, 2020 as the effective date, whereby SAR will be the surviving
corporation and SSR will be the dissolving corporation in the merger (the “Merger”). SAR andSSR subsequently executed a merger agreement (the “Merger Agreement”) to that effect on
March 2, 2020.
(1) History of SAR
SAR was listed on the Real Estate Investment Trust Securities Market of the Tokyo Stock
Exchange (the “Tokyo Stock Exchange”) in April 2016 as a diversified REIT with 18 properties(with a total acquisition price of 61.4 billion yen). SAR entrusts its asset management functions
to SAIM, which belongs to Star Asia Group (Note 1), an independent property investment group.
SAR has expanded its capital base through public offerings for property acquisitions three times
so far, and has been developing its portfolio with diversified assets, including office buildings,
residences, logistics facilities and hotels mainly in the Tokyo area. Since its listing, SAR has
been advocating active management, the basic principle of which is to maximize unitholder
value. SAR examines and take various measures by thinking outside the box. Typical examples
include four asset replacements (Note 2) that enabled distribution of profits on sale to theunitholders of SAR by enhancing the portfolio quality and producing profits on the sale of suchproperties, as well as investments in mezzanine debt which only SAR alone has conductedamong the listed REITs as of March 2, 2020. As of March 2, 2020, SAR has had seven fiscal
periods of operating history since its listing and manages a portfolio of 34 properties (with a
total acquisition price of 102.3 billion yen).
(Note 1) “Star Asia Group” is a group led by Malcolm F. MacLean IV and Taro Masuyama, who founded the group and remain
key players of the group to this day. “Star Asia Group” consists of all related entities and investment destinations(funds in which both Malcolm F. MacLean IV and Taro Masuyama are involved in the decision-making and theinvestment destinations of such funds).
(Note 2) The fifth asset replacement scheduled by SAR is not included.

(2) History of SSR
SSR was listed on the Real Estate Investment Trust Securities Market of the Tokyo Stock
Exchange in September 2016 as a diversified REIT holding 18 properties (with a totalacquisition price of 57.3 billion yen), sponsored by the Galileo Group (Note 1), an Australian
independent property and fund management group, and the Nippon Kanzai Group (Note 2).
SSR has had seven fiscal periods of operating history since its listing and manages a portfolioof 18 properties (with a total acquisition price of 57.5 billion yen) as of March 2, 2020.
However, SSR has not received sufficient support from the Galileo Group, its main sponsor,
and despite SSR being listed at around the same time as SAR, its asset size as of March 2, 2020is roughly the same as the size as of SSR’s listing. Additionally, SSR has never expanded its
capital base through a public offering. Furthermore, a relatively high level of asset management
fees and average interest on loans were among the factors hindering the growth of distributions
12per unit. Moreover, SSR has only sold properties but has not conducted any acquisition in thefiscal period ended in June 2018. This has resulted in the lowered earning capacity of theportfolio, and profits on sale have been allocated to costs of preparing suspended issuances ofinvestment units instead of being distributed to unitholders. This management approach is notconsidered to be prioritizing unitholders, and distributions per unit have been stagnant since thesecond fiscal period after SSR’s listing, in which it became unaffected by factors such as fixed
property tax. Therefore, SSR has been reconsidering a growth strategy which includes thepossibility of a merger.
(Note 1) “Galileo Group” is an Australia-based business group led by Galileo Sydney Holdings Pty Limited, Galaxy JREIT
Pty Limited and Werrett Family Pty Ltd, and engages in the property development and fund management businesses.
(Note 2) “Nippon Kanzai Group” is a business group led by Nippon Kanzai Co., Ltd. (which is listed on the first section of theTokyo Stock Exchange).

(3) Background of execution of the Merger Agreement
In light of the situation of SSR as described above, Lion Partners GK (“LPGK”), an affiliate ofStar Asia Group, announced a proposal for the Merger (the “Proposal”) on May 10, 2019 andrequested to hold a general meeting of unitholders of SSR as part of the necessary proceduresfor consummation of the Merger. Subsequently, on June 28, 2019, LPGK received approval
from the Director-General of the Kanto Local Finance Bureau to convene SSR’s general
meeting of unitholders and held the general meeting of unitholders at 10:00 am on August 30,
2019 (hereinafter referred to as the “Unitholders’ Meeting Convened by LPGK”).
Among the following Proposed Agenda Items 1 through 4, the Unitholders’ Meeting Convened
by LPGK voted on Proposed Agenda Items 2 through 4. Proposed Agenda Item 1 waswithdrawn because Executive Director Makoto Muranaka had resigned. All voted agenda items,
Proposed Agenda Item 2 through Proposed Agenda Item 4, were adopted and approved byresolution as per the original proposals. (With respect to Proposed Agenda Item 2 and Proposed
Agenda Item 4, an attending unitholder submitted a motion requesting amendment of the
proposal, but both of such motions were rejected.)
Proposed Agenda
Item 1:
Proposed Agenda
Item 2:
Proposed Agenda
Item 3:
Proposed Agenda
Item 4:

Removal of Executive Director Makoto Muranaka
Appointment of Executive Director Toru Sugihara
Cancellation of the asset management entrustment agreement with
Sakura Real Estate Funds Management, Inc.
Entering into an asset management entrustment agreement with Star
Asia Investment Management Co., Ltd.

In connection with the resolutions at the Unitholders’ Meeting Convened by LPGK, Galaxy
JREIT Pty Limited, which is a unitholder of SSR and the shareholder that owns all of the voting
rights in Sakura Real Estate Funds Management, Inc. (“SREFM”), which had been the asset
management company of SSR until February 29, 2020, later filed an action seeking rescissionof the resolutions adopted at the unitholders’ meeting with the Tokyo District Court (the “Action
for Rescission of Resolutions”) as well as a petition for an order of injunction to suspend theperformance of duties and to appoint an acting representative for SSR’s executive director, apetition for an order of injunction to suspend the effects of resolutions of general meeting of
13

unitholders, etc., and a petition for an order of injunction to prohibit certain acts on the basis ofseeking to preserve the right to seek an injunction against illegal acts (hereinafter collectively
referred to as the “Petitions”). However, the Action for Rescission of Resolutions has been
dismissed by the Tokyo District Court on February 27, 2020. Each of the Petitions has been
either dismissed by the court (A petition for permission to appeal, however, has been filed
against the Tokyo high court’s dismissal of the immediate appeal as to one of the Petitions.) orwithdrawn by the petitioner (furthermore, a petition for a provisional disposition order against
SSR relating to the rights under the asset management agreement has been separately filed by
SREFM).
In the course of its discussions with SAR to review the Merger, SSR has established a special
committee (the “Special Committee”) consisting of Shigeru Kaneda and Hirotaka Isayama,
Supervisory Directors of SSR, who are independent from Star Asia Group and the result of the
Merger, and Kiyoshi Kondaibo, a third party. SSR has executed the MOU supported by anopinion on January 30, 2020 from the Special Committee concluding that it is reasonable for
SSR to enter into the MOU and to review, negotiate, and conduct due diligence with a view
toward an expedited execution of a definitive agreement.
After executing the MOU, each of SAR and SSR has conducted due diligence and entered into
discussions regarding the terms of the Merger based on the MOU. SAR and SSR have executedthe Merger Agreement on March 2, 2020 because they have agreed to the terms of the Merger,
including the merger ratio.
(4) Purpose of the Merger
SAR believes that the Merger will contribute to: (i) further diversification of its portfolio bothin terms of geographical area and asset type and increase stability of portfolio revenue throughthe expansion of asset size; (ii) improved efficiency of operational costs; and (iii) larger market
capitalization and improved liquidity.
As for SSR, the Merger is also expected to enable it to achieve its initial goal of having 150
billion yen of assets under management. Additionally, the Merger is expected to increase thestability of SSR’s portfolio revenue through diversification both in terms of area and asset type
due to the expansion in asset size, and realize improved efficiency of SSR’s operational costs
and increase its market capitalization and the liquidity of its investment units. Furthermore,
SSR believes the Merger is the best option because a management approach that seeks tomaximize unitholder value can be expected after the Merger as a result of active management
by SAIM and the promotion of external growth by taking advantage of the preferential
negotiating rights that SAR enjoys.
The asset size of SAR after the Merger is expected to be 53 properties (Note) with a value of
166.8 billion yen (Note), which is a significant step toward the asset size of 200 billion yen,which SAR has set as the goal for external growth. In addition, SAR believes that expansion of
the asset size (and increase in the number of properties held) will increase its flexibility inconducting active management. After the Merger, SAR will seek to maximize unitholder valueof the SAR after the Merger, taking advantage of the strong support from the Star Asia Groupin contributing to SAR’s external growth.
(Note) Total of number of properties and asset size (based on the acquisition price) after theacquisition and sale of the asset described in the “3. Summary of the contents of the matters set
forth in Items 1 to 3, Paragraph 1, Article 193 of the Regulation for Enforcement of the Act on
Investment Trusts and Investment Corporations, (3) Matters concerning financial documents,
14etc. (i) Matters concerning the surviving corporation in the absorption-type merger (SAR)”
scheduled by SAR, and the number of properties and the estimated acquisition price of theassets held by SSR (which price is as described in the appraisal report as of November 1, 2019obtained by SAR), respectively.
We would appreciate it if you could agree with the content of the Merger and approve theMerger Agreement.
2. Summary of the contents of the Merger Agreement
As described in Attachment 1 hereto.
3. Summary of the contents of the matters set forth in Items 1 to 3, Paragraph 1, Article 193 of
the Regulation for Enforcement of the Act on Investment Trusts and Investment Corporations(1) Matters regarding appropriateness of consideration for the merger(i) Matters concerning the total amount of consideration for the merger delivered at the time of
the absorption-type merger, the method of calculation thereof and the appropriateness of theallocation of such consideration(a) Matters concerning the merger ratio and allocation
SAR
SSR(Surviving corporation in(Dissolving corporation in thethe absorption-type
absorption-type merger)
merger)
Allocationofinvestment
units
under theMerger

1.78
1(Reference):
Prior to taking into
consideration the Investment
Unit Split
0.89

The number of new SAR investment units (the “Investment Units”) to be issued as a result of
the Merger (the number of units after the Investment Unit Split of SAR): 592,741 investment
units
SAR plans to split one investment unit into two investment units with July 31, 2020 as therecord date for splitting the investment units and August 1, 2020 as the effective date of the split(the “Investment Unit Split”); the allocation ratio shown above and the number of new
investment units SAR will allocate and deliver are subject to the Investment Unit Split taking
effect. The merger ratio before the Investment Unit Split is SSR 0.89 to SAR 1; however, on
the basis of that ratio, against one SSR investment unit, 0.89 SAR Investment Units would beallocated and delivered, and this would result in many SSR unitholders being allocated fractionsof less than one Investment Unit. To make it possible for SSR unitholders to continue holding
Investment Units after the Merger, a split of the investment units will be carried out before theeffective date of the Merger, in the ratio of two investment units to one Investment Unit for
purpose of delivering to all SSR unitholders at least one Investment Unit, and for every one
SSR investment unit, 1.78 Investment Units post-Investment Unit Split will be allocated anddelivered.
As a result of allocating 1.78 Investment Units to SSR unitholders for each SSR investment
15

unit held, fractions of less than one investment unit will occur in the number of investment units
that must be delivered. Those fractional units of less than one share will be sold through market
transactions, and the proceeds from such sale will be delivered to the unitholders allocatedfractional shares in accordance with the fractions held pursuant to the Investment Trust Act.
In addition to the abovementioned investment units, SAR intends to pay SSR unitholders (theunitholders stated or recorded in the final unitholders’ register on the day before the effective
date of the Merger (excluding those SSR unitholders who have demanded the purchase of theirinvestment units pursuant to Article 149-3 of the Investment Trust Act) (hereinafter referred toas the “Unitholders Subject to Allocation”), in lieu of cash distributions for the business periodof SSR from January 1, 2020 to July 31, 2020, a merger consideration in the form of cash
distribution based on SSR’s distributable income for that same period of an amount(disregarding fractions of a yen) which is the quotient resulting from a division of the amountof SSR’s distributable income on the date before the effective date of the Merger by the number
of issued SSR investment units on that date as reduced by the number of investment units heldby unitholders other than the Unitholders Subject to Allocation. The merger consideration will
be paid within a reasonable period from the effective date of the Merger.
In addition, SSR will submit before the General Meeting of Unitholders a proposal for anamendment to be made to its articles of incorporation with a view to changing its fiscal periods
from the current dates of June 30 and December 31 to January 31 and July 31 as Proposal 7. If
the aforementioned amendment is approved in the general meeting of the unitholders, the lastperiod before the effective date of the Merger is expected to be a seven -month business period
from January 1, 2020 to July 31, 2020, and cash distributions with June 30, 2020 as the record
date will not be distributed (and instead, as mentioned above, a merger consideration in theform of cash distributions based on SSR’s distributable income for that same period will bepaid).
(b) Basis for the calculations
SAR has appointed Nomura Securities Co., Ltd. (“Nomura Securities”), and SSR has appointed
Mizuho Securities Co., Ltd. (“Mizuho Securities”), respectively, as their financial advisors for
the Merger. SAR and SSR have requested their respective financial advisors to conduct
financial analysis with regard to the merger ratio used in the Merger in order to calculate themerger ratio used in the Merger in a fair manner.
Summaries of the calculations made by Nomura Securities and Mizuho Securities each indicate
figures prior to taking into account the Investment Unit Split, by SAR, of one investment unit
into two investment units as mentioned in the section “(a) Matters concerning the merger ratio
and allocation” above.
Because the investment units in SAR and SSR are both listed on the Tokyo Stock Exchange
and market prices are available, Nomura Securities used average market investment unit priceanalysis, and because there are multiple listed investment corporations comparable to each ofSAR and SSR and an analogical estimate based on comparable investment corporations is
possible, it also used a comparable investment corporation analysis. To reflect the state of futurebusiness operations in the calculations, Nomura Securities conducted a discounted cash flow
analysis (“DCF Analysis”). Further, to reflect in its estimations the amount of the impact of fairvalue and realizable value on net assets, Nomura Securities also used the adjusted net asset
method in its calculations. A summary of Nomura Securities’ calculations is shown below. The
range of values for the merger ratio shown indicates the range of estimates for SSR when the16value for one Investment Unit is considered to be 1.
In its average market investment unit price analysis, Nomura Securities used the simple averageof the closing prices on May 10, 2019 (the “First Calculation Base Date”), the five businessdays including and preceding the First Calculation Base Date, the one-month period including
and preceding the First Calculation Base Date, the three-month period including and preceding
the First Calculation Base Date, and the six-month period including and preceding the First
Calculation Base Date, as well as the simple arithmetic average of the closing prices on
February 27, 2020 (the “Second Calculation Base Date”), the five business days including andpreceding the Second Calculation Base Date, the one-month period including and preceding theSecond Calculation Base Date, the three-month period including and preceding the Second
Calculation Base Date, and the six-month period including and preceding the Second
Calculation Base Date, respectively.
SAR’s business plan that Nomura used as the basis for the DCF Analysis includes certain fiscal
periods for which significant increase or decrease in profits is expected. A substantial increasein profits from the previous period is expected for the fiscal period ending July 2020 with anoperating profit of 2,346 million yen, an ordinary profit of 2,072 million yen, and a net profitof 2,072 million yen. A substantial decrease in profits from the previous period is expected forthe fiscal period ending July 2021 with an operating profit of 1,755 million yen, an ordinary
profit of 1,477 million yen, and a net profit of 1,476 million yen. These are due to gain on thesale of Alphabet Seven, which is planned to be sold in the fiscal periods ending July 2020 andJanuary 2021. For details of the supplemental explanation regarding the assumptions anddisclaimers of Nomura Securities’ analysis, please refer to Note 1 at the end of this paragraph.
Valuation Method
Average Market Investment
Unit Price Analysis(First Calculation Base Date)
Average Market Investment
Unit Price Analysis(Second Calculation Base
Date)
Comparable Investment
Corporation Analysis
DCF Analysis
Adjusted Net Asset Method

Range of Merger Ratio
0.80 - 0.81

0.83 - 0.84

0.89 - 1.09
0.83 - 0.93
0.90

In performing its analysis, Mizuho Securities has reviewed the financial information disclosed
by SAR and SSR as well as the published information available to the public and otherinformation. Because the investment units of SAR and SSR are both listed on the Tokyo Stock
Exchange and market prices are available, Mizuho Securities used a market investment unit
price based analysis. In addition because there are multiple listed investment corporations thatare similar to SAR and SSR to a certain degree in terms of, among others, owned real property
portfolio and others from the viewpoint of analyzing the range of merger ratio, although they
are not directly comparable with SAR and SSR, and an analogical estimate of the unitholder
value based on comparable investment corporations is possible, Mizuho Securities also
conducted a comparable investment corporation analysis. In addition, Mizuho Securities
17

constructed the dividend discount models analysis as a method of calculation (“DDM
Analysis”) of the unitholder value based on dividends that unitholders of SAR and SSR could
expect to receive in the future. For purposes of reflecting the market value of properties heldby each of SAR and SSR, Mizuho Securities also used the adjusted net asset method.
The calculated ranges of the merger ratio shown below are ranges of the number of SAR
investment units to be allocated for each Investment Unit.
Valuation Method
Market Investment Unit
Price Based Analysis
Comparable Investment
Corporation Analysis
DDM Analysis
Adjusted Net Asset
MethodRange of Merger Ratio
0.83 - 0.84
0.81 - 1.04
0.80 - 1.09
0.87 - 0.90

In performing the market investment unit price based analysis, Mizuho Securities has adopted
February 27, 2020 as the reference date (the “Reference Date”) and has reviewed the investment
unit price on the Reference Date and the average of the closing investment unit prices over themost recent five business days, the most recent month, the most recent three-month period andthe most recent six-month period, each ending on the Reference Date.
In performing the DDM Analysis, Mizuho Securities assessed the unitholder’s value for SSR
and SAR by discounting each investment corporation’s future theorized dividend based on
financial forecasts at a certain discount rate to the present value. When estimating SSR’s future
theorized dividend based on financial forecasts, for purposes of the financial forecasts preparedby SREFM for the period from June 2020 to December 2022, Mizuho Securities took into
consideration that the asset management fee rate will decrease due to the change of the asset
management company from SREFM to SAIM, as the Special Committee concluded it
reasonable to do so. On the other hand, when estimating SAR’s future theorized dividend basedon financial forecasts, Mizuho Securities amended the financial forecasts prepared by SAIM
for the period from July 2020 to January 2023, so that it will not take into consideration the saleof properties owned by SAR and the acquisition of new properties, as the Special Committee
concluded it reasonable to do so. The financial forecasts of SAR and SSR used as the basis forthe calculation in the DDM Analysis were not created on the assumption that the Merger will
be implemented. There were no fiscal years in which a significant increase or decrease in profit
was expected in the future profit plans of SAR and SSR, on which Mizuho Securities relied inperforming the DDM Analysis.
For details of the supplemental explanation regarding the assumptions and disclaimers for
Mizuho Securities’ analysis, please refer to Note 2 at the end of this paragraph.
(Note 1) In determining the merger ratio, Nomura Securities assumed that public information and all information provided to
Nomura Securities were accurate and complete without independent verification of the accuracy or completeness ofsuch information. Nomura Securities neither conducted an independent evaluation, appraisal or assessment nor
requested a third-party institution to appraise or assess the assets or liabilities (including derivatives products, offbalance-sheet assets and liabilities and other contingent liabilities) of SAR and SSR, including the analysis andevaluation of individual assets and liabilities. It is assumed that the information included in the financial forecasts of18

each of SAR and SSR (including profit plans and other information) has been reasonably examined or prepared basedon the best and good faith forecasts and judgment of the management of SAR and SSR that are currently available.
Nomura Securities’ calculation reflects the information obtained by Nomura Securities by February 27, 2020 andprevailing economic conditions. Nomura Securities’ calculation was made for the sole purpose of assisting theinstitution that determines the business execution of Star Asia Investment Corporation to assess the fairness of themerger ratio.
(Note 2) In determining the merger ratio, Mizuho Securities has relied upon and assumed the accuracy and completeness of all
public information examined by Mizuho Securities and the financial or other information that was furnished to Mizuho
Securities by SAR and SSR or the asset management company of each of SAR and SSR (including a former asset
management company the asset management agreement of which was terminated at the time of delivery of the written
merger ratio calculation report; hereinafter the same) or discussed between Mizuho Securities and SAR and SSR andthe Special Committee, and upon which calculation of the merger ratio is substantially based. Mizuho Securities did
not independently verify (nor does it assumes responsibility or liability for independently verifying) the accuracy orcompleteness of such information. The contents of Mizuho Securities’ written merger ratio calculation report could
potentially be different if there are matters that would make the information provided to Mizuho Securities or discussed
between Mizuho Securities and SAR and SSR and the Special Committee materially incorrect, or if there is a fact or
circumstance not disclosed at the time of delivery of the written merger ratio calculation report, or which occurs
subsequent to the delivery of the written merger ratio calculation report (including facts which potentially existed at
the time of delivery of the written merger ratio calculation report and which are clarified subsequently). Mizuho
Securities has assumed that the executive directors of each of SAR and SSR or officers and employees of the asset
management company of each of SAR and SSR were unaware of any fact that would make the information provided
to or discussed with Mizuho Securities incomplete or misleading. In addition, Mizuho Securities did not conduct an
independent valuation or appraisal of any assets or liabilities (including derivatives, off-balance sheet assets andliabilities and other contingent liabilities), or the reserves of either company or its affiliates. Mizuho Securities was
not independently provided with any such valuation or appraisal by a third party, nor did Mizuho Securities make any
request to any third party for any such valuation or appraisal. Mizuho Securities has not assumed any obligation to
conduct any inspection of the properties or facilities of SAR or SSR, nor has Mizuho Securities evaluated thecapitalization, solvency or fair value of SAR or SSR under any law relating to bankruptcy, insolvency or similar
matters. With respect to any information that Mizuho Securities has requested in connection with the calculation of
the merger ratio but which SAR and SSR have not provided or disclosed to Mizuho Securities by SAR and SSR, orinformation that was provided or disclosed to Mizuho Securities, but whose impact on the unitholder value of SAR
and SSR is undetermined at present (including lawsuits and petitions pending at the time of delivery of the written
merger ratio calculation report), or which could not otherwise be used by Mizuho Securities as a basis of Mizuho
Securities’ evaluation, Mizuho Securities has made certain assumptions it believed to be reasonable and appropriate,or was based on the premise that there was no such impact. Mizuho Securities has not verified the impact of suchassumptions or premise on the future financial conditions of SAR and SSR if such assumptions prove to be materially
inaccurate. With respect to the financial forecasts and other forward-looking information provided to Mizuho
Securities, Mizuho Securities has assumed that such information was reasonably prepared by the executive directorsof each of SAR and SSR or officers and employees of the asset management company of each of SAR and SSR on abasis reflecting the best currently available estimates and judgments of the executive directors as to the expected future
results of the operations and financial conditions of the companies. In addition, Mizuho Securities made certain
adjustments to the financial forecasts and business plans of each of SAR and SSR based on the Special Committee’srequest, subject to the condition that the details of such adjustments and details of the financial forecasts and businessplans before the adjustment were reported to the Special Committee, and the Special Committee has confirmed thereasonableness of the details and preconditions of such adjustment. Mizuho Securities relies on the financial forecasts
and business plans after the adjustment or modification and does not rely on independent verification of the feasibility19

of such financial forecasts and business plans. Mizuho Securities has expresses no view as to any analyses or forecasts
referred to in the written merger ratio calculation report or the assumptions on which they are based. Mizuho Securities
is not a legal, regulatory, or tax expert and, accordingly, it has relied on the assessments made by the relevant advisors
to SAR and SSR with respect to such issues. Mizuho has further assumed that the Merger will qualify as a tax-freereorganization for Japanese corporate tax purposes. Mizuho Securities has provided the results of its financial analysis
to SSR in response to SSR’s request for the sole purpose of assisting the board of directors of SSR to determine themerger ratio. Mizuho Securities has not expressed its opinion that the merger ratio is fair from a financial perspective.

(c) Background to calculations
As a result of discussions and negotiations over an extended period comprehensively taking
into consideration such factors as the financial performance and state of the assets and liabilitiesof each of SAR and SSR, their future business prospects, the merits of the Merger and the resultsof the analyses performed by their respective financial advisors, SAR and SSR determined thatthe above merger ratios are fair.
For the process regarding the assessment of the merger ratio by SSR, please also refer to “(e)Measures to Ensure Fairness i. Measures to ensure fairness in assessing the propriety of the
Merger and the merger ratio” below.
(d) Relationships with the institutions which performed the calculations
Neither Nomura Securities nor Mizuho Securities is deemed a related party of SAR or SSR
pursuant to Article 67, paragraph 4 of the Ordinance on Accounting at Investment Corporations(Cabinet Office Ordinance No. 47 of 2006, including subsequent amendments) and neither has
any material interests to be disclosed with respect to the Merger.
(e) Measures to ensure fairness
i. Measures to ensure fairness in assessing the propriety of the Merger and the merger ratio
In the course of assessing the terms of the Merger, SAR reported on a timely basis the status of
its assessment to its board of directors composed of one executive director and two supervisory
directors, whose independence from the asset management company is ensured in terms of theInvestment Trust Act, and all material matters of its assessments were deliberated and approvedby its board of directors.
In addition, SAR appointed Anderson Mori & Tomotsune as its legal advisor for the Merger,
and received advice concerning the methodology and process relating to the procedures anddecision-making process for the Merger.
With respect to SSR, Executive Director Toru Sugihara appointed by the Proposal had been a
director of SAIM, which is SAR’s asset management company, before the Proposal was
submitted, and even thereafter he had been the representative director of LPGK, which madethe Proposal. He is also an employee of Star Asia Management Japan Ltd., a subsidiary of Star
Asia Management Ltd., with which SAR and SAIM have each executed a sponsor support
agreement. Although, he has retired as director of SAIM and representative director of LPGK
and is not engaging in any duties other than as executive director of SSR, it cannot be ruled outthat he could be deemed to be potentially subject to the influence of Star Asia Group when
making decisions. Further, since SSR’s asset management company has been changed to SAIM
as of March 1, 2020, such that SSR and SAR now share the same asset management company,
it cannot be ruled out that the Merger may cause conflicts of interest due to its structure. Given
the foregoing, SSR has taken the following measures to ensure the fairness of the Merger.
20

a. Obtaining Report from Independent Special Committee
Given that the potential conflicts of interest due to the Merger cannot be ruled out because of
its structure as stated above, SSR has established the Special Committee consisting of threemembers, namely, Mr. Shigeru Kaneda and Mr. Hirotaka Isayama, Supervisory Directors of
SSR, who are independent from Star Asia Group (including SAR) and the result of the Merger,
and Mr. Kiyoshi Kondaibo who is a third party (for the independence and appropriateness of
Mr. Kondaibo, please see the table below) at the meeting of its board of directors held on
December 19, 2019, in order to ensure the fairness of the decisions to be made when considering
whether it is appropriate to carry out the Merger and the fairness of its terms. In addition, SSR
delegated to the Special Committee the task of assessing the propriety of the Merger and to giveits opinions to SSR’s board of directors.
Career history
April 1988: The Mitsubishi Bank, Ltd.
(currently MUFG Bank, Ltd.)
December 1993: Mitsubishi Finance (HongKong) Limited
August 1995: The Mitsubishi Bank, Ltd.
(currently MUFG Bank, Ltd.), Singapore
BranchFebruary
2000:
Financial
Product
Development Department, Securitization
Group of the Mitsubishi Bank, Ltd. (currently
MUFG Bank, Ltd.)
July 2003: Head of REIT Business
Promotion Department of Mitsubishi
Securities Co., Ltd. (currently Mitsubishi
UFJ Morgan Stanley Securities Co., Ltd.)
August 2005: Head of Real Estate Investment
Banking Group of Deutsche Securities Inc.
February 2008: Managing Director and Headof Real Estate Investment Banking Group of
Deutsche Securities Inc.
December 2013: Director, Vice President andHead of Finance & Planning Division ofSojitz REIT Advisors K.K. (resigned in June
2017)

Main reason of the appointment- He is not an interested party of the Star
Asia Group- As for the success and failure of the
Merger, despite having 50 investment
units of SSR, he is deemed to have
independence because he shares a mutualinterest with general unitholders- He has worked for Japanese financial
institutions and foreign investment banks
and has been involved in numerous M&A
and REIT projects and has profoundknowledge in finances- He has been officer of an asset
management company of a Japanese
investment corporation and has profoundknowledge in REIT operation

In the resolution of SSR’s board of directors to establish the Special Committee, SSR’s boardof directors also decided that: (i) the determination by the Special Committee, including its
affirmative or negative opinions concerning the Merger, must be respected to the maximum
extent when deciding on the Merger at a meeting of the board of directors; and (ii) if the Special
Committee determines that the implementation of the Merger or its terms are not appropriate,
the board of directors of SSR will decide against carrying out the Merger. Also in the resolution,
SSR’s board of directors authorized the Special Committee, among others, : (a) to negotiatewith SAR about the Merger; (b) to appoint a financial or legal advisor for the Special Committee
or designate or approve a financial or legal advisor for SSR; and (c) to receive information21

necessary to assess and appraise the Merger from the board of directors of SSR. Remuneration
is paid to the members of the Special Committee based on the number of hours they spend
performing their duties, respectively, regardless of the content of their opinions.
Upon such delegation, the Special Committee carefully consulted and discussed these issues by
preparing reports, sharing information, deliberating and reaching decisions through its meetings
that were held eleven times in total during the period from December 19, 2019 until February
28, 2020, and by other means such as e-mail as appropriate. In such discussions and assessment,
the Special Committee received advice from Mori Hamada & Matsumoto, legal advisor of SSR,
concerning the method of discussion and the content of determination and other matters related
to the Merger.
The Special Committee received necessary information for assessment of the Merger, including
detailed explanations and information on SAR’s initial proposal for the Merger, SAR’s proposal
for the merger ratio of the Merger, the respective preparation procedures for and contents ofbusiness plans of SAR and SSR, assumptions for the calculation of the merger ratio by Mizuho
Securities and the results thereof, and drafts of the timely disclosure and convocation notice ofthe general meeting of unitholders relating to the Merger. The Special Committee also received
professional advice from the advisors, and thus it received sufficient information for its
determination. In addition to negotiations with SAR on the MOU, the Special Committee was
kept informed about the details of SAR’s proposal for the merger ratio in a timely manner
whenever SSR received any such proposal from SAR, since the time SSR received the first
SAR proposal for the merger ratio on February 13, 2020 after the Unitholders’ Meeting
Convened by LPGK and discussed and reviewed such proposal taking into account financial
advice from Mizuho Securities. After such discussion and review and with a view to obtaining
more favorable terms of the Merger than those in the merger proposal announced by Star Asia
Group on August 7, 2019, the Special Committee negotiated with SAR the terms of the Merger
by, among others, instructing and requesting Mizuho Securities to request SAR to increase themerger ratio and discussing directly with SAR. The anticipated merger ratio of the Merger
announced by Star Asia Group on August 7, 2019 was to allocate 0.88 investment unit of SAR(before the Investment Unit Split) to one investment unit of SSR, but as a result of suchnegotiations by the Special Committee, it was finally agreed to allocate 0.89 investment unit ofSAR (before the Investment Unit Split) to one investment unit of SSR. The Special Committee
submitted its report as of March 2, 2020 to SSR’s board of directors to the effect that it wasappropriate for SSR to carry out the Merger since: (a) the Merger was deemed as capable ofincreasing the value of SSR; (b) fair procedures were being implemented to secure the interestsof SSR’s general unitholders upon the Merger; and (c) the terms of the Merger were deemed
fair. The outline of the report is as follows:(a) Assessment from the viewpoint of increasing the value of SSR
It is reasonable to determine that the Merger contributes to increasing the value of SSR since:(i) implementation of the Merger is expected to stabilize distributions, secure external growthpotential and reduce certain operational costs, and therefore the Merger is considered beneficial
to the resolution of various issues faced by SSR and to increasing the value of SSR; and (ii)with advice from Mizuho Securities, screening of investment corporations that may be apotential counterparty of a merger with SSR was conducted, and it was confirmed with several
investment corporations that were highly likely to make a merger proposal challenging theMerger whether they intended to make a specific proposal for a merger with SSR, and even22though an opportunity was provided for the making of such proposal over a long period of time,
no proposal for a merger, acquisition, alliance or other similar transaction was made by any
third party (except the Proposal and a proposal that was made during the market checkconducted by SSR prior to a merger with MIRAI Corporation). Therefore, there are no actual
options, other than the Proposal, that may contribute to increasing the value of SSR.
(b) Assessment from the viewpoint of securing the interests of general unitholders through fair
procedures
It is recognized that, in connection with the Merger, (a) there are situations that may be deemedas equivalent to transactions between independent parties in the course of determining the terms
and conditions of the transaction, (b) there are opportunities for general unitholders to makeappropriate decisions based on sufficient information, and (c) fair procedures are implemented
to secure the interests of general unitholders, by taking into consideration the following mattersand others:(i) the Special Committee, composed of independent members, was established for purposes ofassessing the proposed Merger. The Special Committee discussed and assessed SAR’s proposal
for the Merger and negotiated with SAR over the terms of the Merger after receiving
information necessary for assessing the Merger and obtaining advice from the advisors basedon its professional knowledge and a written merger ratio calculation report from a third-party
appraiser, and the Special Committee is recognized as having operated effectively.
(ii) As described in d. below, since it cannot be denied that SSR’s Executive Director Mr.
Sugihara may be deemed as potentially subject to the influence of Star Asia Group, he andSAIM, the asset management company, are not involved in the decision-making process andthe assessment and negotiation of the Merger.
(iii) As described in e. below, the market check was conducted carefully.
(iv) Certain disclosure of information is scheduled in the timely disclosure of execution of the
MOU, timely disclosure of execution of the Merger Agreement, Convocation Notice of General
Meeting of Unitholders and others.
(c) Appropriateness of terms of transactions
The merger ratio of the Merger is appropriate, because (i) the preparation procedures andcontents of SSR’s business plan and SAR’s business plan, which are the basis for calculation
through the DDM Analysis in the written merger ratio calculation report prepared by Mizuho
Securities, are not particularly unreasonable, (ii) the written merger ratio calculation report is
not particularly unreasonable in terms of the methods and results of calculation, and can bedeemed reliable, and the merger ratio of the Merger exceeds the upper limit of the valuation
range based on the market investment unit price based analysis, and is within the valuation
range based on the comparable investment corporation analysis, the DDM Analysis and theadjusted net asset method, and (iii) the merger ratio is the ratio agreed upon as a result of goodfaith negotiations between the Special Committee and SAR. In addition, the terms of the Merger
transactions are fair because no any unfavorable terms has been imposed on SSR in connection
with the Merger.
(d) Conclusion
Based on (a) through (c) above, it is appropriate for SSR to consummate the Merger because(i) the Merger will contribute to the improvement of SSR’s value, and (ii) there are fair23

procedures in place to protect the interests of SSR’s general unitholders in connection with the
Merger, and the terms of the Merger transactions are fair.
b. Receiving a calculation report from an independent third-party appraiser
SSR has appointed Mizuho Securities (which is independent of SAR and SSR) as its financial
advisor and third-party appraiser for the Merger with the approval of the Special Committee,
and received a written merger ratio calculation report on February 28, 2020. For a summary of
the written merger ratio calculation report, please refer to “(b) Basis for the calculations” above.
SSR’s fee for Mizuho Securities is a contingent fee that will be paid subject to successful
completion of the Merger and satisfaction of some other terms.
c. Obtaining advice from an independent legal advisor
SSR has appointed Mori Hamada & Matsumoto (which is independent of SAR and SSR) as its
legal advisor for the Merger with the approval of the Special Committee, and obtained legal
advice on such matters as the methods and process of deliberation on the Merger at the Special
Committee, and details of measures to ensure fairness in considering the Merger.
d. Non-involvement of those who have an interest in the process of decision-making,examination and negotiations relating to the Merger
Since it cannot be ruled out that Mr. Sugihara, SSR’s executive director, could be deemed to be
influenced by the Star Asia Group when making decisions, he has not participated in the
deliberation and resolution concerning the execution of the Merger Agreement at SSR’s boardof directors, nor has he participated in discussions and negotiations with SAR over the merger
ratio of the Merger and other terms of the transaction. As he is SSR’s sole executive director,
Mr. Sugihara has provided necessary explanations and information to the Special Committee,
and carried out various administrative procedures to examine the Merger. In the process of
examining the Merger, however, the Special Committee expelled Mr. Sugihara from the floor
and kept him out of the deliberation and examination of matters for which the Special
Committee determined Mr. Sugihara should not participate in discussions from the standpointof independence based on the advice from Mori Hamada & Matsumoto. Mr. Sugihara therefore
has not been involved in the substantial deliberation and examination of the Merger at theSpecial Committee.
In addition, SSR’s asset management company was changed to SAIM, which is SAR’s asset
management company, on March 1, 2020, which means that SSR and SAR now retain the sameasset management company. However, SAIM has never been involved in the examination of
the terms of the Merger, including the appropriateness and merger ratio of the Merger, nor has
it participated in discussions and negotiations with SAR over the terms of the Merger in its
capacity as SSR’s asset management company.
e. Conducting a market check
The Special Committee conducted a market check from the standpoint of identifying potential
acquirers other than SAR and ensuring the fairness of the merger ratio. Specifically, the Special
Committee checked the details of the market check conducted by SSR when the Proposal was
made and, based on the results of the market check, confirmed with several investment
corporations, through Mizuho Securities, whether they had the intention of considering themerger with SSR, taking into account the feasibility of the merger that will contribute to SSR’s
24interests and other factors. As a result of the confirmation of their intentions, all the investment
corporations replied that they had no ultimate intention to offer any specific proposal for themerger with SSR.
In addition, SSR agreed upon its obligation to preferentially negotiate with SAR in the MOU.
However, SSR also agreed that if a third party other than SAR makes a counterproposal, SSR
may discuss and negotiate the counterproposal to the extent the Special Committee would
consider reasonably necessary (except where such counterproposal is made based on its active
contact with third parties after the execution of the MOU), which gives third parties anopportunity to make counterproposals. Although there was approximately a 10-month period
between the date of the Proposal and the execution of the Merger Agreement, no third party
offered any proposal for merger, acquisition, alliance or other transactions, except for thosemade in the market check conducted by SSR prior to its merger with MIRAI Corporation.
ii. Measures to ensure fairness in the calculation of the merger ratio
As discussed in (b) through (d) above, each of SAR and SSR has requested its respective
financial advisor to perform a financial analysis in regard to the merger ratio and the merger
ratio was determined by comprehensively taking into account the results of such analyses
together with other factors.
SAR, in order to ensure the fairness of the Merger and for the benefit of its unitholders, obtained
from Nomura Securities, an independent third-party financial advisor, a written merger ratio
calculation report providing an analysis from a financial perspective based on certain
assumptions in regard to the allocation under the Merger.
SSR, for its part, in order to ensure the fairness of the Merger and for the benefit of its
unitholders, obtained from Mizuho Securities, an independent third-party financial advisor, awritten merger ratio calculation report providing an analysis from a financial perspective basedon certain assumptions in regard to the allocation under the Merger.
In addition, as mentioned in i. above, SSR’s Special Committee (i) received an explanationfrom Mizuho Securities about details of the calculation results, preconditions of the calculation,and matters taken into account in the course of the calculation in connection with the written
merger ratio calculation report prepared by Mizuho Securities, (ii) had a question and answer
session with Mizuho Securities, and (iii) fully deliberated and examined details of the written
merger ratio calculation report. As a result, the special committee concluded that the contentsof the written merger ratio calculation report prepared by Mizuho Securities are not particularly
unreasonable, and made its report as stated in i. above.
SAR and SSR did not, however, obtain written opinions (so-called “fairness opinions”) fromtheir respective financial advisors to the effect that the merger ratio is reasonable from afinancial perspective for their respective unitholders.
(ii) Reasons why cash was selected as part of consideration for the merger
In lieu of cash distributions to the unitholders of SSR for the fiscal period of SSR after thechange by Proposal 7 (which ends on the date before the effective date of the Merger), SAR
will pay to the Unitholders Subject to Allocation cash as a merger payment. The amount of cash
to be paid will be equivalent to the cash distributions for the same fiscal period for each SSR
investment unit held. Such cash amount will be paid within a reasonable period, taking into
consideration of the time needed to calculate the income of SSR for the relevant fiscal period,
and the time needed to implement the procedures for such merger payment to be made.
25

This merger payment in lieu of dividends will be made in order to distribute to the unitholders
of SSR the results of performance in respect of the asset management of SSR in the final fiscal
period of SSR (from January 1, 2020 to the end of July, 2020, on the assumption that the change
in Proposal 7 will take effect), which ends on the date before the effective date of the Merger.
(iii) Matters regarding appropriateness of provisions for matters regarding total amount ofunitholders’ capital of the surviving corporation in the absorption-type merger
The total amount of unitholders’ capital and the capital surplus of SAR to be added at the timeof the Merger will be as set forth below(although it should be noted that SAR and SSR may
make amendments to such amounts upon discussion and agreement in consideration of thefinancial conditions of SAR and SSR on the date before the effective date of the Merger).
(a) Total amount of unitholders’ capital: JPY 0(b) Capital surplus: An amount calculated by subtracting (a) from the amount of change inunitholders’ capital, as determined pursuant to Paragraph 1, Article 22 of the Ordinance on
Accounting of Investment Corporations (Cabinet Office Ordinance No. 47 of 2006, as
amended)(2) Matters to be referred to regarding consideration for the merger(i) Provisions of the articles of incorporation of the surviving corporation in the absorption-typemerger (i.e., SAR)As described in Attachment 2 hereto.
(ii) Matters concerning the method of converting the investment units delivered asconsideration for the Merger into cash(a) Market in which such investment units are traded
Real Estate Investment Trust Securities Market of the Tokyo Stock Exchange(b) Persons acting as brokers, intermediaries or agents in transactions involving such investment
units
Trading participants of the stock exchange referred to in (a) or securities brokerage firms thatare members of the stock exchange referred to in (a)(iii) Matters concerning the market price of the investment units delivered as consideration for
the Merger
Monthly highest and lowest prices of investment units (closing price) of SAR are as follows.
Month
Highest(JPY)
Lowest(JPY)

Sep. 2019117,500

Oct. 2019
121,200

Nov. 2019
118,000

Dec. 2019
117,100

Jan. 2020
117,800

Feb. 2020
114,700

112,300

115,900

108,400

114,200

112,600

100,600(3) Matters concerning financial documents, etc.
(i) Matters concerning the surviving corporation in the absorption-type merger (SAR)(a) Contents of the financial documents, asset management report and statements on the
distribution of monies related to the final fiscal period of SAR
As described in Attachment 3 hereto.

26

(b) Details of material asset disposals, assumption of material debts and other events thatmaterially affect the condition of SAR’s assets after the last day of SAR’s final fiscal period
i. SAR has resolved to carry out the Investment Unit Split as follows.
<Purpose of the split>
The Merger will be conducted through an absorption-type merger with SAR being the surviving
corporation in the absorption-type merger. The merger ratio before taking into consideration theInvestment Unit Split is SSR 0.89 to SAR 1; however, on the basis of that ratio, against 1 SSR
investment unit, 0.89 Investment Units would be allocated and delivered, which would resultin many SSR unitholders being allocated a fraction of less than one Investment Unit.
Accordingly, in order to make it possible for SSR unitholders to continue holding theInvestment Units after the Merger, a split of the investment units will be carried out, in the ratioof 2 investment units to 1 Investment Unit for purposes of delivering to all SSR unitholders atleast one Investment Unit.
<Method of the split>
Investment units held by the unitholders stated or recorded in the final unitholders register on
July 31, 2020, the date before the effective date of the Merger will be split in the ratio of 2
investment units to 1 Investment Unit. The Investment Unit Split will take effect on August 1,
2020, which is the effective date of the Merger under the condition that the Merger Agreement
has not been canceled.
ii. SAR has executed a sale and purchase agreement on March 2, 2020, for the acquisition ofreal estate trust beneficiary interests in respect of Urban Park Ichigao and Urban Park Gyotoku
from HASEKO Real Estate Development, inc. and LIXIL Realty Corporation respectively, with
March 13, 2020 as the scheduled acquisition date.
iii. SAR has executed a sale and purchase agreement on March 2, 2020, for the transfer of realestate trust beneficiary interests in respect of Alphabet Seven (40% of quasi-co-ownershipinterest on July 1, 2020 and 60% of quasi-co-ownership interest on December 1, 2020) to
Kanden Realty & Development Co., Ltd. with July 1, 2020 and December 1, 2020 as thescheduled transfer date.
(ii) Matters concerning the dissolving corporation in the absorption-type merger (SSR)
Details of material asset disposals, assumption of material debts and other events that materiallyaffect the condition of SSR’s assets after the last day of SSR’s final fiscal period(a) For the Merger, SSR has resolved to table before the General Meeting of Unitholders a
proposal for the amendment of its articles of incorporation with a view to changing its
accounting periods from the current dates of June 30 and December 31 to July 31 and January
31 as Proposal 7. If the aforementioned amendment is approved in the General Meeting ofUnitholders, SSR’s final accounting period before the effective date of the Merger is expected
to be the seven-month period from January 1, 2020 to July 31, 2020.
(b) Galaxy JREIT Pty Limited, a unitholder of SSR, has filed an action seeking a rescission of27

the resolutions of SSR’s unitholders’ meeting against SSR. As of February 27, 2020, such action
has been dismissed.

28

Proposal 6

Termination of Asset Management Agreement (subject to consummation of
the Merger)

Subject to the Merger taking effect, SSR will, on the effective date of the Merger, terminate theasset management agreement it has executed with its asset manager. SSR is submitting a
proposal for such termination to be approved.
SAR has executed an asset management agreement with SAIM. After the Merger, SAIM willcontinue to manage the assets of SAR, which will be the surviving corporation.
This proposal is subject to Proposal No. 5 “Approval of Agreement on Absorption-Type Merger
with Star Asia Investment Corporation” being approved and passed as planned and the Merger
taking effect.

29

Proposal 7

Partial Amendments to the Articles of Incorporation (for change to end of
fiscal period)

1. Reasons for the Amendments
To amend the end of SSR’s fiscal period of SSR from the end of June and of December,respectively, of each year to the end of July of a year and the end of January of the following
year, respectively, and to amend SSR’s 8th fiscal period to the seven month period from January
1, 2020 to July 31, 2020, for purposes including changing the end of SSR's final fiscal period
before the Merger to the last day of July 31, 2020, which is the effective date of the Merger.
2. Content of the Amendments
Details of the amendments are as described below. (The proposed amendments areunderlined.)
Current Articles of Incorporation
Article 45 (Business period and end of fiscal period)

Proposed Amendments
Article 45 (Business period and end of fiscal period)

The business period of the Investment Corporationis the six month period from January 1 of each year
to the last day of June, and the six month period from
July 1 to the last day of December (with the last dayof each business period being referred to as the “endof fiscal period”) except for the 4th business period,
which is from March 1, 2018 to the last day of June,
2018.

The business period of the Investment Corporationis the six month period from February 1 of each year
to the last day of July, and the six month period from
August 1 to the last day of January of the following
year (with the last day of each business period beingreferred to as the “end of fiscal period”) except for
the 8th business period, which is from January 1,
2020 to the last day of July, 2020.

30

Proposal 8

Partial Amendments to the Articles of Incorporation (for change of head
office location)

1. Reasons for the Amendments
Since the head office of SAIM, to which SSR has entrusted the management of its assets, islocated in Minato-ku, the head office of SSR will be relocated from Chiyoda-ku, Tokyo to
Minato-ku, Tokyo.
2. Content of the Amendments
Details of the amendments are as described below. (The proposed amendments areunderlined.)
Current Articles of Incorporation
Article 3 (Location of Head Office)Proposed Amendments
Article 3 (Location of Head Office)The Investment Corporation shall have its head
office in Chiyoda-ku, Tokyo.

The Investment Corporation shall have its head
office in Minato-ku, Tokyo.

31

[Proposals by a Unitholder]
Proposals 9 to 15 were submitted by the Proposing Unitholder. The “Outline of Proposals” and“Reasons for Proposals” below is quoted from the outlines of and reasons for proposals statedin the “Document for Exercise of Proposing Rights by Unitholders” received from the
Proposing Unitholder, with formal adjustments made to the proposal numbers, etc.
Proposal 9 (Proposed by a unitholder): Dismissal of Executive Director Toru Sugihara
1. Outline of Proposal and Reason for Proposal(1) Proposal
Dismissal of Executive Director Toru Sugihara(2) Outline of Proposal
Toru Sugihara shall be dismissed from the post of executive director.
(3) Reason for Proposal
In pushing for the merger of SSR and Star Asia Investment Corporation (the “SA merger”),
Mr. Toru Sugihara (“Mr. Sugihara”) has prioritized the interests of Star Asia Group overthose of SSR.
Mr. Sugihara was a former director of Star Asia Investment Management Co., Ltd., but
has devoted himself to projects that contribute to the external growth of Star Asia
Investment Corporation as a responsible person in Star Asia Group even after his
resignation (See press release of Star Asia Investment Corporation dated April 26, 2019(http://starasia-reit.com/file/news-4107f77bf9ad2b3bda7f3bb32d2fba3531dbb17d.pdf)).
Mr. Sugihara, as a representative of Lion Partners GK, which belongs to the Star Asia
Group, held a general meeting of unitholders of SSR, which was convened on August 30,
2019 by Lion Partner GK with the convocation permission of the Director of the Kanto
Local Finance Bureau. At the general meeting (the “Preceding General Meeting ofUnitholders”), Mr. Sugihara requested for SSR to replace its executive director and tochange its asset manager in order to realize the SA merger, and made it look as if theappointment of himself as a corporate officer of SSR, the termination of the asset
management agreement between SSR and Sakura Real Estate Funds Management, Inc. andthe execution of the asset management agreement between SSR and Star Asia Investment
Management Co., Ltd., had been approved, despite the fact that the resolution requirements
had not been met due to a majority vote against the proposals. However, he did not submit
a proposal seeking approval for the SA merger, which was the ultimate purpose of thePreceding General Meeting of Unitholders, and the merger has not yet been approved. Since
conflicts of interest may arise when an asset management company undertakes asset
management for two or more investment corporations, it is common practice for a company
to seek approval at a general meeting of unitholders when it wishes to change its asset
manager or replace its executive director, subject to the condition that approval of a relevant
merger proposal can be obtained. Nevertheless, under Mr. Sugihara's leadership, Star Asia
Group created a situation where Star Asia Investment Management Co., Ltd. could become
the asset manager for both Star Asia Investment Corporation and SSR before the SA merger
is approved, and Mr. Sugihara is currently attempting to use his position as executive
32

director of SSR to force the SA merger.
Purportedly, Mr. Sugihara is not currently engaged in any business related to Star Asia
Group. However, as is obvious from Mr. Sugihara's personal history and the backgroundcircumstances before and after his appointment as an executive director of SSR, Mr.
Sugihara continues to be strongly incentivized to prioritize the interests of Star Asia Groupover those of SSR, even after his appointment as an executive director of SSR. As a result,he continues to be seriously conflicted in his relationship with SSR and its unitholders. (Thefact that Star Asia Group holds approximately 18% of the investment units in Star Asia
Investment Corporation while holding only approximately 5% of the investment units in
SSR clearly demonstrates that the interests of Star Asia Group would be prioritized.)
Given these circumstances, the proposer has determined that the serious conflict of interest
involving Mr. Sugihara is not merely a theoretical concern, and that Mr. Sugihara in fact
acts in a way that does not prioritize the interests of SSR.
The proposer hereby proposes to dismiss Mr. Sugihara in order to prevent the Star Asia
Group, which holds only a little more than 5% of the investment units in SSR, from pursuing
its own interests by sacrificing the interests of SSR's unitholders who hold the majority of
the remaining investment units in SSR through Mr. Sugihara.
2. Opinion of the Board of Directors regarding Proposal
The Board of Directors are opposed to this proposal.
[Reasons for Objection]
As stated in Proposal 1, since the executive director, Sugihara Toru has offered to resign
as executive director at the opening of the General Meeting of Unitholders for purposes ofadjusting the term of office of the executive directorship, Toru Sugihara will not be SSR’s
executive director at the time this proposal is submitted to the General Meeting ofUnitholders. Therefore, SSR, after explaining the above to the Proposing Unitholder,confirmed its intention to withdraw the proposal; however, the Proposing Unitholder did
not accept the withdrawal.
Given these circumstances, SSR has decided to include the “Outline of Proposal” in the
convocation notice as proposed by the Proposing Unitholder. However, as stated in Proposal
1, SSR deems Toru Sugihara qualified to be SSR’s executive director. Accordingly, theBoard of Directors is unanimously opposed to this proposal.

33

Proposal 10 (Proposed by a unitholder): Appointment of One Executive Director
1. Outline of Proposal and Reason for Proposal(1) Proposal
Appointment of One Executive Director(2) Outline of Proposal
The following candidate for executive director shall be appointed as an executive director.
Name(Date of Birth)
Kyong-pil Min(May 13, 1964)

Career and Material Concurrent
Positions

Numberof Units
Owned

June 1988
April 1999
July 2003

Lehman Brothers
Moore Capital Japan, Director
Goldman Sachs Realty Japan,
Senior Vice President
March 2006
Morgan Stanley Securities,
Securitization
Products
Division
October 2007
WestLB Bank, Managing
Director
0
March 2012
Trust Capital Co., Ltd.,Managing Director
August 2012
GI Capital Management Ltd.,
Director
December 2019 Sakura Real Estate Funds
Management, Inc., Managing
Director
Finance and Planning Division,
Capital Market Head(current position)
The above candidate for executive director concurrently holds the position of Managing
Director of Sakura Real Estate Funds Management, Inc. (Note by SSR: We have quoted theoriginal text from the “Document for Exercise of Proposing Rights by Unitholders” here;
however, as of the date of preparation of this convocation notice, Sakura Real Estate Funds
Management, Inc. is not SSR’s asset manager.)
The above candidate for executive director has no special interest in SSR.
(3) Reason for Proposal
The candidate for executive director, Mr. Kyong-pil Min (“Mr. Min”) not only has
extensive experience in areas of real-estate finance, corporate acquisition, bad debt andcapital market in Japan and the US, but also has a wide network of real-estate market players
in and outside Japan. In addition to being in charge of financial aspects, including
relationship-building with financial institutions and management of annual budgets
regarding assets under management as the Capital Market Head of the Finance and Planning
Division of Sakura Real Estate Funds Management, Inc. from December 2019, he was also
responsible for the management of SSR’s external audit.
34

The proposer believes that there is no one other than Mr. Min with the ability andexperience required to be the executive director of SSR, and with a full grasp of SSR’s
status. He has the ability to maximize the interests of SSR’s unitholders, and is the mostqualified to be the executive director.
Mr. Min has never been an officer or employee of the Star Asia Group, and there is noserious conflict of interest concerning Mr. Sugihara, as described in the “Reason for
Proposal” for Proposal 9.
2. Opinion of the Board of Directors regarding Proposal
The Board of Directors is opposed to this proposal.
[Reasons for Objection]
This proposal seeks to appoint Mr. Min as executive director of SSR in place of Toru
Sugihara, and corresponds to Proposal 1 “Appointment of One Executive Director”
submitted by SSR.
With the approval from SSR's unitholders at the general meeting of unitholders of SSR
held at 10 AM on August 30, 2019, Mr. Sugihara was appointed executive director of SSR(It should be noted that although the Proposing Unitholder filed a lawsuit with the Tokyo
District Court demanding the cancellation of the relevant resolution at the general meetingof unitholders, the Tokyo District Court issued a ruling on February 27, 2020, dismissing
the Proposing Investor's claim (No. 24747 of 2019 (Wa)) (the “Judgment”)). Since then, Mr.
Sugihara has strived to respond to the mandate of SSR's unitholders and has worked toensure appropriate management. Specifically, in order to maximize unitholders' interests,
he has established a special committee to ensure fairness in the merger discussions, and has
advanced efforts toward the Merger while giving utmost consideration to conflicts ofinterest, leading to the execution of the Merger Agreement on March 2, 2020.
In addition, Mr. Sugihara has extensive experience and an extensive network in the realestate sector in Japan, particularly in the J-REIT sector. He has the knowledge andexperience necessary to be the executive director of SSR (For a brief biography, etc. of Mr.
Sugihara, please refer to Proposal 1.).
By contrast, Mr. Min has no past experience in J-REITs. In addition, as this proposal was
submitted to SSR by means of the “Document for Exercise of Proposing Rights by
Unitholders” on January 31, 2020, at the time SSR received this document, it had only beenslightly less than 2 months since Mr. Min assumed his office in Sakura Real Estate Funds
Management, Inc. Therefore, the reasons given by the Proposing Unitholder for the
proposal, such as “relationships-building with financial institutions” and “management of
the external audits”, are hardly based on reality, and Mr. Min cannot be said to have “a fullgrasp of the status of SSR” Furthermore, SSR has not been able to confirm whether Mr.
Min has agreed to assume the position of executive director of SSR.
Therefore, we have concluded that there is no need to appoint Mr. Min as executive
director, and Mr. Sugihara, the candidate referred to in Proposal 1 submitted by SSR, isqualified as executive director of SSR and serves the interests of unitholders. Accordingly,
the Board of Directors is unanimously opposed to this proposal.

35

Proposal 11 (Proposed by a unitholder): Dismissal of Supervisory Director Shigeru Kaneda
1. Outline of Proposal and Reason for Proposal(1) Proposal
Dismissal of Supervisory Director Shigeru Kaneda(2) Outline of Proposal
Shigeru Kaneda shall be dismissed from the position of supervisory director.
(3) Reason for Proposal
Shigeru Kaneda (“Mr. Kaneda”) chaired the Preceding General Meeting of Unitholders
convened by the Star Asia Group, and took a vote without adding a considerable number ofvoting rights relating to proxies submitted by individual unitholders to the voting results,
thereby declaring approval of each of the proposals submitted by the Star Asia Group.
Despite the fact that Mr. Kaneda took some time before the vote and told the unitholders
when he declared the above approval at the meeting that his decision may be wrong andthat the outcome of the resolution may change in the event that his decision turned out tobe wrong, there is no evidence that he had examined his own conduct of the proceedings indetail thereafter. At the Preceding General Meeting of Unitholders, Mr. Kaneda, as
supervisory director of SSR, had originally expressed his opposition to the proposal of theStar Asia Group toward the SA merger, saying that the proposal was abusive. (See the press
release of SSR dated July 4, 2019 (http://sakurasogoreit.com/file/news73687731975b5db10fc9b371a9e27e 8028425586.pdf).) However, it does not appear that
he has taken any measures to suspend the proceedings with respect to the SA merger andthe execution of the asset management agreement with Star Asia Investment Management
Co., Ltd. until the appropriateness of his conduct of the proceedings at the Preceding
General Meeting of Unitholders has been verified.
Given these circumstances, the proposer has determined that Mr. Kaneda has notadequately supervised the executive director, Mr. Sugihara, who acts in a way that does notprioritize the interests of SSR, and that he lacks in qualification as a supervisory director.
Since the proposer believes that a person who can properly supervise the executive directorof SSR should be the supervisory director of SSR, the proposer hereby proposes to dismiss
Mr. Kaneda, who does not perform the supervisory function in a manner appropriate to thecircumstances of SSR.
2. Opinion of the Board of Directors regarding Proposal
The Board of Directors is opposed to this proposal.
[Reasons for Objection]
As stated in Proposal 2, since the supervisory director, Mr. Kaneda, has offered to resign
as supervisory director at the opening of the General Meeting of Unitholders for purposesof adjusting the term of office of the supervisory director, Mr. Kaneda will not be SSR’s
supervisory director at the time this proposal is submitted to the General Meeting ofUnitholders. Therefore, SSR, after explaining the above to the Proposing Unitholder,confirmed its intention to withdraw the proposal; however, the Proposing Unitholder did
36not accept the withdrawal.
Given these circumstances, SSR has decided to include the “Outline of Proposal” in the
convocation notice as proposed by the Proposing Unitholder. However, as stated in Proposal
2, SSR deems Mr. Kaneda qualified to be supervisory director of SSR. Accordingly, theBoard of Directors is unanimously opposed to this proposal.

37

Proposal 12 (Proposed by a unitholder): Appointment of One Supervisory Director
1. Outline of Proposal and Reason for Proposal(1) Proposal
Appointment of One Supervisory Director(2) Outline of Proposal
The following candidate for supervisory director shall be appointed as a supervisory
director.
Name(Date of Birth)Shuhei Takahashi(February 19, 1973)

Career and Material Concurrent Positions

Number ofUnits Owned

April 1996

The Legal Training andResearch Institute of theSupreme Court of Japan(50th)
April 1998
Shimizu Tadashi Law
OfficeAugust 2001
Bingham McCutchen Dana
LLP
NovemberProfessional Admission in
2001
New York, US
March 2002
Shimizu Tadashi Law
OfficeApril 2008
SHUHEITAKAHASHILAW OFFICE, Director(current position)
The above candidate for supervisory director has no special interest in SSR.

0(3) Reason for Proposal
The candidate for supervisory director, Mr. Shuhei Takahashi (“Mr. Takahashi”), hasparticularly extensive experience and advanced professional expertise in multiple areas ofcorporate legal affairs and various related areas centered on corporate reconstruction casesand corporate acquisition/M&A cases, including real-estate transactions. In particular, he
has a proven record of having knowing, giving beneficial advice and supervising the legality
and appropriateness of corporate management operations from an independent and fairstandpoint in the areas of corporate acquisition and corporate rehabilitation. He also hasadvanced insights on such advice and supervision.
The proposer believes that there is no one but Mr. Takahashi who has the ability andexperience required to be a supervisory director of SSR. The proposer believes that Mr.
Takahashi is the most qualified person to be SSR’s supervisory director and that he canprecisely grasp and analyze the situation surrounding SSR, ensuring the soundness of the
management of SSR and protecting the interests of the unitholders of SSR. The proposer
believes that Mr. Takahashi’s appointment will contribute to the maximization of theinterests of SSR’s unitholders.
2. Opinion of the Board of Directors regarding Proposal
38

The Board of Directors is opposed to this proposal.
[Reasons for Objection]
At the general meeting of unitholders of SSR held at 10 AM on August 30, 2019, SSR
obtained unitholders' approval to appoint Mr. Sugihara as executive director. Since then, theBoard of Directors has consisted of three members: Mr. Sugihara, executive director; Mr.
Kaneda, supervisory director; and Mr. Isayama, supervisory director. This has enabled SSR
to be swiftly and efficiently managed.
Mr. Kaneda and Mr. Isayama, in particular, have extensive expertise as an attorney lawyer
and as a certified public accountant, respectively, and have served as supervisory directorsof SSR for nearly 4 years since 2016. Along with a deep understanding of the business of
SSR, they are well versed in the real estate business, and have appropriate knowledge andexperience as supervisory directors of a listed real estate investment corporation (Pleaserefer to Proposal 2 for their brief biographies.). In addition, both of them, as members of a
special committee established to ensure fairness for the Merger, have carefully evaluatedthe Merger. Therefore, if the Merger is approved at the General Meeting of Unitholders,
they will be the most appropriate persons to supervise the management of SSR until the
Merger becomes effective.
By contrast, Mr. Takahashi, the candidate nominated by the Proposing Unitholder, is said
to have handled matters such as insolvency and corporate reconstruction as his main duties.
He is also said to have handled internal and external disputes, labor issues, compliance andinternal controls, intellectual property disputes (trademark right litigation, etc.), and debt
collection. Therefore, he does not specialize in real estate transactions, real estate
investment and real estate securitization. Furthermore, we have not been able to confirm his
experience in listed real estate investment corporations. From these facts, he cannot be
deemed qualified for the position of supervisory director in a listed real estate investment
corporation. In addition, SSR has not been able to confirm whether Mr. Mr. Takahashi has
agreed to assume the position of supervisory director of SSR.
Therefore, we have concluded that there is no need to appoint Mr. Takahashi as supervisory
director and that Mr. Kaneda and Mr. Isayama, the candidates under Proposal 2 (which is
SSR’s proposal), are qualified to be supervisory directors of SSR and to serve the interestsof unitholders. Accordingly, the Board of Directors is unanimously opposed to this proposal.

39

Proposal 13 (Proposed by a unitholder): Termination of Asset Management Agreement withStar Asia Investment Management Co., Ltd.
1. Outline of Proposal and Reason for Proposal(1) Proposal
Termination of Asset Management Agreement with Star Asia Investment Management Co.,Ltd.
(2) Outline of Proposal
The Asset Management Agreement between SSR and Star Asia Investment Management
Co., Ltd. shall be terminated.
(3) Reason for Proposal
Star Asia Investment Management Co., Ltd. concurrently serves as asset manager for both
SSR and Star Asia Investment Corporation. However, as stated in the “Reason for Proposal”
for Proposal 9, an asset manager that undertakes asset management for multiple investment
corporations gives rise to the major issue of conflict of interest.
In particular, since an asset management company would play a central role in merger
negotiations between investment corporations, a merger between investment corporations
which entrust asset management to the same asset management company would give riseto the risk of a conflict of interest. In the case of the SA merger, it is obvious that Star Asia
Investment Management Co., Ltd. would prioritize the interests of Star Asia Group withrespect to which it has common interests and that the interests of SSR’s unitholders would
not be respected. Nevertheless, Mr. Sugihara, who was the representative of Lion Partners
GK (which belongs to the Star Asia Group) had entered into the Asset Management
Agreement with Star Asia Investment Management Co., Ltd. in his capacity as executive
director of SSR.
The Proposer makes this proposal to seek the termination of the Asset Management
Agreement in order to prevent the Star Asia Group (which holds only approximately 5% of
the units in SSR) from pursuing its own profit at the expense of the interests of SSR's
unitholders who hold the remaining majority of the units.
2. Opinion of the Board of Directors regarding Proposal
The Board of Directors is opposed to this proposal.
[Reasons for Objection]
This proposal proposes to terminate the Asset Management Agreement with Star Asia
Investment Management Co., Ltd.
At the general meeting of unitholders of SSR held at 10 AM on August 30, 2019, theexecution of an asset management agreement between Star Asia Investment Management
Co., Ltd. and SSR was approved (It should be noted that although the Proposing Unitholder
filed a lawsuit with the Tokyo District Court demanding the cancellation of the relevant
resolution, the court ruled to dismiss such Proposing Unitholder's claim), and Star Asia
Investment Management Co., Ltd. has begun acting as SSR’s asset manager on March 1,
2020.
40

Although this proposal was suggested to SSR by means of the “Document for Exercise of
Proposing Rights by Unitholders” dated January 31, 2020, asset management by Star Asia
Investment Management Co., Ltd. had not commenced at the time this proposal wasreceived by SSR. Therefore, it means that the Proposing Unitholder has proposed thetermination of the Asset Management Agreement with Star Asia Investment Management
Co., Ltd. without giving any consideration to Star Asia Investment Management Co., Ltd.’s
performance in managing SSR’s assets.
Furthermore, the reason for the termination of the Asset Management Agreement with Star
Asia Investment Management Co., Ltd. asserted by the Proposing Unitholder is not in any
way different from the substance of the assertion by the Proposing Unitholder since before
the general meeting of unitholders held on August 30, 2019, and it does not indicate theexistence of any new circumstance indicating that the management of SSR’s assets should
not be entrusted to Star Asia Investment Management Co., Ltd. That is to say, the executionof the Asset Management Agreement with Star Asia Investment Management Co., Ltd. wasapproved by SSR's unitholders after taking into consideration the views of the Proposing
Unitholder at the meeting; therefore, the this proposal by the Proposing Unitholder is simply
a rehash of an old discussion.
Nonetheless, this proposal was made for the sole purpose of reversing or abolishing alawfully adopted resolution of the general meeting of unitholders, and it constitutes adisregard for the wishes of the unitholders, and unnecessarily disrupts the management of
SSR, thereby impairing unitholders' interests.
Therefore, SSR believes that the termination of the Asset Management Agreement withStar Asia Investment Management Co., Ltd. is against the interests of unitholders, isinappropriate, and should not be carried out. Accordingly, the Board of Directors is
unanimously opposed to this proposal.
It should be noted that even if this proposal is approved, the termination date of the AssetManagement Agreement will be on or after the date falling after the elapse of 6 months fromthe date that a termination notification is given (which will be September 30, 2020 at theearliest). Accordingly, if the proposal for approval of the Merger Agreement and the
proposal for termination of the asset management agreement stated in Proposals 5 and 6,
respectively, are approved, such that the Merger has becomes effective and the current asset
management agreement executed by SSR is terminated on the scheduled effective date of
the Merger as set forth in the Merger Agreement, then the Asset Management Agreementwith Star Asia Investment Management Co., Ltd. will in any event not be terminatedpursuant to this proposal.

41

Proposal 14 (Proposed by a unitholder): Execution of Asset Management Agreement
1. Outline of Proposal and Reason for Proposal(1) Proposal
Execution of Asset Management Agreement(2) Outline of Proposal
The Asset Management Agreement in Exhibit 4 shall be executed with Sakura Real Estate
Funds Management, Inc.
The name, address and history of Sakura Real Estate Funds Management, Inc. are as
follows.
Name
Address
History

Sakura Real Estate Funds Management, Inc.
8-11, Kudan Minami 3-chome, Chiyoda-ku, Tokyo
July 7, 2015
Establishment
August 14, 2015
Obtained license as Real Estate Broker (Governor ofTokyo (1) Registration No. 98232)
November 4, 2015 Increased capital from JPY 3,000,000 to JPY
101,520,000
January 28, 2016
Obtained license for Entrustment-based Agency
Services for Transactions (Minister of Land,
Infrastructure, Transport and Tourism Registration No.
100)
March 25, 2016
Registered as a Financial Instruments Business
Operator under Article 29 of the Financial Instruments
and Exchange Act (Director of Kanto Local Finance
Bureau Registration No. 2907)
March 26, 2016
Admitted as a member of The Investment Corporation
Investment Trusts Association, Japan (Note)
April 1, 2016
Entered into the Asset Management Agreement with
SSR (terminated on February 29, 2020)(Note by SSR: We have quoted the original text from the “Document for Exercise of Proposing
Rights by Unitholders” here; however, with regard to the date, March 26, 2016 is a Saturday
and this is considered to be a typographical error for “May 26, 2016”, and “The Investment
Corporation Investment Trusts Association, Japan” is deemed a typographical error for “TheInvestment Trusts Association, Japan”.)(3) Reason for Proposal
As stated in the “Reason for Proposal” for Proposal 9, there is a major issue in Star Asia
Investment Management Co., Ltd. handling asset management for SSR, in terms of conflictof interest.
Meanwhile, as Sakura Real Estate Funds Management, Inc. has not executed any asset
management agreement with other investment corporations and there arises no issue of
conflict of interest in appointing Sakura Real Estate Funds Management, Inc. as SSR’s asset
manager, it can be expected that Sakura Real Estate Funds Management, Inc. would act in
the interests of the unitholders of SSR. In addition, Sakura Real Estate Funds Management,
Inc. has an advantage over other asset management companies in that it has served as the42asset management company of SSR until recently, is fully aware of the asset management
conditions of SSR and is capable of investing SSR’s assets in a manner consistent withprevious investment policies. Further, SSR, the asset management company that has been
served by Sakura Real Estate Funds Management, Inc., has had better performance results
than Star Asia Investment Corporation, which is the company served by Star Asia
Investment Management Co., Ltd. Looking at the growth of NAV per unit, while the NAV
per unit for Star Asia Investment Corporation has only grown 1.27% in the last four (4)years, SSR has achieved a growth of 2.22%. Furthermore, the yield of issue price-based
average distributions as of the IPO for Star Asia Investment Corporation is 5.3%, while that
number for SSR is 5.8%. Since dividends per unit in Star Asia Investment Corporation is
subject to excessive volatility and relies on capital gains for every term, its sustainability isquestionable.
In addition, based on past experience, this proposal also offers to amend the agreement
previously entered into with Sakura Real Estate Funds Management, Inc. on terms moreadvantageous to SSR's unitholders. (More specifically, under this proposal, (i) the rate to be
multiplied in the formula for calculation of management fee in Exhibit 4, Annex 2, will bechanged from 0.40% to 0.25%, and (ii) the rate to be multiplied to NOI in the formula for
calculation of management fee will be changed from 3% to 2%). Sakura Real Estate Funds
Management, Inc. has also given its informal consent, in principle, to accept an agreement
under such amended terms, subject to the condition that SSR officially offers the same terms.
2. Opinion of the Board of Directors regarding Proposal
The Board of Directors is opposed to this proposal.
[Reasons for Objection]
This proposal proposes the execution of an asset management agreement between SSR
and Sakura Real Estate Funds Management, Inc.
Sakura Real Estate Funds Management, Inc. had been SSR’s asset manager up to February
29, 2020. However, at the general meeting of unitholders of SSR held on 10 AM on August30, 2019, the proposal to terminate the asset management agreement was submitted andapproved on the grounds that the company has continued to manage SSR’s assets in amanner that did not seem to contribute to maximizing the value of unitholders, that SSR has
had to pay the company 136 million yen in professional fees incurred in connection withproperty acquisitions that were not completed, and that the SSR had been unable to conduct
a public offering accompanied by the acquisition of properties since its listing. (It should be
noted that even though the Proposing Unitholder had filed a lawsuit with the Tokyo District
Court demanding the cancellation of the relevant resolution, the court had dismissed the
Proposing Unitholder's claim.).
The purpose of this proposal is to have Sakura Real Estate Funds Management, Inc., whichlost its role as SSR’s asset manager after it was concluded at the general meeting ofunitholders that it was not qualified to be SSR’s asset manager, revert to being SSR’s asset
manager. Therefore, it is obvious that this proposal is against the wishes of SSR's
unitholders and that it impairs the interests of SSR’s unitholders.
In addition, as far as SSR is aware, many employees have been leaving Sakura Real Estate
Funds Management, Inc., and we believe that it is becoming impossible for Sakura Real43

Estate Funds Management to maintain a system of handling its business as an asset manager
for a listed real estate investment corporation.
Therefore, SSR believes that entrusting Sakura Real Estate Funds Management, Inc. tomanage SSR’s assets is against the interests of unitholders and should not be implemented.
Accordingly, the Board of Directors is unanimously opposed to this proposal.

44

Proposal 15 (Proposed by a unitholder): Partial Amendment of the Articles of Incorporation
1. Outline of Proposal and Reason for Proposal(1) Proposal
Partial Amendment of the Articles of Incorporation(2) Outline of Proposal
The Articles of Incorporation of SSR shall be amended as follows.

Current Articles of Incorporation(newly established)

Current EXHIBIT 1(The underlined parts indicate the amendments.)
Amendment Proposal
CHAPTER XII SPECIAL PROVISIONS IN
CASE OF MERGER
Article 55 (Special Provisions in case of
Merger of the Investment Corporation)
1. Consolidation and mergers (including bothwhere the Investment Corporation
becomes a surviving corporation in anabsorption-type merger and where it
becomes a dissolving corporation in anabsorption-type merger) between theInvestment Corporation and Star Asia
Investment Corporation (including theaffiliates thereof and any other person orentity which is deemed to be substantiallyequivalent thereto) shall be prohibited.
However, this shall not apply to the casewhere there is affirmative vote of two
thirds or more of the voting rights ofunitholders present at the Investment
Corporation’s general meeting ofunitholders for approval of the merger
agreement pertaining to such merger.
2. The provisions of deemed approval set
forth in Article 17 shall not apply to a
resolution of the general meeting ofunitholders as prescribed in the proviso to
the preceding paragraph.
3. The provisions of deemed approval set
forth in Article 17 shall not apply to a
resolution for amending these Articles ofIncorporation, for purposes of amending
this Article directly or in substance(including setting forth a provision
conflicting with this Article in anotherarticle).
(The proposed amendments are underlined.)
Amendment Proposal
45

1. Management Fee 1
1. Management Fee 1
As consideration for management (i) for the
As consideration for management (i) for theperiod from the day following theperiod from the day following theimmediately preceding Fiscal-Year End of
immediately preceding Fiscal-Year End of
Investment Corporation until the day
Investment Corporation until the day
falling three months following that Fiscalfalling three months following that FiscalYear End (hereinafter referred to as
Year End (hereinafter referred to as“Calculation Period I”) and (ii) for the“Calculation Period I”) and (ii) for theperiod from the day following the last day
period from the day following the last dayof Calculation Period I until the relevantof Calculation Period I until the relevant
Fiscal-Year End (hereinafter referred to as
Fiscal-Year End (hereinafter referred to as
the “Calculation Period II”), the fee shall be
the “Calculation Period II”), the fee shall be
the amount obtained by multiplying thethe amount obtained by multiplying thetotal value of the assets of the Investment
total value of the assets of the Investment
Corporation calculated by the method
Corporation calculated by the method
specified below by the rate separately
specified below by the rate separately
agreed upon between the Investment
agreed upon between the Investment
Corporation and the Asset Management
Corporation and the Asset Management
Company (subject to a maximum of 0.40%
Company (subject to a maximum of 0.25%(per annum)), multiplying that product by(per annum)), multiplying that product by
the actual number of days in the relevant
the actual number of days in the relevant
Calculation Period I or Calculation Period
Calculation Period I or Calculation Period
II, and then dividing that product by 365
II, and then dividing that product by 365(with any fractional amount of less than one(with any fractional amount of less than one
yen to be disregarded).
yen to be disregarded).
2. Management Fee 2
2. Management Fee 2
As consideration for management during
As consideration for management during
the Fiscal Term having that relevant Fiscalthe Fiscal Term having that relevant FiscalYear End as its final day, the fee shall be an
Year End as its final day, the fee shall be an
amount calculated in accordance with theamount calculated in accordance with thefollowing formula (with any fractional
following formula (with any fractionalamount of less than one yen to beamount of less than one yen to be
disregarded, and with zero being thedisregarded, and with zero being theminimum amount).
minimum amount).
<Formula><Formula>
Management Fee 2=NOI (*) × the rate
Management Fee 2=NOI (*) × the rate
(subject to a maximum of 3%) separately(subject to a maximum of 2%) separately
agreed upon between the Investment
agreed upon between the Investment
Corporation and the Asset Management
Corporation and the Asset Management
Company
Company(Note by SSR)
It should be noted, regarding this proposal, that the “Document for Exercise of Proposing
Rights by Unitholders” states that “we require this proposal to be discussed and voted on
before the proposals related to the SA merger. In addition, even if the proposals related to
the SA merger have been approved at the General Meeting of Unitholders, the resolution
approving this proposal shall become effective before the resolution approving the relevant
merger agreement and the proposals related thereto, regardless of whether this proposal wasapproved before or after the approval of the proposals related to the SA merger, and the46

Articles of Incorporation of SSR as amended by this proposal shall apply to the resolution
approving such merger agreement and the proposals related thereto. [sic]”(3) Reason for Proposal
As stated in the “Reason for Proposal” for Proposal 9, the proposer is opposed to the SA
merger which would harm the interests of SSR’s unitholders.
Therefore, the proposer, in order to place importance on the actual wishes of SSR’s
unitholders while essentially prohibiting the merger between SSR and Star Asia Investment
Corporation, proposes to add to the text of the Articles of Incorporation of SSR a provision
to the effect that the merger between SSR and Star Asia Investment Corporation may beapproved by the affirmative vote of two-thirds or more of unitholders present, without
applying the provisions of deemed approval. We believe that this proposal is a measure toconfirm the actual wishes of SSR’s unitholders in order to avoid any disadvantage to SSR’s
unitholders, and that such proposed provision is reasonable and appropriate.
In addition, as stated in the “Reason for Proposal” for Proposal 14, considering that wehave already obtained the consent from Sakura Real Estate Funds Management, Inc. to enter
into an asset management agreement with management fees that are more beneficial to theunitholders, the proposer proposes to amend the content of EXHIBIT I to ensure theimposition of such restrictions on management fees in the Articles of Incorporation too.
[Reasons for Objection]
This proposal for amendment of the Articles of Incorporation is for purposes of (1)“prohibiting” the merger between SSR and Star Asia Real Estate Investment Corporation
while not applying such prohibition where affirmative vote of two thirds or more of theunitholders has been obtained in connection with the approval of the merger agreement at
the general meeting of unitholders, (2) not applying the provisions of deemed approval inconnection with the resolution of (1) above, (3) not applying the provisions of deemed
approval in connection with the resolution for amending the provisions of such Articles ofIncorporation and (4) reducing the amount of the management fees payable by SSR to theasset management company. However, SSR opposes this proposal based on the unanimousview of the Board of Directors.
To begin with, the “Articles of Incorporation” are the basic rules governing an organization,and operation and management of investment corporations, and it is inappropriate in lightof the nature of the Articles of Incorporation to establish provisions that focus exclusively
on transactions with specific persons or entity.
Also, in this proposal, the requirement to lift the prohibition of merger between SSR andStar Asia Real Estate Investment Corporation is prescribed as “affirmative vote of two thirds
or more of the voting rights of unitholders present at the meeting”; however, under theInvestment Trust Act a resolution for approving a merger agreement must be approved by
the vote of “a majority of two-thirds or more of the voting rights of unitholders present at
the meeting, where unitholders holding a majority of the issued investment units arepresent”. Relaxing this requirement is not permitted under the Investment Trust Act. The
legality of this proposal is questionable under the Investment Trust Act since such Act
stipulates that no rules may be established that violate the law. (Article 67, Paragraph 6 of
the Investment Trust Act). Also, when SSR made inquiries to the Proposing Unitholder
about this matter, the Proposing Unitholder replied that “The proviso to Article 55 (1) of the47

new proposal under proposal 9 of the “Document for Exercise of Proposing Rights by
Unitholders” sets out the requirements for lifting the prohibition on the SA merger under
the introductory clause of the said paragraph, and does not set out the requirements for theapproval of the merger itself (and approval of the merger itself is, of course, subject tostatutory quorum and other requirements under the Investment Trust Act.). ” However, as
stated in 1. (3) above, the Proposing Unitholder itself expressly states that it "propose to add
to the text of the Articles of Incorporation of SSR a provision to the effect that the merger
between the said company and SSR may be approved by the affirmative vote of twothirds or more of unitholders present." (underlined and bolded by SSR), and the Proposing
Unitholder's reply is clearly inconsistent with the statement of the reason for the Proposing
Unitholder’s proposal itself. SSR believes that the legality of this proposal is questionable
under the Investment Trust Act, in light of the fact that the Proposing Unitholder haschanged its explanation regarding the contents of its proposal.
In addition, if the proposal for approval of the Merger Agreement (Proposal 5) and the
proposal for termination of the Asset Management Agreement in connection with themerger are approved at the General Meeting of Unitholders, SSR will be dissolved as ofAugust 1, 2020, and the Asset Management Agreement of SSR will be terminated as of thesame date. Therefore, we believe that there is little need to reduce management fees at thispoint.
For these reasons, we believe that amendment of the Articles of Incorporation under this
proposal should not be implemented. It is our view that there are doubts as to their legality
and that there is little necessity to do so.

48

Attachment 1[Translation]

MERGER AGREEMENT

March 2, 2020
49

MERGER AGREEMENTStar Asia Investment Corporation (“SAR”) and Sakura Sogo REIT Investment Corporation (“SSR”)
enter into this merger agreement (the “Agreement”) as follows in relation to the merger between SAR
and SSR (the “Merger”).
Article 1

Method of the Merger

In accordance with the provisions of this Agreement, SAR and SSR shall implement an absorptiontype merger with SAR as the surviving corporation and SSR as the dissolving corporation under Article
147 of the Act on Investment Trusts and Investment Corporations (Act No. 198 of 1951, as amended;
the “Investment Trusts Act”).
Article 2

Names and addresses of merging parties

The names and addresses of the surviving corporation and the dissolving corporation are as follows.
(1)

(2)

Name and address of the surviving corporation
Name:Star Asia Investment Corporation

Address:

Atago Green Hills Mori Tower 18F, 2-5-1, Atago, Minato-ku, Tokyo

Name and address of the dissolving corporation
Name:

Sakura Sogo REIT Investment Corporation

Address:

3-8-11, Kudan Minami Chiyoda-ku, Tokyo

Article 3

Split of SAR’s investment units

Subject to satisfaction of all conditions precedent set forth in Article 13, SAR shall split the investment
units owned by the unitholders stated or recorded on the final unitholders register of SAR as of the
day immediately preceding the effective date of the Merger (“Effective Date”) into 2 investment units
for every one investment unit on the Effective Date (“Investment Unit Split”).
Article 4
4.1

Method for calculating the number of investment units to be issued and allotted at
the time of the Merger and matters regarding the allotment

At the time of the Merger, SAR shall issue new investment units after the split in accordancewith Article 3 in such number as is calculated by multiplying by 1.78 the aggregate number ofinvestment units in SSR owned by the unitholders stated or recorded in the final unitholders
register of SSR as of the Effective Date (excluding SAR, SSR, and the unitholders of SSR who
have requested the purchase of their investment units in accordance with the provisions of Article
149-3 of the Investment Trusts Act (except for the unitholders who have withdrawn such request
for the purchase); the “Allotted Unitholders”), and shall allot and deliver to the Allotted
Unitholders 1.78 investment units in SAR after the split in accordance with Article 3 per one
investment unit in SSR owned by the Allotted Unitholders. In this case, however, the effect of
the allotment and delivery, as well as the Merger, shall be subject to the condition precedent that
the Investment Unit Split takes effect on the Effective Date, and if the Investment Unit Split does
－

50

－

not take effect on the Effective Date, SAR and SSR shall consult in good faith and reach an
agreement for changing the Effective Date specified in Article 6 and for taking other necessary
measures for the Merger to take effect.
4.2

In the case of the preceding paragraph, if there is any fraction of less than one investment unit
in the investment units in SAR to be allotted to the Allotted Unitholders, SAR shall treat such
fraction in accordance with the provisions of Article 149-17 of the Investment Trusts Act.

Article 5

Matters regarding total unitholders’ capital of the surviving corporation

The amount by which the total unitholders’ capital and the capital surplus of SAR will increase upon
the Merger shall be as follows; provided, however, that SAR and SSR may change such amount upon
agreement through consultation, taking into consideration the financial conditions of SAR and SSR
on the day immediately preceding the Effective Date.
(1)

Unitholders’ Capital: 0 yen(2)Capital Surplus: The amount obtained by deducting the amount set out in the preceding itemfrom the amount of increase or decrease in the unitholders’ equity, etc., set out in Article 22,
Paragraph 1 of the Ordinance on Accountings of Investment Corporations (Cabinet Office
Ordinance No. 47 of 2006, as amended)

Article 6

Effective Date

The effective date of the Merger shall be August 1, 2020; provided, however, that SAR and SSR may
change the Effective Date upon agreement through consultation, if necessary in order to complete theprocedures for the Merger or for any other reason.
Article 7

General meeting of unitholders

7.1

SAR shall hold a general meeting of unitholders on March 31, 2020 or a date separately
determined by SAR and SSR upon agreement, and request such general meeting of unitholders
to approve (i) this Agreement, in accordance with the provisions of Article 149-7, Paragraph 1of the Investment Trusts Act, and (ii) other proposals separately determined by SAR and SSR
upon agreement.

7.2

SSR shall hold a general meeting of unitholders on March 30, 2020 or a date separately
determined by SAR and SSR upon agreement, and request such general meeting of unitholders
to approve (i) this Agreement, in accordance with the provisions of Article 149-2, Paragraph 1of the Investment Trusts Act, (ii) termination of the asset management agreement as of theEffective Date subject to the Merger taking effect, and (iii) other proposals separately determinedby SAR and SSR upon agreement.

Article 8

Post-merger trade name and related entities, etc. of SAR

8.1

SAR’s post-merger trade name shall be Star Asia Investment Corporation.

8.2

SAR’s asset manager (which shall mean an asset manager as referred to in Article 2, Paragraph
21 of the Investment Trusts Act; the same hereinafter), asset custody company (which shall meanan asset custody company as referred to in Article 2, Paragraph 22 of the Investment Trusts Act;
－

51

－

the same hereinafter), administrative agent (which shall mean an administrative agent as referred
to in Article 2, Paragraph 23 of the Investment Trusts Act to which the services set out in each
item of Article 117 of the Investment Trusts Act shall be entrusted; the same hereinafter), andaccounting auditor shall not be changed upon the Merger.
8.3

Subject to the effectiveness of the Merger, SSR shall, upon the Effective Date, terminate SSR’s
asset management agreement with its asset manager, asset custody agreement with its asset
custody company, administration agreements with its administrative agents, audit agreement(excluding audits of SSR’s financial statements required under the Financial Instruments andExchange Act (Act No. 25 of 1948, as amended) for its fiscal period ending on July 31, 2020)
with its accounting auditor, and any other agreement separately determined by SAR and SSR
upon agreement.

8.4

Notwithstanding the preceding three paragraphs, SAR and SSR may change the provisions
thereof upon agreement through consultation.

Article 9

Payment upon the merger

In lieu of cash distribution to the unitholders of SSR for SSR’s fiscal period ending on the day
immediately preceding the Effective Date, SAR shall make a payment to the Allotted Unitholders upon
the merger. The amount of such payment shall be calculated by the following formula (with any
fractional amount of less than one yen to be rounded down) per one investment unit in SSR owned by
the Allotted Unitholders, and within a period after the Effective Date that is reasonable in considerationof the determination of profit for that fiscal period of SSR, the process of rendering payment upon themerger, and other factors:

Amount of payment
upon the merger per
one investment unit=

Distributable profit of SSR
as of the day immediately
preceding the Effective Date
Outstanding investment units in SSR
as of the day immediately
preceding the Effective Date

In the formula set out above, the term “Outstanding investment units in SSR as of the day immediately
preceding the Effective Date” shall mean the number of investment units calculated by deducting thenumber of investment units held by the unitholders of SSR other than the Allotted Unitholders fromthe outstanding number of investment units in SSR as of the day immediately preceding the Effective
Date.
Article 10

Cash distribution

10.1 Until the Effective Date, SAR shall not pay any cash distribution to its unitholders (except forthe cash distribution paid to unitholders or investment unit pledge holders stated or recorded on
the final unitholders register of SAR as of the January 31, 2020, the amount of which shall be
up to the amount of distributable profits (which means the amount of profits as set forth in Article
136, Paragraph 1 of the Investment Trusts Act) for the fiscal period ended January 31, 2020) or
purchase investment units for consideration by agreement with any unitholder.
10.2 Until the Effective Date, SSR shall distribute 704,630,116 yen in total (2,116 yen per investmentunit) to unitholders or investment unit pledge holders stated or recorded on the final unitholders
register of SSR as of December 31, 2019 as cash distributions for the fiscal period ended on
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December 31, 2019, and except for such cash distributions, shall not pay any cash distributions
to any unitholder or purchase investment units for consideration by agreement with any
unitholder.
10.3 Notwithstanding the preceding two paragraphs, if the Effective Date is changed to a date after
August 1, 2020, SAR and SSR will determine the treatment of cash distributions upon agreement
through consultation.
Article 11

Succession of corporate property

On the Effective Date, SAR shall succeed to any and all assets, liabilities, rights and obligations of
SSR existing as of the Effective Date.
Article 12

Covenants

12.1 From the execution date of this Agreement to the Effective Date, SAR and SSR shall eachconduct their respective businesses and manage and operate their respective properties with thedue care of a prudent manager, and cause their respective asset managers, asset custodycompanies, administrative agents, and other third parties to do the same, and shall obtain theprior consent of the other party before taking any action that might materially affect theirrespective assets, rights or obligations (including, but not limited to, issuance of investment units,
issuance of investment corporation bonds, incurrence of new borrowings (excluding any
borrowing to pay existing loans), or entering into or performing a sale or purchase agreement
for real property), unless otherwise expressly provided for herein or in any other agreement
executed as of the execution date of this Agreement.
12.2 SAR and SSR shall immediately give notice to the other party, if, during the period on or before
the Effective Date, either party learns of any event which may reasonably have a material impact
on their business, financial condition, or the Merger (including, but not limited to, an event suchas a breach of any loan agreement, breach of law or ordinance by SAR or SSR, or a matter
indicated by the relevant authorities). In this case, SAR and SSR shall discuss and consider how
to deal with such event in good faith and shall use best efforts to resolve such issues.
Article 13

Conditions for the Merger

If any of the following conditions precedent to the Merger is not satisfied as of the day immediately
before the Effective Date, or if it becomes clear that any of such conditions precedent to the Merger
will not be satisfied on or before the day immediately preceding the Effective Date (in both cases,
except if either party fails to satisfy the conditions precedent due to a reason attributable to itself or its
asset manager), then either party may cancel this Agreement without assuming any liability or payment
obligation to the other party by giving written notice to the other party before the Effective Date (except
for any liability or payment obligation owed by the party which provided such notice pursuant tobreach of any other provision of this Agreement):(1)

approval at the general meetings of unitholders of both SAR and SSR (including, but not limited
to, approvals for proposals set forth in Article 7, Paragraph 1 and Paragraph 2) and otherprocedures pursuant to applicable laws and ordinances have been completed, and all necessary
permits and approvals have been obtained, as required in relation to the Merger or in order toimplement the matters contemplated in connection with the Merger;
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(2)

neither SAR nor SSR is in breach of a contractual obligation (including those under thisAgreement) or financial covenant or delayed in payment of a monetary debt (including taxes andother public charges); provided, however, that minor breaches and delays in payment shall be
excluded;(3)

there is no occurrence of any acceleration event (including any event that would constitute an
acceleration event either with the passage of time or notice, or both), suspension of payments,
or insolvency by SAR or SSR;

(4)

consent has been obtained from each financial institution lending money to SAR or SSR withrespect to conducting the Merger and the basic borrowing conditions applicable on or after theeffective date of the Merger (for each loan agreement, including necessary measures so that nobreach of financial covenant clause, breach of covenant clause, or acceleration event attributable
to SAR occurs after the Merger), and such consent has not been withdrawn;(5)each of SAR and SSR has reasonably confirmed that the procedures for filing of Form F-4 are
not necessary for the Merger under the U.S. Securities Act;

(6)

no petition for the commencement of bankruptcy procedures, civil rehabilitation procedures, or
any other similar legal insolvency procedures is filed with respect to SAR or SSR;

(7)

SAR and SSR, as well as the asset managers of SAR and SSR, have not been subject torevocation of registration by a supervisory agency, suspension of all or a part of its business, orother administrative disposition that materially impairs, or has a materially adverse effect on, theimplementation of the Merger; and(8)in addition to the above, there is no event which is reasonably judged to materially impede theMerger or to make it impracticable.

Article 14

Change of conditions for the Merger and termination of this Agreement

If, during the period from the execution date of this Agreement to the Effective Date, (i) there is any
material change in the assets or the business condition of SAR or SSR, (ii) it is reasonably concluded
that the implementation of the Merger has become impossible or impracticable, (iii) it becomesdifficult to achieve the purpose of the Merger for any other reason, or (iv) it becomes clear that there
are grounds to believe that any of the above circumstances may arise, then SAR and SSR may, upon
agreement through consultation in good faith, change the conditions of the Merger or any otherprovisions of this Agreement, or terminate this Agreement.
Article 15

Announcements

In the event SAR or SSR makes a public announcement in relation to the Merger such as the executionof this Agreement, its contents, or otherwise, the party shall make such announcement only with theprior consent of the other party hereto as to the announcement’s content, timing, method, etc.
Article 16

Costs and expenses

Each of SAR and SSR shall be responsible for its own expenses incurred by each of them before theEffective Date relating to the execution and performance of this Agreement (including, but not limited
to, fees to legal counsels, certified public accountants, tax accountants, research companies, advisersand other experts appointed by each of them; however, the expenses arising subject to the Merger
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taking effect are not included). SSR shall record the expenses that it is responsible for as expenses
for the fiscal period ending before the Effective Date.
Article 17

Governing law

This Agreement shall be governed by and construed in accordance with the laws of Japan.
Article 18

Jurisdiction

SAR and SSR agree that the Tokyo District Court shall be the court of first instance having exclusive
jurisdiction in any dispute related to this Agreement.
Article 19

Good faith consultation

Any necessary matters concerning the Merger as well as those provided for in this Agreement shall beseparately determined through mutual consultation by SAR and SSR in accordance with the purposeof this Agreement.
(The remainder of this page has been intentionally left blank.)

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This Agreement has been prepared in two originals, to which each of SAR and SSR shall affix its
name and seal and retain one original.
March 2, 2020

SAR

Star Asia Investment Corporation
Atago Green Hills Mori Tower 18F, 2-5-1, Atago, Minato-ku, Tokyo
Executive Director

SSR

Atsushi Kato

Sakura Sogo REIT Investment Corporation
3-8-11, Kudan Minami Chiyoda-ku, Tokyo
Executive Director

Toru Sugihara

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Attachment 2

Articles of Incorporation

Star Asia Investment Corporation

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Star Asia Investment Corporation
Articles of Incorporation
Chapter 1: General Provisions
Article 1 (Trade Name)
The name of the Investment Corporation shall be Star Asia Toshi Hojin in Japanese. In English, theInvestment Corporation shall be named Star Asia Investment Corporation.
Article 2 (Purpose)
The Investment Corporation’s purpose is, in accordance with the “Act on Investment Trusts andInvestment Corporations” (Act No. 198 of 1951, as amended; hereinafter, the “Investment TrustsAct”), to manage its assets by investing them primarily in real estate assets (as stipulated in Article
29, Paragraph 1, Item 1 (1) through (4); hereinafter the same) among the specified assets (as set forthin the Investment Trusts Act; hereinafter the same).
Article 3 (Location of Head Office)The Investment Corporation shall have its head office in Minato-ku, Tokyo.
Article 4 (Method of Public Notice)
Public notices of the Investment Corporation shall be made in the Nihon Keizai Shimbun.
Chapter 2: Investment Units
Article 5 (Refund of Investment Units upon Unitholder Request and Acquisition of its Investment
Units Based on Agreement with Unitholders)
1. The Investment Corporation shall not refund any investment units upon request of unitholders.
2. The Investment Corporation may acquire its investment units with compensation based onagreement with any of its unitholders.
Article 6 (Total Number of Authorized Investment Units)
1. The total number of authorized investment units for the Investment Corporation shall be ten
million units.
2. The ratio of the total issue price of investment units offered in Japan to the total issue price ofinvestment units issued by the Investment Corporation shall exceed 50%.
3. The Investment Corporation shall be able to invite parties to underwrite investment units it issues
within the limits of the total number of authorized investment units specified in Paragraph 1 withthe approval of the Board of Directors. The monetary amount to be paid in for a single unit of theoffered investment units (investment units allocated to those who applied for the underwritingof the relevant investment units in response to the invitation) shall be the amount that is
approved by the Board of Directors as a fair price in the light of the substance of the assets thatbelong to the Investment Corporation (hereinafter, the “investment assets”).
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Article 7 (Regulations on Handling of Investment Units)
Descriptions or recordings in the unitholders register of the Investment Corporation, registration andcancellation of pledges on investment units, and any other procedures relating to the handling ofinvestment units and the fees for those procedures are subject to laws and regulations and these
Articles of Incorporation as well as the rules for the handling of investment units as prescribed by the
Board of Directors.
Article 8 (Minimum Net Assets to Be Constantly Held by the Investment Corporation)
The Investment Corporation shall hold minimum net assets of fifty million yen at all times.
Chapter 3: General Meeting of Unitholders
Article 9 (Convocation and Holding)
1. The Investment Corporation shall convene its general meeting of unitholders on October 1, 2017and onwards without delay, and subsequently convene the general meetings of unitholders on
October 1 and onwards every two years without delay.
2. Aside from the preceding paragraph, the Investment Corporation shall convene a general meetingof unitholders at any time, when prescribed by laws and regulations to do so or when it isotherwise necessary.
3. Unless otherwise prescribed by laws and regulations, the general meeting of unitholders shall be
convened, based on the resolution of the Board of Directors, by the Executive Director when there
is one Executive Director. When there are two or more Executive Directors, the general meetingof unitholders shall be convened by a single Executive Director in accordance with the orderpredetermined by the Board of Directors.
4. The general meeting of unitholders shall be held at a venue located within the 23 wards of Tokyo.
5. To convene a general meeting of unitholders, the Investment Corporation shall make a public
notice of the day of the general meeting of unitholders at least two months before the relevantdate, and send such notice to the unitholders in writing, or in such electromagnetic formats asprescribed by laws and regulations, at least two weeks before the relevant date. Such public
notice will not be required, however, for a general meeting of unitholders that is to be held before
the elapse of 25 months from the day of the immediately prior general meeting of unitholders
held in accordance with the provision of Paragraph 1.
Article 10 (Chairperson)
The general meeting of unitholders shall be chaired by the Executive Director when there is one
Executive Director. When there are two or more Executive Directors, the general meeting ofunitholders shall be chaired by a single Executive Director in accordance with the orderpredetermined by the Board of Directors. In the event of any accident involving the Executive Director
who is to serve as chairperson, the general meeting of unitholders shall be chaired by another
Executive Director or another Supervisory Director in accordance with the order predetermined by
the Board of Directors.
Article 11 (Resolution)
1. Unless otherwise prescribed by laws and regulations or the Articles of Incorporation, a resolutionof the general meeting of unitholders shall be made through a majority of the voting rights held
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by unitholders attending the meeting.
2. Unitholders may exercise their voting rights through a proxy who is also a unitholder with voting
rights in the Investment Corporation.
3. In the case of the preceding paragraph, the said unitholders or the proxy must submit a document
proving the delegated authority to the Investment Corporation for each general meeting ofunitholders.
Article 12 (Exercise of Voting Rights in Writing)
1. Unitholders who do not attend the general meeting of unitholders may exercise their voting rights
in writing.
2. The number of voting rights exercised in writing shall be included in the number of voting rights
of attending unitholders.
Article 13 (Exercise of Voting Rights in Electromagnetic Formats)
1. With a resolution of the Board of Directors, the Investment Corporation may determine thatunitholders who do not attend the general meeting of unitholders may exercise their voting rights
in electromagnetic formats.
2. The number of voting rights exercised in electromagnetic formats shall be included in the numberof voting rights of attending unitholders.
Article 14 (Deemed Approval)
1. Unitholders who do not attend a general meeting of unitholders and do not exercise their voting
rights shall be deemed to approve the proposals for resolution (excluding proposals whose
purposes conflict with each other in cases where multiple proposals are submitted) submitted to
the general meeting of unitholders.
2. The number of voting rights of unitholders deemed to approve the proposals for resolution inaccordance with the provision of the preceding paragraph shall be included in the number ofvoting rights of attending unitholders.
Article 15 (Record Date, Etc.)
1. When convening a general meeting of unitholders within three months from the end of theimmediately preceding fiscal period (as defined in Article 34; hereinafter the same), theunitholders described or recorded in the final register as of the end of the fiscal period shall be
the unitholders who may exercise their rights at the relevant general meeting of unitholders.
2. Notwithstanding the provisions of the preceding paragraph, the Investment Corporation may,when necessary, have the unitholders described or recorded in the final register as of the record
date, which the Investment Corporation determines by a resolution of the Board of Directors andgives public notice in advance in accordance with laws and regulations, to be the unitholders whoshould exercise their right at the relevant general meeting of unitholders.
3. With respect to the proceedings of the general meeting of unitholders, minutes shall be prepared
as prescribed by laws and regulations. The chairman, the Executive Directors and the Supervisory
Directors attending the relevant general meeting of unitholders shall sign or seal the minutes.
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4. The Executive Directors shall keep the minutes as stipulated in the preceding paragraph at thehead office of the Investment Corporation for a period of ten years.
Chapter 4: Executive Directors and Supervisory Directors
Article 16 (Number of Executive Directors and Supervisory Directors)
The Investment Corporation shall have at least one Executive Director and at least two Supervisory
Directors (provided, in any event, that the number of Supervisory Directors shall be at least one morethan the number of Executive Directors).
Article 17 (Appointment and Term of Office of Executive Directors and Supervisory Directors)
1. Unless otherwise prescribed by laws and regulations, the Executive Directors and Supervisory
Directors shall be appointed by a resolution of the general meeting of unitholders.
2. The term of office of the Executive Directors and Supervisory Directors shall be two years after
taking office. However, their term of office may be extended or shortened, to the extent
prescribed by laws and regulations, by a resolution of the general meeting of unitholders.
Furthermore, the term of office of the Executive Directors and Supervisory Directors who areappointed to fill vacancies or to increase the number of directors shall be the same as theremaining term of the preceding or incumbent Executive Directors or Supervisory Directors.
3. The effective period of a resolution for the appointment of substitute Executive Directors or
Supervisory Directors shall be until the expiration of the term of office of the incumbent Executive
Directors or Supervisory Directors to be replaced, who were appointed at the general meeting ofunitholders at which such resolution was made. However, such term may be shortened by aresolution of the general meeting of unitholders.
Article 18 (Standards for Payment of Remuneration for Executive Directors and Supervisory
Directors)
Standards for the payment of remuneration and the timing of payment to the Executive Directors andthe Supervisory Directors of the Investment Corporation shall be as follows:
1. Remuneration for an Executive Director shall be no more than 800,000 yen per month, with theamount to be determined by the Board of Directors, and such amount shall be paid by the last
day of each month by remittance into the account designated by the relevant Executive Director.
2. Remuneration for a Supervisory Director shall be no more than 400,000 yen per month, theamount to be determined by the Board of Directors, and such amount shall be paid by the last
day of each month by remittance into the account designated by the relevant Supervisory Director.
Article 19 (Liability of Executive Directors and Supervisory Directors to the Investment Corporation)
With regard to the liability for damages of Executive Directors or Supervisory Directors under Article
115-6, Paragraph 1 of the Investment Trusts Act, and in cases where they perform their duties in goodfaith and without gross negligence, the Investment Corporation may, to the extent prescribed by laws
and regulations and by a resolution of the Board of Directors, exempt the Executive Directors or
Supervisory Directors from such liability for damages if it finds it particularly necessary to do so in
consideration of the details of the facts that gave rise to the liability, the manner of execution ofduties by such directors and other circumstances.
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Chapter 5: Board of Directors
Article 20 (Convocation)
1. Unless otherwise prescribed by laws and regulations, the Executive Director shall convene andchair the Board of Directors meeting when there is one Executive Director. When there are two
or more Executive Directors, a single Executive Director shall convene and chair the Board of
Directors meeting in accordance with the order predetermined by the Board of Directors.
2. The convocation notice of the Board of Directors meeting shall be dispatched to all Executive
Directors and Supervisory Directors at least three days before the day of the meeting. However,the convocation period may be shortened or the convocation procedures may be omitted byunanimous approval of the Executive Directors and Supervisory Directors.
3. Each of the Executive Directors and Supervisory Directors who do not have the authority toconvene the Board of Directors meeting may request for such meeting to be convened inaccordance with the provisions of the Investment Trusts Act.
Article 21 (Resolution, Etc.)
1. Unless otherwise prescribed by laws and regulations or the Articles of Incorporation, a resolutionof the Board of Directors meeting shall be made by a majority vote of the attendants, with thepresence of a majority of the Executive Directors and Supervisory Directors who are entitled toparticipate in the vote.
2. With respect to the proceedings of the Board of Directors meeting, minutes shall be prepared asprescribed by laws and regulations. The Executive Directors and the Supervisory Directors
attending the relevant general meeting of unitholders shall sign or seal the minutes.
3. The Executive Directors shall keep the minutes prepared in accordance with the preceding
paragraph at the head office of the Investment Corporation for a period of ten years.
Article 22 (Rules of the Board of Directors)
Other than those as prescribed by laws and regulations as well as the Articles of Incorporation,
matters with respect to the Board of Directors shall be as prescribed by laws and regulations as wellas in accordance with the Rules of the Board of Directors determined by the Board of Directors.
Chapter 6: Accounting Auditor
Article 23 (Appointment of Accounting Auditor)
Unless otherwise prescribed by laws and regulations, the accounting auditor shall be appointed by aresolution of the general meeting of unitholders.
Article 24 (Term of Office of Accounting Auditor)
1. The term of office of the accounting auditor shall be until the conclusion of the first general
meeting of unitholders to be held following the end of the first fiscal period after the elapse of
one year from the date of assumption of office by the accounting auditor.
2. Unless otherwise resolved at the general meeting of unitholders described in the preceding
paragraph, the accounting auditor shall be deemed to have been reappointed at the said general
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meeting of unitholders.
Article 25 (Standards for Payment of Remuneration for Accounting Auditor)
Remuneration for the accounting auditor shall be no more than 20 million yen for each fiscal period,and shall be an amount determined by the Board of Directors. Such an amount shall be paid byremittance into the account designated by the accounting auditor within a month from the date on
which the Investment Corporation receives the full audit reports required under the Investment
Trusts Act and other laws and regulations.
Article 26 (Liability of Accounting Auditor to the Investment Corporation)
The Investment Corporation may, pursuant to the provisions of the Investment Trusts Act and by aresolution of the Board of Directors, exempt the accounting auditor from its liability to the extent
prescribed by laws and regulations.
Chapter 7: Target and Policies of Asset Management
Article 27 (Basic Policies for Asset Management)
The Investment Corporation shall manage its assets to achieve internal and external growth of its
investment assets from the medium- to long-term perspectives, with the objective of maximizing
unitholders’ profits.
Article 28 (Investment Approach)
1. The Investment Corporation shall aim to manage its assets by investing more than half of the total
amount of its assets in real estate assets.
2. When investing in real estate assets, the Investment Corporation shall diversify its investments inreal estate, and the primary or underlying property of such real estate assets shall mainly be for
office, logistics, retail, residential and hotel use.
3. The target geographical areas for the Investment Corporation’s investments shall be the Greater
Tokyo area (which refers to Tokyo, Kanagawa, Chiba and Saitama Prefectures), the Osaka area
(which refers to Osaka City and its neighboring areas), the Nagoya area (which refers to Nagoya
City and its neighboring areas), the Fukuoka area (which refers to Fukuoka City and its neighboringareas) and the Sapporo area (which refers to Sapporo City and its neighboring areas) as well asother cities designated by government ordinances and similar cities.
4. Notwithstanding the provisions of each of the preceding paragraphs, the Investment Corporation
may take measures necessary for protecting unitholders’ interests when unpredictable events likesudden changes in market trends, general economic conditions, real estate market trends andother events occur, possibly damaging unitholders’ interests.
5. The Investment Corporation shall set the total amount of its specified real estate (real estateinterests, real estate leasehold interest or surface rights, trust beneficiary interests in real estate
ownership, or land leasehold interest or surface rights among the specified assets acquired by theInvestment Corporation) at 75% (or more) than the total amount of the specified assets held by
the Investment Corporation.
Article 29 (Types, Objectives and Scope of Asset Management Target)
The Investment Corporation shall invest in the following specified assets in accordance with the basic
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asset management policies set forth in Article 27.
(1) Real estate, etc. (hereinafter collectively referred to as the following assets stipulated in (1)through (5) below; hereinafter the same)1) Land and fixtures thereof, surface rights and leasehold interest in land and fixtures thereof(hereinafter collectively referred to as “real estate”)
2) Leasehold interest in real estate3) Surface rights (including sectional surface rights)
4) Trust beneficiary interests in respect of the assets stipulated in (1) through (3) (including
comprehensive trusts in which monies incidental to real estate are also held in trust)5) Beneficiary interests in monetary trusts to be managed as investments in assets stipulated
in Items (1) through (3) above.
(2) Asset backed securities, etc. with real estate, etc. as the primary investment target (hereinaftercollectively referred to as the assets stipulated in Items (1) through (5) below; hereinafter referred
to as “real estate backed securities”)
1) Silent partnership-related equity interest securities (which refers to the silent partnership
equity interest set forth in Article 2, Paragraph 2, Item 5 of the Financial Instruments andExchange Act (Act No. 25 of 1948, as amended; hereinafter, the “Financial InstrumentsAct”), but limited to those of the relevant silent partnership for which the operator
manages an amount that is more than half of the assets the partnership owns, formanagement purposes, as investments in real estate, etc.)
2) Preferred securities (which refers to the preferred securities set forth in the Article 2,
Paragraph 9 of the Act on Securitization of Assets (Act No. 105 of 1998, as amended;hereinafter, the “Asset Securitization Act”), but limited to those of the relevant specificpurpose company that manages an amount that is more than half of the assets it has
acquired, in relation to asset securitization, for its operations as investments in real estate,etc.)3) Beneficiary securities (which refers to the beneficiary securities of investment trusts(including book-entry beneficiary securities of investment trusts) set forth in Article 2,
Paragraph 7 of the Investment Trusts Act, but limited to those of the relevant investment
trust that manages an amount that is more than half of its investment trust assets asinvestments in real estate, etc.)
4) Investment securities (which refers to the investment securities (including book-entry
investment units) set forth in Article 2, Paragraph 15 of the Investment Trusts Act, but
limited to those of the relevant investment corporation that manages an amount that ismore than half of the assets it owns, for management purposes, as investments in realestate, etc.)
5) Beneficiary certificates of specified purpose trusts (which refers to the beneficiary
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certificates of specified purpose trusts set forth in Article 2, Paragraph 15 of the Asset
Securitization Act, but limited to those of the relevant specified purpose trust thatmanages an amount that is more than half of its trust assets as investments in real estate,etc.)(3) Other specified assets
1) Bank deposits
2) Call loans3) National government bonds (as set forth in Article 2, Paragraph 1, Item 1 of the Financial
Instruments Act)
4) Municipal bonds (as set forth in Article 2, Paragraph 1, Item 2 of the Financial Instruments
Act)5) Debentures issued by a juridical person by a special law (as set forth in Article 2, Paragraph
1, Item 3 of the Financial Instruments Act)
6) Specified bonds (as set forth in Article 2, Paragraph 1, Item 4 of the Financial Instruments
Act)7) Bonds (as set forth in Article 2, Paragraph 1, Item 5 of the Financial Instruments Act,
excluding bonds with warrants)
8) Negotiable deposit certificates9) Beneficiary securities of loan trust (as set forth in Article 2, Paragraph 1, Item 12 of the
Financial Instruments Act)
10) Commercial paper (as set forth in Article 2, Paragraph 1, Item 15 of the Financial
Instruments Act)
11) Monetary claims such as loan claims to specific purpose companies (as set forth in the
Asset Securitization Act) with the objective of investing in real estate, etc., and othersimilar types of corporations, etc. (hereinafter, “real estate-related loans and othermonetary claims”)
12) Bonds issued by a godo-kaisha (limited liability company) with the objective of investingin real estate-related loans and other monetary claims
13) Beneficiary interests in trust for real estate-related loans and other monetary claims(assets stipulated in (11) through (13); collectively referred to as “real estate-related loans
and other monetary claims, etc.”)
14) Monetary claims (as set forth in Article 3, Item 7 of the Order for Enforcement Order ofthe Act on Investment Trusts and Investment Corporations (Cabinet Order No. 480 of 2000,
as amended; hereinafter, the “Order for Enforcement of the Investment Trusts Act”),
excluding what is otherwise set forth in Item (3) of this Article; hereinafter the same)
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15) Beneficiary interests in trust for monetary claims (excluding real estate, etc., real estatebacked securities and what is otherwise set forth in (3) of this Article)
16) Beneficiary interests in monetary trust with the objective of managing the trust assets asinvestments primarily in the assets stipulated in (1) through (15)17) Shares (limited to cases where the objective is in effect to invest in real estate, etc. or realestate backed securities, or where they are to be acquired in association with or in relation
to the management of real estate, etc. or real estate backed securities)18) Rights related to derivative transactions (as set forth in Article 3, Paragraph 2 of the Orderfor Enforcement of the Investment Trusts Act)
19) Securities (as set forth in Article 3, Item 1 of the Order for Enforcement of the Investment
Trusts Act, excluding those that fall under real estate, real estate backed securities, as wellas the items in item (3) of this Article and the following paragraph)20) Easements, beneficiary interests in trust for easements (including comprehensive trusts
in which monies incidental to real estate are also held in trust), beneficiary interests inmonetary trust with the objective of managing the trust assets as investments primarily
in easements, and equity interests related to an agreement in which one of the parties
makes equity investment for the management of easements to be performed by the otherparty while the other party manages the invested capital as investments primarily ineasements and promises to distribute the profits generated from the said management21) Renewable energy generating facilities as set forth in Article 3, Item 11 of the Order for
Enforcement of the Investment Trusts Act)
2. Aside from the assets indicated in the preceding paragraph, the Investment Corporation may
invest in the assets indicated below only in cases where the objective of the investment is toinvest in effect in real estate, etc. or real estate backed securities, or where the investment ismade in association with or in relation to the investment in said assets:
1) Trademark rights, and the exclusive or non-exclusive right to use the trademarks (as set forthin the Trademark Act (Act No. 127 of 1959, as amended))2) Copyrights, etc. (as set forth in the Copyright Act (Act No. 48 of 1970, as amended))3) Rights to use the source of a hot spring as set forth in the Hot Springs Act (Act No. 125 of 1948,
as amended) and facilities, etc., related to such hot spring4) Movables (as set forth in the Civil Code (Act No. 89 of 1896, as amended) and referring tofacilities, equipment, vehicles and other objects attached to real estate for structural andutilization reasons), but excluding the items set forth in Item 3 (21) of the preceding paragraph5) Beneficiary interests in monetary trusts with the objective of managing it as investments initems stipulated in (1) through (4)
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6) Specified investments (as set forth in Article 2, Paragraph 6 of the Asset Securitization Act)
7) Membership rights in membership companies (as set forth in Article 575, Paragraph 1 of theCompanies Act (Act No. 86 of 2005, as amended)
8) Equity interests in partnerships under the Civil Code (limited to partnerships that have realestate, leasehold interest in real estate, surface rights or easements, or beneficiary interests
in trust for these assets (including comprehensive trusts in which monies incidental to realestate are also held in trust) as partnership assets and that aim to lease, operate or manage
such assets)
9) Rights under insurance contracts (limited to cases where such rights are acquired with theobjective of mitigating risks associated with investments in real estate, etc. or real estatebacked securities)
10) Carbon dioxide equivalent quota set forth in the Act on Promotion of Global WarmingCountermeasures (Act No. 117 of 1998, as amended) and any other assets or rights of a similar
nature, or emission rights (including emission rights related to greenhouse gases)11) Other rights to be acquired incidentally with investments in real estate, etc. and real estatebacked securities.
Article 30 (Investment Limitations)
1. With regard to the assets set forth in Paragraph 1, Item 3 and Paragraph 2 of the preceding article,
the Investment Corporation shall manage them by taking into account security and liquidity or byconsidering their relevance with the specified assets set forth in Paragraph 1, Items 1 and 2 of thepreceding article. For real estate-related loans and other monetary claims, etc., the Investment
Corporation shall manage them only up to an amount equivalent to 5% of the Investment
Corporation’s total assets.
2. With regard to the rights relating to the derivative transactions set forth in Paragraph 1, Item 3(18) of the preceding article, the Investment Corporation shall manage them only with theobjective of hedging against the risk of interest rate fluctuations arising from its liabilities andother risks.
Article 31 (Purposes and Scope of Leasing of Portfolio Assets)
1. In principle, the Investment Corporation shall lease (including leasing of parking lots and spaces
for installation of signboards) the real estate (including real estate underlying real estate-related
assets it acquires (collectively referred to as “real estate, etc. and real estate underlying realestate-related assets acquired by the Investment Corporation”; hereinafter the same)) among its
investment assets, in order to efficiently manage the investment assets and achieve highmanagement performances.
2. When leasing the real estate described in the preceding paragraph, the Investment Corporation
may receive or provide tenant security deposits, guarantees, and other similar monies. When
receiving such monies, the Investment Corporation shall manage them in accordance with thebasic policies of asset management as set forth in Article 27 and the investment approach as set
forth in Article 28.
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3. The Investment Corporation may lease the investment assets other than real estate (including
real estate, etc. and real estate underlying real estate-related assets acquired by the Investment
Corporation) that are among its investment assets.
Article 32 (Principles of Asset Evaluation)
1. In evaluating its investment assets, the Investment Corporation shall do so prudently andfaithfully for the benefit of its unitholders.
2. In evaluating the investment assets, the Investment Corporation shall endeavor to ensure thereliability of the evaluation results.
3. In evaluating the investment assets, the Investment Corporation shall do so in conformity withthe principle of continuity as a rule.
Article 33 (Methods, Standards and Record Date of Asset Valuation)
1. The methods and standards of the Investment Corporation’s asset valuation shall, for each typeof investment assets, be determined in the manner stated below, in accordance with theRegulations on the Calculation of Investment Corporations (Cabinet Office Order No. 47 of 2006,
as amended), the Rules on Real Estate Investment Trusts and Real Estate Investment Corporations
established by The Investment Trusts Association, Japan (as amended; hereinafter, the “Rules on
Real Estate Investment Trusts and Real Estate Investment Corporations”), other rules andregulations established by the Association, and generally accepted corporate accounting
standards as well as other corporate accounting practices.
(1) Real estate, leasehold interest in real estate and surface rights (as set forth in Article 29,
Paragraph 1, Item 1 (1) through (3))
These assets shall be valued at the acquisition price less the accumulated depreciation
amount. The depreciation amount of buildings and facilities, etc. shall be calculated by thestraight-line method. For facilities, etc., however, other calculation methods may be employed
if calculation using the straight-line method becomes inappropriate for a legitimate reason,and it can be reasonably judged that changing calculation methods will not cause any problem
from the standpoint of investor protection.
(2) Beneficiary interests in trusts for real estate, leasehold interest in real estate or surface rights(as set forth in Article 29, Paragraph 1, Item 1 (4))
If the trust assets are assets referred to in the preceding item, they shall be valued inaccordance with the preceding item. If the trust assets are financial assets, they shall bevalued in accordance with generally accepted corporate accounting standards and othercorporate accounting practices. The value of the relevant beneficiary interests in trust shallbe calculated by deducting the amount of liabilities from the total value of these assets.
(3) Beneficiary interests in monetary trust to be managed as investment primarily in real estate,leasehold interest in real estate or surface rights (as set forth in Article 29, Paragraph 1, Item
1 (5))
If the assets comprising the trust assets are assets referred to in Item 1, they shall be valuedin accordance with Item 1. If the assets comprising the trust assets are financial assets, theyshall be valued in accordance with generally accepted corporate accounting standards andother corporate accounting practices. The value of the relevant beneficiary interests in trust
shall be calculated by deducting the amount of liabilities from the total value of these assets.
(4) Equity interest in silent partnerships related to real estate (as set forth in Article 29, Paragraph
1, Item 2 (1))
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If the assets comprising the silent partnership are assets referred to in Items 1 through 3, theyshall be valued in accordance with the methods set forth therein. If the assets comprising thesilent partnership are financial assets, they shall be valued in accordance with generally
accepted corporate accounting standards and other corporate accounting practices. The valueof the relevant equity interest in the silent partnership shall be calculated by deducting theamount of liabilities from the total value of these assets.
(5) Real estate-backed securities (as set forth in Article 29, Paragraph 1, Item 2 (2) through (5))
If the relevant real estate-backed securities have a market price, the value based on themarket price (meaning a trading price on a financial instruments exchange, a price publishedby an authorized financial instruments firms association, etc., or a trading price establishedby a trading system similar thereto that enables sale, purchase, liquidation and othertransactions at any time; hereinafter the same) shall be used. If there is no market price, therelevant real estate-backed securities shall be valued at a value calculated in a reasonable
manner. A market price or value calculated in a reasonable manner that should be used shallbe obtained by the same methods in each fiscal period, except where the accuracy ofvaluation will be increased by other methods. If neither a market price nor a value calculated
in a reasonable manner is available, the relevant real estate-backed securities may be valuedat acquisition cost.
(6) Securities, etc. (as set forth in Article 29, Paragraph 1, Item 3 (3) through (7) and (9), (10), (12),(13), (15), (17) and (19))
If the relevant securities, etc. have a market price, the value based on the market price shallbe used. If there is no market price, the relevant securities, etc. shall be valued at a value
calculated in a reasonable manner.
(7) Monetary claims (as set forth in Article 29, Paragraph 1, Item 3 (11) and (14))
These assets shall be valued at acquisition price less provisions for doubtful accounts
calculated based on estimated bad debts. However, if claims are acquired at a price lower orhigher than the claimable amount, and the difference between the acquisition amount andthe claimable amount is considered to be an interest rate adjustment, the claims shall bevalued at the value calculated based on the amortized-cost method less the provisions for
doubtful accounts.
(8) Beneficiary interests in monetary trust (as set forth in Article 29, Paragraph 1, Item 3 (16))
If the assets comprising the trust assets are assets referred to in Item 4, 5 or 6, they shall bevalued by the method set forth therein, and the value of the relevant beneficiary interests inmonetary trusts shall be the total value of these assets.
(9) Rights related to derivatives transactions (as set forth in Article 29, Paragraph 1, Item 3 (18))1) Claims and obligations arising from derivatives transactions listed on a financial
instruments exchange
These claims and obligations shall be valued at the value calculated based on the final
price (closing price; if there is no closing price, the quotation (the lowest ask quotationor highest bid quotation that has been published; if both of them have been published,
the middle thereof)) on the financial instruments exchange on the record date. If there
is no final price on the record date, these claims and obligations shall be valued at thevalue calculated based on the final price on the day before and closest to the record date.
2) Claims and obligations arising from non-listed derivatives transactions without prices ona financial instruments exchange
These claims and obligations shall be valued at the value calculated by reasonable
methods as the value similar to the market price. In a mark-to-market valuation, the best
estimate shall be used. If it is considered extremely difficult to calculate a fair value, theseclaims and obligations shall be valued at acquisition price.
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3) Hedge accounting may be applied to transactions that are considered hedging
transactions in accordance with generally accepted corporate accounting standards andother corporate accounting practices. For transactions that satisfy the requirements for
special accounting for interest rate swaps, such special accounting for interest rate swaps
may be applied.
(10) Others
In cases not mentioned above, assets shall be valued at the valuation amount that should be
used in accordance with the valuation rules of The Investment Trusts Association, Japan, or
the valuation amount that should be used based on generally accepted accounting standards.
2. If a valuation is made by a method different from the one in the preceding paragraph in order toindicate values in asset management reports, etc., it shall be made in the following manner:(1) Real estate, leasehold interest in real estate, and surface rights
In principle, the valuation amount based on the appraisal of a real estate appraiser.
(2) Beneficiary interests in trusts for real estate, leasehold interest in real estate or surface rights,
and equity interests in silent partnerships related to real estate
If the trust assets or the assets comprising the silent partnership are assets referred to in thepreceding item, they shall be valued in accordance with the preceding item. If the trust assets
or the assets comprising the silent partnership are financial assets, they shall be valued inaccordance with generally accepted corporate accounting standards and other corporate
accounting practices. The value of the relevant equity interests in silent partnership or
beneficiary interests in trust shall be calculated by deducting the amount of liabilities fromthe total value of these assets.
3. The record date for asset valuation shall be each settlement date. However, for assets set forth in
Article 29, Paragraph 1, Item 3 and Paragraph 2 that can be valuated at a value based on themarket price, the record date shall be the last day of every month.
Article 34 (Settlement Date)
The fiscal periods of the Investment Corporation shall be from February 1 through the end of July ofeach year, and from August 1 through the end of January of the following year (the last day of eachfiscal period is hereinafter referred to as the “settlement date”).
Article 35 (Cash Distribution Policies)
1. Distribution Policies
In principle, the Investment Corporation shall make distributions based on the following policies:(1) Of the total cash amount to be distributed to unitholders, the amount of profits (meaning theamount calculated by deducting the sum of the total capital contributions and other amounts
from the net asset amount appearing on the balance sheet of the Investment Corporation;
hereinafter the same) shall be calculated in accordance with the Investment Trusts Act,
generally accepted corporate accounting standards and other corporate accounting practices.
(2) When making a distribution up to the amount of profits, the distribution amount shall be an
amount determined by the Investment Corporation, which shall be an amount in excess of
90% of the amount of distributable profits (or, if there is a change in the calculation of suchamount due to amendments to laws and regulations or for any other reason, the amount after
the change) as defined in the special taxation measures for investment corporations as set
forth in the Act on Special Measures Concerning Taxation (Act No. 26 of 1957, as amended;hereinafter, the “Special Taxation Measures Act”). Furthermore, the Investment Corporation
may set aside long-term repair reserves, payment reserves, distribution reserves, and similar
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reserves and allowances that are considered necessary for maintaining or enhancing the valueof its assets.
(3) The amount of profits retained and not allocated to distributions shall be managed inaccordance with the Investment Corporation’s targets and asset management policies.
2. Cash Distributions in Excess of Profits
The Investment Corporation may make cash distributions in excess of its profits to the unitholders
based on the statement of cash distributions approved pursuant to the Investment Trusts Act, if
the Board of Directors determines that it is appropriate to do so due to the trends in the economic
environment, real estate market and leasing market, etc. or for purposes of maximizing
unitholders’ interests, or it is possible to avoid the imposition of corporate and other taxes on theInvestment Corporation. If the Investment Corporation makes cash distributions in excess of its
profits, the maximum amount shall be the amount of profits for the relevant fiscal period plus theamount prescribed by laws and regulations, etc. (including the rules of The Investment Trusts
Association, Japan).
3. Method of Distributing Distributions, Etc.
Distributions shall be distributed in cash to the unitholders or registered investment unit pledgees
who are registered or recorded in the latest unitholders register as of the settlement date inproportion to the number of investment units held by them within 3 months of the settlement
date in principle.
4. Rules of The Investment Trusts Association, Japan
In addition to Paragraphs 1 through 3, the Investment Corporation shall make cash distributionsin accordance with the Rules on Real Estate Investment Trusts and Real Estate Investment
Corporations.
5. Period of exclusion (joseki kikan) of the right to demand distributions
The Investment Corporation shall be released from its obligation to pay distributions if 3 years
have passed since the date of commencement of the payment thereof. No unpaid distributions
shall bear interest.
Article 36 (Maximum Amounts, Etc. of Borrowings and Issuance of Investment Corporation Bonds)
1. The Investment Corporation may borrow funds (including through a call market) or issue
investment corporation bonds (including short-term investment corporation bonds; hereinafter
the same) for purposes of financing, among other things, the acquisition of assets, payment of
repair costs or distributions, operation of the Investment Corporation, and repayment of debts(including the refund of tenant security deposits and guarantees, and repayment of borrowings
and investment corporation bonds) for the steady growth, efficient management and stable
management of its investment assets. When the Investment Corporation borrows funds, it shalldo so only from qualified institutional investors as defined in Article 2, Paragraph 3, Item 1 of the
Financial Instruments Act (limited to those who fall within the category of institutional investors
as defined in Article 67-15, Paragraph 1, Item 1 (b) (2) of the Special Taxation Measures Act).
2. In the case of the preceding paragraph, the Investment Corporation may provide its investment
assets as collateral.
3. The maximum amount of borrowings shall be 1 trillion yen, and the maximum amount ofinvestment corporation bonds that may be issued shall be 1 trillion, provided that their combined
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amount shall not exceed 1 trillion yen.
Article 37 (Standards for Payment of Asset Management Fees to Asset Management Company)
1. The method of calculating fees payable to the asset management company to which theInvestment Corporation entrusts the management of its investment assets (hereinafter, the“Asset Management Company”) shall be as follows:(1) Midterm fee I
The midterm fee I shall be the amount (rounded down to the nearest yen) obtained bymultiplying the total valuation amount of the investment assets by a rate to be agreed uponwith the Asset Management Company, which shall be up to 0.3%. The total valuation amountof the investment assets shall be the total of A. and B. below:
A. As for the real estate, etc. in Article 29, Paragraph 1, Item 1 (1) through (4), the total of theamounts obtained by multiplying (i) the appraisal value (or, if no appraisal value is obtained
as of the end of the relevant fiscal period, the selling price (meaning the price stipulated in
the relevant sales agreement, etc., but excluding consumption tax and local consumption tax(hereinafter, the “consumption tax, etc.”)) or acquisition price (meaning the price stipulated
in the relevant sales agreement, etc., but excluding the acquisition fee and other expenses
related to the acquisition and consumption tax, etc.), whichever is lower, of each of therelevant assets as of the end of the relevant fiscal period by (ii) the number of days for which
each of the relevant assets is held in the relevant fiscal period, and dividing the resulting figure
by the number of days in a year (365 days for a year other than a leap year, and 366 days fora leap year; hereinafter the same)
B. As for the real estate, etc. in Article 29, Paragraph 1, Item 1 (5), real estate-backed securities
in Article 29, Paragraph 1, Item 2, and assets related to the real estate-related loans and othermonetary claims, etc. in Article 29, Paragraph 1, Item 3 (11) through (13) among the otherassets in Article 29, Paragraph 1, Item 3, the total of the amounts obtained by multiplying (i)the value of each of the relevant assets valued by the method set forth in Article 33, Paragraph
1 as of the end of the relevant fiscal period by (ii) the number of days for which each of therelevant assets is held in the relevant fiscal period, and dividing the resulting figure by the
number of days in a year.
(2) Midterm fee II
The midterm fee II shall be the amount (rounded down to the nearest yen) (i.e. the amountcalculated by the following formula) obtained by multiplying (i) the amount obtained by
dividing the distributable amount before deducting the midterm fee II as of the end of therelevant fiscal period of the Investment Corporation (or, if a loss carried forward is included in
the net income before tax (before deducting the midterm fee II and nondeductible
consumption tax, etc.), calculated in accordance with generally accepted corporate
accounting standards in Japan, the amount after compensating for the amount of the loss
carried forward) by the total number of issued and outstanding investment units as of the endof the relevant fiscal period (hereinafter, “distributions per unit before deducting midterm feeII”) by (ii) the “total real estate rental revenue minus real estate rental expenses (excluding
depreciation expenses and losses on retirement of non-current assets) in the relevant fiscal
period (hereinafter, “NOI”)” and (iii) a rate to be agreed upon with the Asset Management
Company, which shall be up to 0.002%.
Midterm fee II = Distributions per unit before deducting midterm fee II x NOI x a rate of up to
0.002% (rounded down to the nearest yen)If the Investment Corporation holds its undisposed or uncancelled investment units as of the
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end of the relevant settlement date, the total number of issued and outstanding investment
units shall mean the total number of issued and outstanding investment units as of the endof the relevant settlement date less the number of investment units held by the Investment
Corporation. If investment units have been consolidated or split, the total number of issued
and outstanding investment units as of the settlement date of the fiscal period in which theconsolidation or split has been conducted and any subsequent fiscal periods shall be thenumber that is adjusted to the number of investment units before the consolidation or split
using the consolidation ratio or split ratio.
(3) Acquisition fee
Upon acquisition of any new real estate, etc., real estate-backed securities or real estaterelated loans and other monetary claims, etc., the acquisition fee shall be the amount(rounded down to the nearest yen) obtained by multiplying the acquisition price (meaning
the price stipulated in the relevant sales agreement, etc., but excluding the acquisition fee
and other expenses required for the acquisition and consumption tax, etc.) of such real estate,etc., real estate-backed securities or real estate-related loans and other monetary claims, etc.
by a rate to be agreed upon with the Asset Management Company, which shall be up to 1%(or 0.5% if the Investment Corporation acquires any new real estate, etc., real estate-backed
securities or real estate-related loans and other monetary claims, etc. from its interested
parties as defined in the Interested Party Transaction Regulations of the Asset Management
Company) of such acquisition price.
(4) Transfer fee
Upon transfer of any real estate, etc., real estate-backed securities or real estate-relatedloans and other monetary claims, etc., the transfer fee shall be the amount (rounded down
to the nearest yen) obtained by multiplying the transfer price (meaning the price stipulated
in the relevant sales agreement, etc., but excluding the transfer fee and other expenses
required for the transfer and consumption tax, etc.) of such real estate, etc., real estatebacked-securities or real estate-related loans and other monetary claims, etc. by a rate to beagreed upon with the Asset Management Company, which shall be up to 1% (or 0.5% if theInvestment Corporation transfers any real estate, etc., real estate-backed securities or realestate-related loans and other monetary claims, etc. to its interested parties as defined in
the Interested Party Transaction Regulations of the Asset Management Company) of suchtransfer price.
(5) Merger fee
If investigation and valuation of the assets, etc. held by the other party to a consolidationtype merger or an absorption-type merger of the Investment Corporation (including the casewhere the Investment Corporation becomes the surviving corporation in an absorption-typemerger, and the case where the Investment Corporation becomes the dissolving corporationin an absorption-type merger; hereinafter the same) (hereinafter collectively referred to as
the “Merger”) or any other services related to the Merger are performed, and the Merger
becomes effective, then the merger fee shall be the amount (rounded down to the nearestyen) obtained by multiplying the total of the valuation amounts of the real estate-related
assets held by such other party that will be transferred to or held by the corporation
established in the consolidation-type merger or the surviving corporation in the absorptiontype merger as of the date on which such Merger becomes effective (hereinafter, the“Valuation Amount”) by a rate to be agreed upon with the Asset Management Company,
which shall be up to 1% (or 0.5% if the Investment Corporation merges with an investment
corporation that falls within the category of interested parties as defined in the Interested
Party Transaction Regulations of the Asset Management Company, or an investment
corporation for which any of the interested parties is entrusted with the management of
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assets).
2. The fees payable to the Asset Management Company by the Investment Corporation, as set forthin the preceding paragraph, shall be paid at the following times:(1) Management fee I:
Within 3 months of the end of the fiscal period(2) Management fee II:
Within 3 months of the end of the fiscal period(3) Acquisition fee: By the end of the month following the month in which the date ofacquisition of the real estate, etc., real estate-backed securities or real estate-related loans
and other monetary claims, etc. (i.e., the date on which the transfer of ownership and otherrights becomes effective) falls.
(4) Transfer fee: By the end of the month following the month in which the date of transfer ofthe real estate, etc., real estate-backed securities or real estate-related loans and othermonetary claims, etc. (i.e., the date on which the transfer of ownership and other rights
becomes effective) falls.
(5) Merger fee: By the end of the month following the month in which the effective date of the
Merger falls (in the case of a consolidation-type merger, the corporation established in the
consolidation-type merger shall pay the fee; if the Investment Corporation becomes thedissolving corporation in an absorption-type merger, the surviving corporation in theabsorption-type merger shall pay the fee).
Article 38 (Attribution of Profit and Loss)Any and all profits and losses arising from the management of the Investment Corporation’s
investment assets by the Asset Management Company shall be for the account of the Investment
Corporation.
Article 39 (Burden of Expenses)
1. If the Investment Corporation is requested to pay overdue interest or damages involving taxes
related to the investment assets, expenses required for its general administrator, its asset
custodian and the Asset Management Company to take charge of the administrative work
entrusted by the Investment Corporation, and advances made by such general administrator,
asset custodian and the Asset Management Company, the Investment Company shall pay the
overdue interest or damages.
2. In addition to the preceding paragraph, the Investment Corporation shall pay the following
expenses:(1) Expenses related to the issuance of investment units and investment unit acquisition rights,
issuance of investment corporation bonds, and listing and listing maintenance (including theexpenses of preparing, printing and delivering investment securities and investment unit
acquisition right certificates as well as fees for underwriting securities firms);(2) Expenses of preparing, printing and filing securities registration statements, securities reports
and extraordinary reports;(3) Expenses of preparing, printing and delivering prospectuses;(4) Expenses of preparing, printing and delivering financial statements and asset management
reports, etc. prescribed in laws and regulations (including filing expenses upon filing withregulatory authorities or other parties);(5) Expenses of public notices of the Investment Corporation as well as expenses related to its
advertising and IR activities, etc.;(6) Fees and expenses payable to experts, etc. (including legal advisers, tax advisers, accounting
advisers, appraisal experts, due diligence experts, and judicial scriveners, etc.);
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(7) Out-of-pocket expenses and insurance premiums, etc. of the Executive Directors andSupervisory Directors, remuneration for accounting audits, and expenses incurred due to theholding of general meeting of unitholders and Board of Directors meetings, etc.;(8) Expenses related to the acquisition, administration and operation of investment assets(including expenses related to registration, expenses for due diligence and otherinvestigations, trust fees and trust expenses, advertising expenses, brokerage fees,
management service fees, non-life insurance premiums, maintenance and repair costs, andutility expenses, etc.);(9) Interest, loan fees, undertaking fees and other expenses on borrowings and investment
corporation bonds;(10) Expenses of obtaining and maintaining ratings of the Investment Corporation;(11) Expenses required for the operation of the Investment Corporation; and(12) Other expenses incidental and related to, or similar to, the foregoing Items that should beborne by the Investment Corporation.
Article 40 (Consumption Tax and Local Consumption Tax)The Investment Corporation shall be liable for the consumption tax, etc. levied on the expenses andamounts that should be paid by the Investment Corporation for the management of investment
assets or other services and that constitute taxable items under the Consumption Tax Act (hereinaftercollectively referred to as the “taxable items”), and pay an amount equivalent to the consumption
tax, etc. in addition to the amounts of the taxable items. Unless otherwise provided, all the amounts
described in these Articles of Incorporation shall be amounts that do not include consumption tax,
etc.
Chapter 8: Entrustment of Services and Administrative Work
Article 41 (Entrustment of Asset Management, Custody and Other Services and AdministrativeWork)
1. Pursuant to the Investment Trusts Act, the Investment Corporation shall entrust asset
management services to the Asset Management Company and asset custody services to its asset
custodian.
2. The Investment Corporation shall entrust a third party with the administrative work, other thanasset management and custody services, that is required to be entrusted to a third party pursuant
to the Investment Trusts Act (hereinafter, the “general administrative work”).
3. With regard to administrative work to be entrusted after the establishment of the Investment
Corporation that relates to the offering of investment units issued by the Investment Corporationand the issuance of investment securities, the Board of Directors shall, from time to time,
determine the general administrator and execute an agreement on entrustment of generaladministrative work.

Established:
November 25, 2015
Revised: March 10, 2016
Revised: October 26, 2017
Revised: October 30, 2019

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Attachment 3
Financial statements, Asset Management Report and Statement of Cash Distributions of SAR inrespect of the final fiscal period

I. Asset Management Report
II. Balance Sheet
III. Statement of Income
IV. Statement of Unitholders’ Equity
V. Notes
VI. Statement of Cash Distributions
VII. Statement of Cash Flows (Reference Information)

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I. Asset Management Report
1. Overview of Asset Management(1) Operation status of Star Asia Investment Corporation (SAR)
3rd fiscal period 4th fiscal period 5th fiscal period 6th fiscal period 7th fiscal period
February 1, 2017 to August 1, 2017 to February 1, 2018 to August 1, 2018 to February 1, 2019 toJuly 31, 2017
January 31, 2018
July 31, 2018
January 31, 2019
July 31, 2019

Fiscal period(Million yen)

3,211

3,194

2,810

3,844

3,785

(Million yen)

2,312

2,408

2,791

3,224

3,334

(Million yen)

1,113

1,142

1,234

1,438

1,559

(Million yen)

836

841

963

1,088

1,214

Operating income(Million yen)

2,098

2,051

1,576

2,406

2,225

Ordinary income(Million yen)

1,833

1,876

1,305

2,073

1,965

Net income(Million yen)

1,832

1,802

1,305

2,049

1,964

Total assets(Million yen)

83,60982,15493,553111,079

110,240(%)[24.1][(1.7)][13.9][18.7][(0.8)](Million yen)

41,892

41,87047,287

54,83954,739Operating revenue
Of which, real estate leasing
revenues
Operating expenses
Of which, real estate leasing
expenses[Period to period]
Net assets[Period to period](%)[20.8][(0.1)][12.9][16.0][(0.2)]

Interest-bearing debt

(Million yen)

38,73037,35043,23052,34051,580Unitholders’ capital(Million yen)

40,03140,03145,832

52,74552,745(Units)414,300

414,300

470,624

540,824

540,824

Total number of investment units
issued and outstanding
Net assets per unit

(Yen)

101,116

101,063

100,477

101,400

101,215(Million yen)

1,832

1,689

1,305

2,011

1,960

(Yen)

4,423

4,077

2,773

3,720

3,625

(Yen)

4,423

4,077

2,773

3,720

3,625

(Yen)

－

－

－

－

－

(%)

2.4

2.3

1.5

2.0

1.8

[Annualized value]

(%)

[4.9]

[4.5]

[3.0]

[4.0]

[3.6]

Return on equity (Note 3)

(%)

4.8

4.3

2.9

4.0

3.6

[Annualized value]

(%)

[9.7]

[8.5]

[5.9]

[8.0]

[7.2]

Equity ratio at end of period (Note 3)

(%)

50.1

51.0

50.5

49.4

49.7

[Period on Period change](%)[(1.4)][0.9][(0.4)][(1.2)][0.3]

Cash distribution payout ratio (Note 3)

(%)

100.0

93.7

100.0

98.2

99.8

(Days)

181

184

181

184

181

(Properties)

24

23

29

34

34

Depreciation(Million yen)

287

305

355

409

415

Capital expenditures(Million yen)

190

182

281

262

189

(Million yen)

1,763

1,871

2,184

2,545

2,535

(Million yen)

1,221

1,335

1,661

1,860

1,957

(Yen)

2,948

3,224

3,529

3,440

3,620

(%)

46.3

45.5

46.2

47.1

46.8

Total cash distribution
Cash distribution per unit
Of which, cash distribution of
earnings
Of which, cash distribution in excessof earnings per unit
Ratio of ordinary income to total assets(Note 3)【Other reference information】
Number of operating days
Number of investment properties at
end of period

Lease NOI (net operating income)(Note 3)
FFO (funds from operation)(Note 3)
FFO per unit (Note 3)
Debt to total assets ratio at the end of
period (LTV)

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(Note 1)(Note 2)
(Note 3)The operating periods for SAR are the six-month periods from February 1 to July 31 and August 1 to January 31 of the following year.
Unless otherwise specifically noted, amounts are rounded down to the unit displayed and percentages are rounded to the first decimal place.
Calculated based on the following formula.

Ratio of ordinary income to total
assetsReturn on equity
Equity ratio at end of period
Cash distribution payout ratio

Lease NOI (net operating income)FFO (funds from operation)
FFO per unit

Ordinary income ÷ ｛(total assets at the beginning of period + total assets at the end of period）÷ 2｝ × 100
Net income ÷ ｛(net assets at the beginning of period + net assets at the end of period) ÷ 2｝ × 100
Net assets at the end of period ÷ total assets at the end of period × 100
Cash distribution per unit (not including cash distribution in excess of earnings) ÷ net income per unit × 100
For the 3rd, 5th and 6th fiscal periods, cash distribution payout ratio is calculated by the following formula due
to changes in the number of investment units during the period following issuance of new investment units
during the period:
Total cash distribution (not including cash distribution in excess of earnings) ÷ Net income × 100
Real estate leasing revenues - real estate leasing expenses + depreciation
Net income + depreciation - gain or loss on sales of real estate
FFO ÷ total number of investment units issued and outstanding(2) Status of asset management during the 7th fiscal period
1) Significant developments of the investment corporation
SAR listed on the J-REIT section of the Tokyo Stock Exchange with assets of 61,493 million yen(on an acquisition price basis, the same applies below) in April 2016 as a diversified real estate
investment corporation. SAR has conducted public offerings accompanying property acquisition
three times to date, and its asset size has increased to more than 100 billion yen as of the endof its 6th fiscal period (i.e, the fiscal period ended January 31, 2019). Since its listing, SAR has
engaged in active management while researching and conducting various inventive andunconventional measures under the basic philosophy of maximization of unitholder value.
Representative examples include the conduct of four asset replacements to strengthen SAR’s
portfolio and to achieve capital gains, as well as investments in mezzanine debts, a move that
only SAR (among the listed real estate investment corporations in Japan as of the date of thisdocument) has made.
During the 7th fiscal period (i.e., the fiscal period ended July 31, 2019), SAR acquired
Amusement Media Gakuin Shinkan (acquisition price: 1,020 million yen) by utilizing thepreferential negotiation right it acquired from the Sponsor Group. As a result, SAR’s asset size
expanded to 102,374 million yen (as of the date of this document; excluding silent partnershipinvestments and mezzanine debt investments). Moreover, SAR added the “Expanded Tokyo Area”
to its targeted geographical area for investments, as set forth in its management guidelines andsought more opportunities for external growth, in addition to its acquisition of silent partnership
equity interests with trust beneficiary interests in respect of the “OHA Building” (which is theasset underlying the trust beneficiary interests) as operating assets, and its acquisition of thepreferential negotiation right for that building. In addition, in the 8th fiscal period (i.e., the fiscal
period ending January 31, 2020), SAR acquired preferential negotiation rights for 4 properties (2office properties, 1 commercial facility and 1 residential property) and secured sources forexternal growth up to the date of this document. As a result, SAR holds preferential negotiationrights for 10 properties (3 office properties, 1 commercial facility, 4 residential properties and 2
residential properties exclusively for students) as of the date of this document.

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Furthermore, during the 7th fiscal period, the Star Asia Group proposed a merger between
SAR and Sakura Sogo REIT Investment Corporation, and the results of the resolution delivered at
the General Meeting of Unitholders of Sakura Sogo REIT Investment Corporation held on August30, 2019, are in line with the proposal. Accordingly, SAR believes that the proposal made by theStar Asia Group for purposes of conducting the merger between SAR and Sakura Sogo REIT
Investment Corporation is supported by the unitholders of Sakura Sogo REIT Investment
Corporation. SAR will be prompt in carrying out the procedures for the merger between SAR and
Sakura Sogo REIT Investment Corporation, and aims to realize a merger that will contribute to
the maximization of unitholder value for both SAR and Sakura Sogo REIT Investment Corporation(Note).
SAR achieved internal growth by working to increase revenue from its leasing business and tominimize expenses related to its rental business for assets under management as well as byexpanding its asset size and implementing measures for expanding its asset size in collaboration
with Star Asia Group, as described above.
(Note) As of the date of this document, even though SAR is preparing for its merger with
Sakura Sogo REIT Investment Corporation, no merger agreement has been concluded
between Sakura Sogo REIT Investment Corporation and SAR. Resolution at theGeneral Meeting of Unitholders for each of the investment corporations is required
to give effect to the merger, and there is no guarantee that the merger will take place.
2) Investment environment and management performance
Investment environment:
In terms of the economic environment during the 7th fiscal period, the real economic growthrate (second preliminary figures) for the first half of 2019 increased by 0.6% (2.2% annually) in
the first quarter and by 0.3% (1.3% annually) in the second quarter, and the environment hasremained generally favorable. In particular, consumer spending, which accounts forapproximately 60% of GDP, was strong due to a long holiday associated with the transition to theReiwa era. Meanwhile, corporate earnings have remained at a high level while showing both
growth and contraction. Exports, however, continued to be sluggish due to the impact of ongoing
U.S.-China trade frictions. The outlook for the global economy is uncertain due to theintensification of U.S.-China trade frictions, concerns over a no-deal Brexit, and the decision of
the U.S. Federal Reserve Board at the end of July 2019 to lower interest rate for the first timesince 2008. Amid this situation, the Nikkei Stock Average has increased from 19,561.96 points atthe beginning of 2019 to 21,521.53 points at the end of the 7th fiscal period, and was once withina box range of around 20,500 points, before recovering to its current level of above 21,000 points.
The long-term interest rate in Japan remains at around -0.25% due to a sense of uncertainty overglobal economic prospects and the the Bank of Japan’s continued inclination toward monetaryeasing.
Within this environment, the TSE REIT Index has risen to more than 2,000 points in July 2019
for the first time in about 11 and a half years since 2007, from 1,750.87 points at the beginningof 2019, and now sits at a level above 2,000 points. It is believed that investment in J-REITs
conducting continuous stable distribution is being considered and a situation in which such JREITs are preferred as an investment product with a relatively high yield continues to be seen.

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While a favorable financing environment continues to be seen, transaction yield remains at alow level and supply and demand continues to be tight in the real estate trading market due tocontinued active investments by market participants including listed REITs, private REITs,
overseas investors, and Japanese companies. In addition, in the real estate leasing market,
demand for office floors from tenants continues to be robust due to the positive economic
conditions in Japan, and supply and demand will continue to be tight especially for medium-sized
offices in which SAR invests. We believe that real estate will continue to be highly liquid andprofitable as a result of these factors.
(Office lease market)
According to market research by CBRE K.K., (“CBRE”), the office building vacancy rate in thefive major wards of Tokyo (comprising Chiyoda Ward, Chuo Ward, Minato Ward, Shinjuku
Ward, and Shibuya Ward) have continued to be at a low level of 0.5% during the second
quarter of 2019, and robust demand for office space is expected to continue. The strength ofthe office leasing market is also expected to continue going forward, centering on the Tokyo
area.
(Residence lease market)
According to the “Results of Internal Migration in 2018” announced by the Statistics Bureau,
Ministry of Internal Affairs and Communications, positive net-migration is continuing in
metropolitan areas (major cities) including the 23 wards of Tokyo as well as the cities of
Sapporo, Sendai, Nagoya, Osaka and Fukuoka, and the population increase will be maintained.
In addition, the number of building constructions for dwellings (rental housing) is seeing a
year-on-year decrease for the tenth consecutive month according to “Building Starts” for June
2019, as announced by Ministry of Land, Infrastructure, Transport and Tourism. As theincrease in supply has subsided, SAR believes that the residence lease market will remain
stable.
(Logistics facility lease market)
According to CBRE’s market research, vacancy rates of large multi-tenant logistics facilities in
the Tokyo metropolitan area has remained low at approximately 2.7% during the second
quarter of 2019. In addition, the actual rent index for the overall Tokyo metropolitan area has
increased by 1.9% year-on-year backed by strong demand. The logistics facility lease market
is expected to become even stronger in the future, underpinned by factors such as growth in
e-commerce demand.
(Hotel market)
New supply of accommodation facilities through new developments and conversions
appeared to stem from a sense of scarcity accompanying the increase in inbound tourists toJapan. According to research by CBRE, the number of hotel rooms in nine major cities (Tokyo,
Osaka, Nagoya, Fukuoka, Sapporo, Kyoto, Hiroshima, Sendai and Naha) that are expected to
be opened by 2021 is approximately 80,000, which is equivalent to approximately 24% of theexisting stock at the end of 2018. However, in consideration of the steady uptrend of inboundtourists to Japan, with 40 million tourists being set as the target for 2020, accommodation
demand exceeding this new supply of hotel rooms is expected in the future if the number oftourists increases with the holding of international sports events such as the Rugby World Cup
and the Tokyo Olympic and Paralympic Games.

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Asset management results
Within this environment, SAR has focused on leasing activities in collaboration with leasing
agents based on a leasing strategy that considers the characteristics of each property. The
occupancy rate of assets under management as of the end of the 7th fiscal period (with a totalacquisition price of 102,374 million yen) remains high at 97.6%.
3) Overview of procurement of funds
In the 7th fiscal period, SAR has continued to conduct its financial operations by diversifying its
loan repayment periods and by fixing interest rates, so as to reduce risks of interest rate
fluctuations to improve the stability of its financial base.
SAR has repaid its borrowings using proceeds from its sale of the Hakata-eki Higashi 113
Building (in which SAR holds quasi-co-ownership interests of 51%) and the consumption tax
refund it had received in respect of its 6th fiscal period. SAR then procured 700 million yen
through short-term borrowings to acquire Amusement Media Gakuin Shinkan in February 2019and refinanced loans of 8,000 million yen in April 2019, including 7,300 million yen of long-termloans that had become due for repayment; concurrently SAR also conducted an interest rate
swap.
As a result, SAR’s loan balance as of the last day of the 7th fiscal period (July 31, 2019) was
51,580 million yen, with a loan-to-value ratio (below, “LTV”) of 46.8%.
4) Overview of business performance and cash distribution
As a result of the asset management described above, operating revenue of 3,785 million yen,operating income of 2,225 million yen, ordinary income of 1,965 million yen, and net income of
1,964 million yen were recorded as SAR’s business results for the 7th fiscal period.
Pursuant to the cash distribution policy provided in Article 35, Paragraph 1 of SAR’s Articles ofIncorporation, SAR is required to distribute an amount in excess of 90% of its distributableearnings (as defined in Article 67-15-1 of the Act on Special Measures Concerning Taxation). In
accordance with this policy, the decision was made to distribute cash (not including cash
distribution in excess of earnings) totalling 1,960,487,000 yen, which is an integral multiple ofthe total 540,824 issued investment units in SAR, and more than the amount of minimized tax
expenses such as corporate tax, etc. As a result, earnings per unit in the form of cash distribution
was 3,625 yen.

.

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(3) Capital increases, etc.
The following sets forth changes in unitholders’ capital and in the total number of investment
units issued and outstanding from the date of SAR’s establishment to the end of 7th fiscal period.
Total number ofinvestment units
Unitholders’ capitalissued and(thousand yen)
Date
Description
Remarks
outstanding(Note 11)
(Units)Issued throughprivate placement
Capital increase
January 14, 2016 through private
placement
Capital increase
April 19, 2016
through public
offering
Capital increase
May 17, 2016
through thirdparty allotment
Capital increase
April 4, 2017
through public
offering
Capital increase
April 24, 2017
through thirdparty allotment
Capital increase
February 1, 2018 through public
offering
Capital increase
February 27, 2018 through thirdparty allotment
Capital increase
September 5, 2018 through public
offering
Capital increase
October 2, 2018
through thirdparty allotment
December 1, 2015

ChangeBalance

ChangeBalance

2,000

2,000

200,000

200,000 (Note 1)

95,00097,000 9,500,000 9,700,000 (Note 2)

235,900

332,900

11,800344,700 1,135,750

33,541,12(Note 4)
5

66,200410,900 6,173,017

39,714,14(Note 5)2

3,400

414,300

317,043

40,031,18(Note 6)
5

53,641

467,941 5,525,130

45,556,31(Note 7)6

2,683

470,624

276,354

45,832,67(Note 8)066,857537,481 6,584,077

52,416,74(Note 9)7

3,343

540,824

52,745,96(Note 10)
6

22,705,37 32,405,37(Note 3)5
5329,218(Note 1) Investment units were issued at an issue price of 100,000 yen per unit upon the establishment of SAR.
(Note 2) Investment units were issued at an issue price of 100,000 yen per unit.
(Note 3) New investment units were issued through a public offering at an offer price of 100,000 yen (issue price of 96,250 yen) per unit for purposesof procuring funds for the acquisition of new properties, etc.
(Note 4) New investment units were issued through third-party allotment at an issue price of 96,250 yen per unit for purposes of procuring funds
for the repayment of borrowings.
(Note 5) New investment units were issued through public offering at an offer price of 96,720 yen (issue price of 93,248 yen) per unit for purposesof procuring funds for the acquisition of new properties.
(Note 6) New investment units were issued through a third-party allotment at a price of 93,248 yen per unit for purposes of procuring funds for the
repayment of borrowings.
(Note 7) New investment units were issued through a public offering at an offer price of 106,724 yen (issue price of 103,002 yen) per unit for
purposes of procuring funds for the acquisition of new properties(Note 8) New investment units were issued through a third-party allotment at an issue price of 103,002 yen per unit for purposes of procuring funds

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for the repayment of borrowings.
(Note 9) New investment units were issued through a public offering at an offer price of 101,985 yen (issue price of 98,480 yen) per unit for purposesof procuring funds for the acquisition of new properties(Note 10) New investment units were issued through a third-party allotment at an issue price of 98,480 yen per unit for purposes of procuring funds
for the repayment of borrowings.
(Note 11) Unitholders’ capital does not take into consideration deductions from unitholders’ capital as a result of cash distributions in excess ofearnings related to the allowance for temporary difference adjustment.

【Trading price of investment securities】
The highest and lowest price (closing price) of the investment securities in SAR on the J-REIT
section of the Tokyo Stock Exchange by period is as follows:
4th fiscal
6th fiscal
3rd fiscal
5th fiscal
7th fiscal
periodperiodperiodperiodperiodAugust 1, 2017
August 1, 2018
Fiscal period
February 1,
February 1,
February 1,
toto2017 to2018 to2019 toJanuary 31,
January 31,
July 31, 2017
July 31, 2018
July 31, 2019
2018
2019
Highest109,600 yen 118,300 yen 112,400 yen 109,900 yen 120,900 yen
Lowest92,900 yen

101,000 yen－

83

101,600 yen－

100,000 yen

103,700 yen

(4) Results of cash distribution, etc.
Pursuant to the cash distribution policy provided in Article 35, Paragraph 1 of SAR’s Articles ofIncorporation, SAR is required to distribute an amount is excess of 90% of its distributableearnings (as defined in Article 67-15, Paragraph 1 of the Act on Special Measures Concerning
Taxation). In accordance with this policy, the decision was made to distribute cash (not including
cash distribution in excess of earnings) totaling 1,960,487,000 yen, which is an integral multipleof the total 540,824 issued investment units in SAR, and more than the amount of minimized tax
expenses such as corporate tax, etc. As a result, earnings per unit in the form of cash distribution
was 3,625 yen.
3rd fiscal period

4th fiscal period

5th fiscal period

6th fiscal period

7th fiscal period

February 1, 2017 to August 1, 2017 to February 1, 2018 to August 1, 2018 to February 1, 2019 toJuly 31, 2017

January 31, 2018

July 31, 2018

January 31, 2019

July 31, 2019

(Thousand yen)

1,832,513

1,802,173

1,305,316

2,049,646

1,964,506(Thousand yen)

1,832,669

1,802,393

1,418,609

2,163,215

2,115,855

Amount of retained earnings(Thousand yen)

220

113,292

113,568

151,349

155,368

Total cash distribution(Thousand yen)

1,832,448

1,689,101

1,305,040

2,011,865

1,960,487(Yen)[4,423][4,077][2,773][3,720][3,625](Thousand yen)

1,832,448

1,689,101

1,305,040

2,011,865

1,960,487(Yen)[4,423][4,077][2,773][3,720][3,625](Thousand yen)

-

-

-

-

-

(Yen)

[-]

[-]

[-]

[-]

[-]

(Thousand yen)

-

-

-

-

-

(Yen)

[-]

[-]

[-]

[-]

[-]

(Thousand yen)

-

-

-

-

-

(Yen)

[-]

[-]

[-]

[-]

[-]

Total net income
Total unappropriated retained
earnings for the period[Cash distribution per unit]
Of which, total cash
distribution of earnings[Cash distribution of earnings
per unit]
Of which, total contribution
refunds[Contribution refunds per
unit]
Total contribution refunds
consisting of total cash
distribution from allowancefor temporary difference[Contribution refunds per unit
consisting of total cash
distribution from allowancefor temporary difference per
unit]
Total contribution refunds
consisting of cash distribution
from a refund of investment
under tax law[Contribution refunds per unit
consisting of cash distribution
from a refund of investment
under tax law]

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(5) Future investment policy
1) Outlook for the next fiscal period
In terms of the future of the Japanese economy, although the recent economic environmenthas been positive, the stock market and exchange rate could be affected by the impact of
prolonged U.S.-China trade frictions on the global economy. Accordingly, it will be necessary toclosely monitor fluctuations in the financial and capital markets. In addition, demand for
inbound tourism, which remains favorable, is forecasted to continue increasing gradually
against the backdrop of the expansion of the middle-income group in emerging Asian countries,
but there are concerns that the number of Korean tourists visiting Japan, which account for
approximately one-seventh of overall inbound tourism consumption, will decrease significantly
due to the deterioration in Japan-South Korea relations against the backdrop of intensifying
controls over exports.
On the other hand, we expect the real estate market in Japan to remain strong in light of factors
including continued measures by the Bank of Japan to keep interest rates low over the shortterm, continued active investment in infrastructure and facilities ahead of the upcoming 2020
Tokyo Olympic and Paralympic Games, and inflow of investment capital from overseas. In viewof the hike in consumption tax scheduled for October this year, which is a factor that could cause
downward pressure on the economy, we believe it necessary to closely observe the measuresthat may be introduced to counter the negative effects of the consumption tax hike, such as theintroduction of a reduced tax rate as well as discussions on economic policy and monetary policy
going forward.
2) Future management policy and issues to address(a) External growth strategy
SAR is a diversified REIT that invests in offices, commercial facilities, residences, logistics
facilities, hotels, and residences exclusively for students with a focus on revenues withstability and growth potential, based on the philosophy of maximizing unitholder value. SAR
pursues the establishment of a portfolio that can capture revenues with stability and growthpotential by identifying the characteristics of asset types, conducting a detailed analysis ofmarkets in the investment area, and making carefully selected investments.
(b) Internal growth strategy
In an aim to optimize costs as the basic approach towards management operations, we
identify the characteristics of each asset under management, select an optimal property
management company (“PM company”) and building management company (“BMcompany”) in line with these characteristics, conduct appropriate monitoring based on a
PDCA system (plan, do, check, and action system), and always have a structure in place thatenables the continuous appointment of an optimal PM company and BM company. We willconduct asset management that gives top priority to profits from investment assets basedon this type of system. The internal growth strategy for each asset type is as follows:(Offices and residences)
We work to provide information on properties to a wide range of stakeholders, including
not only major brokerage companies but also local brokerage companies, based on thecharacteristics of the investment assets and to promptly secure and sign contracts withmany tenant candidates in order to maintain and improve occupancy rates. In addition,
when lease agreements are renewed, we negotiate to increase rents if there is divergence
between the market rent in the area and the contract rent for tenants.
Furthermore, as well as defensive repairs to maintain the functions of properties, we also
actively conduct renovation work including improvements to common areas to improve
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the level of appeal for tenants.
(Logistics facilities and hotels)
We work to communicate regularly with tenants and establish positive relationships withtenants for logistics facilities and hotels because these properties are rented usually by asingle tenant or a small number of tenants. We try to gain an understanding of the needs,
etc. of tenants in a timely manner and respond carefully to these needs, etc., in an effort
to improve tenant satisfactions in an aim for having long-term residents as well as rent
increase.
(c) Financial strategy
SAR aims to maintain and expand medium to long-term earnings and achieve growth inassets in aim to establish a stable and sound financial foundation.
(Equity finance)
Decisions on the issuance of new investment units are made while taking into
consideration the dilution of the rights of existing investors and resulting trading prices forinvestment units with the aim of growing the size and value of investment assets, and incomprehensive consideration of factors including the acquisition timing of newly acquired
real estate, the ability to use the sponsor’s warehousing capabilities, LTV level, and thefinancial environment and economic market conditions.
(Debt finance)
The balance between the flexibility of financing and the stability of finances is taken into
consideration when borrowing funds or issuing investment corporation bonds (including
short-term investment corporation bonds).
Specifically, consideration is given to factors including the ratio of long-term debt, theratio of fixed-interest debt, the diversification of repayment periods, procurement
methods (borrowings or investment corporation bonds), the diversification of lenders, andsetting commitment lines.
(LTV)
LTV control is conducted in consideration of surplus funding capabilities mainly for the newacquisition of properties. The upper limit for LTV as a general rule is 60% in accordancewith management guidelines.
(6) Significant subsequent events
Not applicable.

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2. Overview of SAR(1) Status of capital contributions
3rd fiscal period(July 31, 2017)

4th fiscal period(January 31, 2018)

5th fiscal period(July 31, 2018)

6th fiscal period(January 31, 2019)

7th fiscal period(July 31, 2019)(Units)

10,000,000

10,000,000

10,000,000

10,000,000

10,000,000(Units)414,300

414,300

470,624

540,824

540,824(Million yen)

40,03140,03145,832

52,74552,745(People)17,04816,54417,506

19,371

17,778

Fiscal period
Total number of investment
units authorized
Total number of investment
units issued and outstanding
Unitholders’ capital
Number of unitholders(2) Matters concerning unitholders
The top ten unitholders in terms of the percentage of unit holdings as of July 31, 2019 are as
follows:
Investment units Ownership ratio
Name or title
heldof investment(Units)units outstanding
The Master Trust Bank of Japan, Ltd. (trust account)

49,799

9.2

Japan Trustee Services Bank, Ltd. (trust account)

38,606

7.1

STAR ASIA CAPITAL I LLC

24,195

4.5STAR ASIA CAPITAL II LLC

24,195

4.5STAR ASIA CAPITAL III LLC

24,195

4.5STAR ASIA CAPITAL IV LLC
Trust & Custody Services Bank, Ltd. (Security trust
account)

24,195

4.5

16,257

3.0

The Nomura Trust and Banking Co., Ltd. (trust account)

15,981

3.0

14,802

2.7

8,317

1.5

240,542

44.5

NORTHERN TRUST CO. (AVFC) RE UKDU UCITS CLIENTSNON-LENDING 10 PCT TREATY ACCOUNTSSBTC CLIENT OMNIBUS ACCOUNT
Total(Note) The ownership ratio of investment units outstanding is rounded to the first decimal place.

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(3) Matters concerning executives, etc.
1) The Executive Director, Supervisory Directors, and Accounting Auditor for the 7th fiscal
period are as follows:
Total
remuneration
Title offor eachName or title
Main concurrent positions, etc.
position
position in thefiscal period(Thousand yen)
Executive
Director
Star Asia Investment Management Co., Ltd.,
Atsushi Kato
(Notes 1
President and CEO
and 2)
Tamaki Law Office, Lawyer
Well Spring Investments Holdings, K.K.,
Masahiro Tamaki
1,200
AuditorPrimex Capital, Ltd., Auditor
Supervisor
Tatsuya Harada Certified Public Accountant
y Director
Office, CPA(Notes 1
Seiran Certified Public Accountant Joint
and 3)
Office, CPA
Tatsuya Harada
1,200
Minami-Aoyama Accounting Consulting Co.,
Ltd., Representative Director
National Federation of Fire Insurance,
Accounting Auditor
Accounting Ernst
&
Young
8,500
Auditor ShinNihon LLC(Note 1) Atsushi Kato owns seventy-seven investment units in SAR under his own name. The Supervisory Directors do not own any investment units in SAR
under their own names or the names of another person.
(Note 2) The Executive Director does not receive remuneration from SAR.
(Note 3) Although the Supervisory Directors serve as directors for companies other than those stated above, these companies, including the companies
stated above, do not have any special interests with SAR.

2) Policy for deciding on the removal or non-reappointment of the accounting auditor
The Board of Directors meetings of SAR will consider the removal of the accounting auditor asprescribed in Act on Investment Trusts and Investment Corporations (Act No. 198 of 1951,
including the subsequent revisions) and the non-reappointment of the accounting auditor incomprehensive consideration of the quality of audits, the audit remuneration amount, andvarious other circumstances.
(4) The Asset Management Company, Custodian, and General Administrative Agent
The Asset Management Company, Custodian, and General Administrative Agent as of July 31,
2019 are as follows:
Category of entrusting

Name

Asset Management Company

Star Asia Investment Management Co., Ltd.

Custodian

Sumitomo Mitsui Trust Bank, Limited.

General Administrative Agent (Transfer Agent) Sumitomo Mitsui Trust Bank, Limited.
General Administrative Agent (Organization
Sumitomo Mitsui Trust Bank, Limited.
Management)
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General Administrative Agent (Accounting)－

Sumitomo Mitsui Trust Bank, Limited.

89－

3. Status of assets held by SAR(1) Composition of the assets of the real estate investment corporation
6th fiscal period
7th fiscal period
As of January 31, 2019
As of July 31, 2019
Geographic
As a
As a
Type ofPrimary
Total amount
Total amountarea
percentage ofpercentage ofassets
use
held
held
(Note 1)
total assets
total assets(Million yen)
(Million yen)(%)(%)
(Note 2)
(Note 2)
(Note 3)(Note 3）
Greater
19,12817.2
20,172
18.3
Tokyo
Other
Officethan
16,92015.2
15,896
14.4
Greater
Tokyo
Greater
12,44711.2
12,435
11.3
Tokyo
Other
ResidenceRealthanestate in
3,140
2.8
3,135
2.8
Greatertrust
Tokyo
Logistics Greater
31,00427.9
30,87728.0
facilities
Tokyo
Greater
12,857
11.6
12,830
11.6
Tokyo
Other
Hotel
than
7,842
7.1
7,804
7.1
GreaterTokyo
Subtotal

103,340

93.0

103,151

93.6

Investment securities

628

0.6

723

0.7

Long-term loans receivable

300

0.3

300

0.3

Deposits and other assets

6,809

6.1

6,065

5.5

111,079

100.0

110,240

100.0

Total assets(Note 1) “Greater Tokyo” refers to Tokyo’s twenty-three wards, Yokohama City, and Kawasaki City in the case of the office asset type, and the prefecturesof Tokyo, Kanagawa, Saitama, and Chiba in the case of other asset types (residence, logistics facility, and hotel). The same shall apply hereinafter.
(Note 2) “Total amount held” is the carrying amount as at the date of settlement of accounts (in the case of real estate in trust, then the depreciatedbook value), rounded down to the nearest million yen.
(Note 3) “As a percentage of total assets” is the carrying amount of the concerned assets expressed as a percentage of the total amount of assets, rounded
to the first decimal place.

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(2) Principal assets held
An overview of the main assets (top ten properties in terms of book value) held by SAR as ofJuly 31, 2019 is as follows:
As apercentage
ProperLeased Occupanc of total realBook
Leasablety
area
Name of real
value
area
y rateestatePrimary
No.
2
2
(m )
estate, etc.
(Million(m )(%)
leasing
use
(Note
yen)
(Note 2) (Note 3） (Note 4) revenues
1)(%)(Note 5)
LGC- Funabashi
34,901.6
Logistics
7,836 38,086.56
91.6
8.2
03
Logistics
7
facilities
OFC- Higashi-Kobe
15,171.9
7,679 16,931.82
89.6
9.4 Office
12
Center Building
6
LGC30,190.8
Logistics
Iwatsuki Logistics
6,693 30,190.81
100.0
6.1
01
1
facilities
RSC- Urban Park
Residen
6,393
5,977.18 5,865.64
98.1
5.9
02
Daikanyamace
OFCAsahi Building
6,344
8,672.01 8,672.01
100.0
6.7 Office
08
OFC- Honmachibashi
10,489.5
5,905 10,489.58
100.0
6.7 Office
03
Tower
8
Not
Not
LGCLogistics
Baraki Logistics
4,675 12,185.78 disclosed
100.0 disclosed
04
facilities(Note 6)(Note 6)
HTL- Best Western
3,866
5,293.88 5,293.88
100.0
3.0 Hotel
03
Tokyo Nishikasai
Not
Not
LGC- Yokohama
Logistics
3,786 18,142.08 disclosed
100.0 disclosed
02
Logistics
facilities(Note 6)(Note 6)
HTL- Best Western
3,264
4,686.09 4,686.09
100.0
2.4 Hotel
04
Yokohama
145,599.
Total
56,446 150,655.79
96.6
56.5
50
(Note 1) “Property no.” is that assigned to SAR’s investment assets by categorizing into office (OFC), retail facility (RTL), residence (RSC), logistics facility(LGC), and hotel (HTL), and numbering in order by category. The same shall apply hereinafter.
(Note 2) “Leasable area” is the floor area regarded as being available for leasing based on the lease agreement or building drawing, etc. of the building
for the investment asset.
(Note 3) “Leased area” is the sum total of the leased area stated in the lease agreement for the investment asset. Furthermore, in cases where a master
lease agreement has been concluded for the concerned investment asset, as a general rule, it is the sum total of the leased area under leaseagreements concluded with end-tenants for properties under a pass-through type master lease agreement under which rent from end-tenants
is received as is in principle (“pass-through type master lease”), and it is the leased area under the master lease agreement for properties
agreeing to the effect that the rent under the master lease agreement shall be a fixed rent (“rent-guaranteed type master lease”).
(Note 4) “Occupancy rate” is the ratio of leased area to leasable area for the investment asset, rounded to the first decimal place. In addition, in the total
column, it is the ratio of the sum total of leased area to the sum total of leasable area for the investment asset, rounded to the first decimal
place.
(Note 5) “As a percentage of total real estate leasing revenues” is the ratio of real estate leasing revenues for each investment asset to the total real estateleasing revenues for all assets.
(Note 6) Not disclosed, because consent for disclosure has not been obtained from the tenants.

－

91

－

(3) Details of real estate portfolio assets
An overview of the real estate, etc. held by SAR as of July 31, 2019 is as follows:
Appraisalvalue at the Book value
Proper Name of realend of at the end
Location
Form of Leasablety
area
periodof period
estate, etc.
(Note 1)ownershipno.
(m2)(Million(Millionyen)yen)(Note 2)Trust
4-11-30 Minami
OFC- Minami Azabu
beneficia 3,263.08
Minato
3,070
2,974
01
Shibuya Building Azabu,ryWard, Tokyo
interests
1-5
Trust
OFC- Honmachibashi
Honmachibashi,
10,489.5
6,950
5,905
03
Tower
Chuo Ward, Osaka beneficia
8
ry
right
City, Osaka
4-31-6 Yoyogi,
Trust
OFC- Nishi-Shinjuku
ShibuyaWard,beneficia 3,521.03
2,490
1,829
04
Matsuya Building Tokyory right
Trust
Akasaka,
OFC- Alphabet Seven 7-6-38
beneficia 2,464.59
Minato Ward,
2,530
1,839
05
ry
Tokyo
interests
Trust
3-3-2 Shibuya,
OFC- Shibuya MK
beneficia 1,612.88
Shibuya
Ward,
3,190
2,095
06
BuildingryTokyointerests
3-33-8 Tsuruyamachi, Kanagawa Trust
OFC- Asahi Building
beneficia 8,672.01
Ward, Yokohama
7,610
6,344
08
ry
City, Kanagawa
interests
Prefecture
3-1-26 Hakata-eki Trust
Higashi, Hakata
OFC- Hakata-eki East
beneficia 4,632.70
Ward, Fukuoka
2,570
2,310
09
Place
ry
City, Fukuoka
interests
PrefectureTrust
2-35-4 Hamacho,
OFC- Nihonbashi
Hamacho Park
Nihonbashi, Chuo beneficia
1,911.84
1,510
1,461
10
ry
Building
Ward, Tokyo
interests
Trust
2-29-8 Higashi,
OFC- Amusement
beneficia 1,892.18
Media
GakuinShibuya
Ward,
2,660
2,596
11
ry
HonkanTokyo
interests
8-6-26
Motoyamaminami Trust
OFC- Higashi-Kobebeneficia 16,931.8
cho, Higashinada
7,470
7,679
12
Center Buildingry2
Ward, Kobe City,
Hyogo Prefecture interestsTrust2-27-9 Higashi,
OFC- Amusement
beneficia
Media Gakuin
Shibuya Ward,781.33
1,120
1,031
13
ry
ShinkanTokyo
interests
2-12-12
Trust
RSC- Urban Park
Azabujuban,
beneficia 1,986.76
2,370
2,089
01
Azabujuban
Minato Ward,ryTokyointerests
9-8 Sarugakucho, Trust
RSC- Urban Park
beneficia 5,977.18
Shibuya Ward,
8,000
6,393
02
DaikanyamaryTokyointerests
Trust
2-7-22 Inari,
RSC- Urban Park
beneficia 2,584.81
Naniwa
Ward,
1,610
1,520
05
Namba
Osaka City, Osaka ry
interests－

92－

Appraisal
value at the Book value
Proper Name of realend of at the end
Location
Form of Leasablety
area
periodof period
estate, etc.
(Note 1)ownershipno.
(m2)(Million(Millionyen)yen)(Note 2)Trust
1-5-4 Zoshigaya,
RSC- Urban Park
beneficia 1,964.04
Toshima Ward,
1,530
1,511
06
GokokujiryTokyointerests
Trust
3-10-3 Kashiwa,
RSC- Urban Park
beneficia 2,954.77
Kashiwa City,
1,190
1,249
07
Kashiwary
Chiba Prefectureinterests
4-37-7 Senriyama- Trust
RSC- Urban Park
beneficia 5,508.94
nishi, Suita City,
1,630
1,615
08
Ryokuchi Koenry
Osakainterests
Trust
3-19-12 KoenjiRSC- Urban Park
beneficia 1,365.48
kita, Suginami
1,180
1,191
09
Koenjiry
Ward, Tokyo
interests
719-1
Mizuhokami, Oaza Trust
LGC- Iwatsuki Logistics Nagamiya Aza,
beneficia 30,190.8
7,150
6,693
01
Iwatsuki Ward,ry
1
Saitama City,
interests
Saitama Prefecture
1-1 Izutacho,
Trust
Kanagawa Ward,
LGC- Yokohama
beneficia 18,142.0
Yokohama City,
4,060
3,786
02
Logisticsry
8
Kanagawa
interests
PrefectureTrust
2-20-3 Hinode,
LGC- Funabashi
beneficia 38,086.5
Funabashi Ward,
8,650
7,836
03
Logisticsry
6
Chiba Prefectureinterests
Trust2526-42 Baraki,
LGC- Baraki Logistics
beneficia 12,185.7
Ichikawa City,
4,860
4,675
04
ry
8
Chiba Prefectureinterests
735-1 Shimotomi, Trust
LGC- Tokorozawa
beneficia 5,994.75
Tokorozawa City,
1,350
1,355
05
Logistics
Saitama Prefecture ry
interests
2-15-11 Nishiura, Trust
LGC- Funabashi
beneficia 14,018.8
Nishiura Logistics Funabashi City,
3,020
2,952
06
ry
2
I
Chiba Prefectureinterests
2-1-3
Nishiura,
Trust
LGC- Funabashi
FunabashiCity,
beneficia 6,315.87
Nishiura Logistics Chiba
842
832
07
ry
II
Prefectureinterests
2410-3 Yadomichi,
Okawado-aza, OTrustaza, MatsubushiLGC- Matsubushi
beneficia 19,833.4
cho,
2,850
2,745
08
Logisticsry
7
Kitakatsushikainterests
gun, Saitama
PrefectureTrust
1-6-15 Sonezaki,
HTL- R&B Hotelbeneficia 3,940.93
Kita Ward, Osaka
2,310
2,131
01
Umeda Eastry
City, Osakainterests
Trust
3-3-9 Saiwai-cho,
HTL- Smile Hotelbeneficia 1,711.42
Naniwa
Ward,
1,610
1,695
02
Namba
Osaka City, Osaka ry
interests－

93－Propertyno.

Name of realestate, etc.

Location(Note 1)

HTL03

Best WesternTokyo Nishikasai

HTL04

Best Western
Yokohama

HTL05

Hotel WBF
Fukuoka Tenjin
Minami6-17-9 Nishikasai,
Edogawa Ward,Tokyo
4-29-1 Tsurumichuo, Tsurumi
Ward, Yokohama
City, Kanagawa
Prefecture
3-23-32,
Haruyoshi, Chuo
Ward, Fukuoka
City, Fukuoka
Prefecture
4-4-6 Sotokanda,
Chiyoda Ward,
Tokyo

HTL06
HTL07
HTL08

Appraisalvalue at the Book value
end of at the end
Form of Leasablearea
periodof period
ownership(m2)(Million(Millionyen)yen)(Note 2)Trust
beneficia 5,293.88
3,860
3,866
ry
interests
Trustbeneficia 4,686.09
3,250
3,264
ry
interests

Trustbeneficia
ryinterests
Trust
GLANSITbeneficia
AKIHABARA
ry
interests
Best Western
6-19-18 Nishikasai, Trust
beneficia
Tokyo Nishikasai Edogawa Ward,ry
GrandeTokyointerests
5-8-25
Trust
Hotel WBF Art
Nipponbashi,
beneficia
Stay Namba
Naniwa Ward,ryOsaka City, Osaka interests
Total

2,281.49

2,010

1,974

1,089.06

2,520

2,513

2,755.19

3,210

3,186

2,061.46

1,990

2,003

247,102.
68

112,222103,151(Note 1) “Location” is the address of each investment asset. If there is no address indication, the address of the representative building stated on theregister or the representative lot number stated on the register is stated.
(Note 2) “Appraisal value at the end of period” states the appraisal value in the real estate appraisal report as of July 31, 2019 prepared by appraisers at
Daiwa Real Estate Appraisal Co., Ltd., Japan Real Estate Institute, and The Tanizawa Sogo Appraisal Co., Ltd. based on the asset appraisal
methods and criteria prescribed in SAR’s Articles of Incorporation and the regulations prescribed by the Investment Trusts Association, Japan.
.

－

94

－

The leasing status of real estate, etc. held by SAR is as follows:
6th fiscal period(August 1, 2018 to January 31, 2019)

Property Name of real estate,
no.
etc.

OFC-01
OFC-03
OFC-04
OFC-05
OFC-06
OFC-07
OFC-08
OFC-09OFC-10Minami Azabu
Shibuya Building
Honmachibashi
Tower
Nishi-Shinjuku
Matsuya Building
Alphabet Seven
Shibuya MK
Building
Hakata-eki Higashi
113 Building(Note 4)
Asahi Building
Hakata-eki East
Place
Nihonbashi
Hamacho Park
Building

7th fiscal period(February 1, 2019 to July 31, 2019)

Operating
As arevenue
Occupancy rate
percentage
from real[end of theof total realestateperiod]estateleasing(%)
leasing[during the(Note 2)revenues
period](%)(Million yen)

Number oftenants[end of theperiod](Note 1)

Operating
As arevenuepercentage
Occupancy ratefrom real of total real[end of theestateestateperiod]leasingleasing(%)[during the revenues(Note 2)
period](Million yen)(%)

Number oftenants[end of theperiod](Note 1)

5

100.0

95

3.0

5

100.0

97

2.9

5

100.0

217

6.7

5

100.0

223

6.7

10

100.0

101

3.1

10

100.0

105

3.2

9

100.0

76

2.4

8

88.6

73

2.2

4

100.0

76

2.4

4

100.0

76

2.3

34

100.0

67

2.1

－

－

0

0.0

21

100.0

215

6.7

20

100.0

221

6.7

18

100.0

97

3.0

18

100.0

99

3.0

3

100.0

43

1.4

3

100.0

43

1.3

OFC-11

Amusement Media
Gakuin Honkan

1

100.0

Not
disclosed(Note 3)Not
disclosed(Note 3)

1

100.0

Not
disclosed(Note 3)Not
disclosed(Note 3)

OFC-12

Higashi-KobeCenter Building

47

96.1

263

8.2

47

89.6

312

9.4

OFC-13

Amusement Media
Gakuin Shinkan

－

－

－

－

1

100.0

Not
disclosed(Note 3)Not
disclosed(Note 3)

44

100.0

56

1.8

44

100.0

56

1.7

67

96.1

187

5.8

68

98.1

195

5.9

－

－

28

0.9

－

－

－

－

110

94.1

51

1.6

112

96.7

50

1.5

106

98.3

51

1.6

106

91.8

53

1.6

41

100.0

37

1.2

41

100.0

37

1.1

57

94.3

54

1.7

56

95.5

57

1.7

33

1.0

75

100.0

36

1.1

3

100.0

202

6.1
Not
disclosed(Note 3)

RSC-01
RSC-02
RSC-04
RSC-05
RSC-06
RSC-07
RSC-08

Urban Park
Azabujuban
Urban Park
Daikanyama
Urban Park ShinYokohama(Note 5)
Urban Park Namba
Urban Park
GokokujiUrban Park
Kashiwa
Urban Park
Ryokuchi Koen

RSC-09Urban Park Koenji

72

91.7

LGC-01

Iwatsuki Logistics

3

100.0

203

6.3
Not
disclosed(Note 3)

1

100.0

Not
disclosed(Note 3)

4

91.6

273

8.2

2

100.0

1

100.0

1

100.0

1

100.0

1

100.0

Not
disclosed(Note 3)Not
disclosed(Note 3)Not
disclosed(Note 3)Not
disclosed(Note 3)Not
disclosed(Note 3)Not
disclosed(Note 3)Not
disclosed(Note 3)Not
disclosed(Note 3)Not
disclosed(Note 3)Not
disclosed(Note 3)

LGC-02

Yokohama Logistics

1

100.0

Not
disclosed(Note 3)

LGC-03

Funabashi Logistics

4

91.6

261

8.1

LGC-04

Baraki Logistics

2

100.0

LGC-05Tokorozawa
Logistics

1

100.0

LGC-06

Funabashi Nishiura
Logistics I

1

100.0

LGC-07

Funabashi Nishiura
Logistics II

1

100.0

LGC-08

Matsubushi
Logistics

1

100.0

Not
disclosed(Note 3)Not
disclosed(Note 3)Not
disclosed(Note 3)Not
disclosed(Note 3)Not
disclosed(Note 3)Not
disclosed(Note 3)Not
disclosed(Note 3)Not
disclosed(Note 3)Not
disclosed(Note 3)Not
disclosed(Note 3)

HTL-01R&B Hotel Umeda
East

1

100.0

65

2.0

1

100.0

65

2.0

HTL-02

Smile Hotel Namba

1

100.0

42

1.3

1

100.0

40

1.2

HTL-03

Best WesternTokyo Nishikasai

1

100.0

85

2.6

1

100.0

99

3.0

－

95

－

6th fiscal period(August 1, 2018 to January 31, 2019)

Property Name of real estate,
no.
etc.

HTL-04

Best Western
Yokohama

Operating
As arevenue
Occupancy rate
percentage
from real[end of theof total realestateperiod]estateleasing(%)
leasing[during the(Note 2)revenues
period](%)(Million yen)

Number oftenants[end of theperiod](Note 1)
1

100.0

80

2.5

Not
disclosed(Note 3)Not
disclosed(Note 3)Not
disclosed(Note 3)Not
disclosed(Note 3)

HTL-05

Hotel WBF Fukuoka
Tenjin Minami

1

100.0

HTL-06

GLANSITAKIHABARA

1

100.0

HTL-07

Best WesternTokyo Nishikasai
Grande

1

100.0

56

HTL-08

Hotel WBF Art Stay
Namba

1

100.0

676

98.1

Total

7th fiscal period(February 1, 2019 to July 31, 2019)
Operating
As arevenuepercentage
Occupancy ratefrom real of total real[end of theestateestateperiod]leasingleasing(%)[during the revenues(Note 2)
period](Million yen)(%)

Number oftenants[end of theperiod](Note 1)
1

100.0

80

2.4

Not
disclosed(Note 3)Not
disclosed(Note 3)Not
disclosed(Note 3)Not
disclosed(Note 3)

1

100.0

1

100.0

1.7

1

100.0

70

2.1

Not
disclosed(Note 3)Not
disclosed(Note 3)

1

100.0

Not
disclosed(Note 3)Not
disclosed(Note 3)

3,224

100.0

646

97.6

3,334

100.0

(Note 1) “Number of tenants” is the number of tenants (excluding parking) under the lease agreement stated in the lease agreement for the investment
asset at the end of each fiscal period. If a single tenant is leasing multiple rental units in an investment asset, the tenant is counted as one
tenant for the concerned investment asset. If a single tenant is leasing rental units across multiple investment assets, the tenant is counted as
separate tenants and the sum total number of tenants is stated in the total column. Furthermore, in cases where a pass-through type master
lease agreement has been concluded for the concerned investment asset, the total number of end-tenants is stated. In cases where a rentguaranteed type master lease agreement has been concluded for the concerned investment asset, the number of tenants is one and the sum
total of these is stated.
(Note 2) “Occupancy rate” is the ratio of leased area to leasable area for the investment asset at the end of each fiscal period, rounded to the firstdecimal place. In addition, in the total column, it is the ratio of the sum total of leased area to the sum total of leasable area for the investment
assets, rounded to the first decimal place.
(Note 3) Not disclosed, because consent for disclosure has not been obtained from the tenants.
(Note 4) As for Hakata-eki Higashi 113 Building, 49% quasi-co-ownership interest was transferred on December 3, 2018, and 51% quasi-co-ownershipinterest on February 1, 2019.
(Note 5) Urban Park Shin-Yokohama was transferred on October 11, 2018.

(4) Detailed list of renewable power generation facilities
Not applicable.
(5) Detailed list of operating rights, etc. for public facilities, etc.
Not applicable.
(6) Details of securities portfolio assets
An overview of the securities held by SAR as of July 31, 2019 is as follows:
Appraisal
Appraisal
Book value
amountQuantigain or(million yen) (million yen)
Asset Name of theRemarkType of asset tyloss(Note 1)no.
securitys(Units)(Million
Unit Amoun Unityen)
Amount
price
t
price
Star Asia
Mezzanine
MEZCorporate(Note 1)
Loan Debt
400 －
400
－ －
－
01
bond
(Note 5)Investment
Series 1
Star Asia
Trust
MEZ(Note 2)
Mezzanine
beneficiary
－ －
125 －
125
－
02
(Note 5)
Loan Debt
rights－96－

Investment
Series 3
SubordinatedsilentSilentpartnershippartnership
TKI-01equity interest equity
in Godo Kaisya interest
SAPR8
SilentSilentpartnershippartnership
TKI-02 equity interest
equityin Godo Kaisya
interest
SAPR7
Total

－

－

－

－

105

－

105

－

(Note 3)(Note 6)

－

－

92

－

92

－

(Note 4)(Note 6)

－

－

723

－

723

－

－

97

－

(Note 1) The underlying assets are trust beneficiary interests in a trust mainly comprised ofRelief Premium Haneda.
(Note 2) The underlying assets are trust beneficiary interests in a trust mainly comprised of
The Royal Garden Residence Shirokanedai.
(Note 3) Operating assets are trust beneficiary interests in a trust mainly comprised of Urban
Park Mitsuike Koen and Urban Park Tokiwadai Koen.
(Note 4) Operating assets are trust beneficiary interests in a trust mainly comprised of OHA
Building.
(Note 5) “Appraisal amount” is the fair value as of July 31, 2019. Please refer to “Notes on
financial instruments” in “V. Notes” for the fair value calculation method.
(Note 6) “Appraisal amount” indicates the book value.

(7) Table of specific transaction contract amounts and fair value
The specific transaction contract amounts and fair value for SAR as of July 31, 2019 are as
follows:
Contract amount, etc.
Fair value(thousand yen) (Note 1)
Classification
Type(Thousand yen)
Of which,(Note 2)over one year
Interest rate swaps
Other than
(floating receivable,
44,280,000
36,980,000(122,065)
market trades
fixed payable)(Note 1) Contract amount, etc. is based on notional principal.
(Note 2) Fair value is calculated based on the price quoted by lending financial institutions,etc.
(8) Status of other assets
The following is a significant specific asset included in SAR’s portfolio other than those stated in“(3) Details of real estate portfolio assets” through “(6) Details of securities portfolio assets” as ofJuly 31, 2019.
Appraisal
Book value
amountApprai(million yen) (million yen)
sal
Quant
(Note 1)
Asset
Name of theType ofgain Remarityno.
security
asset
or lossks
Uni
Uni(Units)(Milliot
Amout
Amountn yen)
pric
nt
pric
e
e
Star Asia
Loan
MEZ- Mezzanine Loan
(Note
receivabl
300
300
04
Debt Investment
2)eSeries 4(Note 1) “Appraisal amount” is the fair value as of July 31, 2019. Please refer to “Notes on
financial instruments” in “V. Notes” for the fair value calculation method.
(Note 2) The underlying assets are trust beneficiary interests in a trust mainly comprised ofPremier Kaigan Building.

－

98

－

(9) Status of assets held by country and region
No assets are held from countries and regions other than Japan.

－

99

－

4. Capital expenditures on real estate held
(1) Schedule of capital expenditures
The following are the principal capital expenditures arising from renovation construction work,
etc. for the 8th fiscal period currently planned for the assets held by SAR as of July 31, 2019.
Please note that the estimated construction amounts include portions that are expensed as aseparate account item of accounting costs.
Estimated construction costs(thousand yen)
Name of real estate,
Amount of Total
etc.
PurposeScheduled period
Totalpayment amount(Location)amountduringalready
periodpaid
Funabashi Nishiura
From: October
Logistics II
Refurbishment of
2019
44,848(Funabashi City,
exterior wall
To: January 2020
Chiba)(2) Capital expenditures during the fiscal period
The following summarizes the primary construction work that constitutes capital expenditures
implemented for the assets held by SAR as of July 31, 2019 during the 7th fiscal period. Capital
expenditures for the 7th fiscal period amounted to 189,197 thousand yen and, when combinedwith the 114,653 thousand yen in repair expenses charged to the 7th fiscal period expenses, totals
303,850 thousand yen in construction work implemented.
Name of real estate,
Construction costs
etc.
Purpose
Period(Thousand yen)
(Location)
Alphabet Seven
Refurbishment of exterior
From: March 2019
(Minato Ward,
40,599wall
To: July 2019
Tokyo)
Higashi-KobeCenter Building
Renovation of 6th floor
From: January 2019
30,420(Kobe City, Hyogo office
To: May 2019
Prefecture)
Asahi Building
Upgrading of air(Yokohama City,
From: May 2019conditioning system on
15,669Kanagawa
To: June 2019
2nd and 7th floors
Prefecture)
Best Western
Yokohama
Upgrading of airFrom: July 2019
(Yokohama City,
10,358
conditioning system
To: July 2019
Kanagawa
Prefecture)
Others

-

-

Total

－

92,149189,197100－

(3) Cash reserved for long-term repair and maintenance plan
Not applicable.

－

101

－

5. Expenses and liabilities(1) Details of expenses related to asset management

Item

6th fiscal period
August 1, 2018 toJanuary 31, 2019

Asset management fee(Note)
Custodianandgeneraladministrative agent fees

(Unit: thousand yen)
7th fiscal period
February 1, 2019 toJuly 31, 2019

260,206

251,121

22,377

23,583

Director remuneration

2,400

2,400

Other expenses

64,94567,548

Total

349,928

344,653(Note)In addition to the amount above, asset management fee was incurred as follows: From the property transfer incentive portion in
the 6th fiscal period, 41,715 thousand yen; from the property transfer incentive portion in the 7th fiscal period, 14,535 thousand
yen; from the property acquisition incentive portion included in the book value of individual real estate, etc. in the 6th fiscal
period, 135,550 thousand yen; from the property acquisition incentive portion included in the book value of individual real estate,etc. in the 7th fiscal period, 5,100 thousand yen; from the acquisition incentive portion included in the book value of investmentsin the 6th fiscal period, 1,000 thousand yen and from the acquisition incentive portion included in the book value of investmentsin the 7th fiscal period, 1,000 thousand yen.

－

102

－

(2) Status of borrowings
The status of borrowings as of July 31, 2019 is as follows:
Classification

LenderSumitomo Mitsui Banking
Corporation

Drawdown date

Balance at the Balance at the
Average
beginning of end of current
Repaymentinterest rate Repayment date
Application Remarks
current period
periodmethod(Note 1)
(Million yen) (Million yen)
-

230

-

0.2625%

Mizuho Bank, Ltd.

Short-termborrowings Sumitomo Mitsui Banking
Corporation

230
September 6, 2018

February 1, 2019--

Subtotal

460-

Sumitomo Mitsui Banking
Corporation

1,950

-

Mizuho Bank, Ltd.

1,800

-

Sumitomo Mitsui Trust
Bank, Limited.

1,050

-

700

-

Aozora Bank, Ltd.

600-

Shinsei Bank, Limited

600-

Resona Bank, Limited

600-

Sumitomo Mitsui Banking
Corporation

1,950

1,950

Mizuho Bank, Ltd.

1,800

1,800

Sumitomo Mitsui Trust
Bank, Limited.

1,050

1,050

700

700

Aozora Bank, Ltd.

600

600

Shinsei Bank, Limited

600

600

Resona Bank, Limited

600

600

1,950

1,950

1,800

1,800

MUFG Bank, Ltd.

MUFG Bank, Ltd.

April 20, 2016

April 20, 2016

Sumitomo Mitsui Banking
Corporation
Long-term
Mizuho Bank, Ltd.
borrowings
Sumitomo Mitsui Trust(Note 2)
Bank, Limited.

1,050

1,050

700

700

Aozora Bank, Ltd.

600

600

Shinsei Bank, Limited

600

600

Resona Bank, Limited

600

600

Sumitomo Mitsui Banking
Corporation

350

350

Mizuho Bank, Ltd.

400

400

450

450

Aozora Bank, Ltd.

400

400

Shinsei Bank, Limited

400

400

Resona Bank, Limited

MUFG Bank, Ltd.

Sumitomo Mitsui Trust
Bank, Limited.

April 20, 2016

April 6, 2017

400

400

Sumitomo Mitsui Banking
Corporation

1,400

1,400

Mizuho Bank, Ltd.

1,050

1,050

500

500

Aozora Bank, Ltd.

400

400

Shinsei Bank, Limited

400

400

Sumitomo Mitsui Trust
Bank, Limited.

April 6, 2017

－

103

－

August 20, 20190.2546%

April 22, 2019

0.3640%(Note 3)

April 20, 2019

0.4830%(Note 3)

April 20, 2020

0.6250%(Note 3)

April 20, 2021

0.5300%
October 20, 2020
(Note 3)0.7100%(Note 3)

April 20, 2022

Lump
payment
at term
end(Note 4)

Unsecured,noguarantee

Lump
payment
at term
end(Note 4)

Unsecured,noguarantee

Resona Bank, Limited

Classification

400

LenderDrawdown date

Sumitomo Mitsui Banking
Corporation

April 20, 2017400

Balance at the Balance at the
Average
beginning of end of current
Repaymentinterest rate Repayment date
Application Remarks
current period
periodmethod(Note 1)
(Million yen) (Million yen)
1,000

1,000

600

600

500

-

Mizuho Bank, Ltd.

500-

Sumitomo Mitsui Banking
Corporation

970

970

Mizuho Bank, Ltd.

920

920

800

800

500

500

Shinsei Bank, Limited

500

500

Resona Bank, Limited

500

500

The Bank of Fukuoka, Ltd.

500

500

Sumitomo Mitsui Banking
Corporation

1,865

1,865

Mizuho Bank, Ltd.

1,715

1,715

Sumitomo Mitsui Trust
Bank, Limited.

1,050

1,050

600

600

600

600

Resona Bank, Limited

600

600

The Bank of Fukuoka, Ltd.

170

170

500

500

200

200

500

500

Mizuho Bank, Ltd.

450

450

Sumitomo Mitsui Trust
Bank, Limited.

700

700

Mizuho Bank, Ltd.
Sumitomo Mitsui Banking
Corporation

February 2, 2018

Sumitomo Mitsui Trust
Bank, Limited.
Aozora Bank, Ltd.

February 2, 2018

Aozora Bank, Ltd.
Shinsei Bank, Limited

April 20, 2018

Long-term
The Dai-ichi Life Insurance
borrowings
Company Limited
Mizuho Trust & Banking(Note 2)
Co., Ltd.
Sumitomo Mitsui Banking
Corporation

Aozora Bank, Ltd.

500

500

Shinsei Bank, Limited

600

600

Resona Bank, Limited

500

500

The Bank of Fukuoka, Ltd.

250

250

500

500

850

850

Mizuho Bank, Ltd.

750

750

Sumitomo Mitsui Trust
Bank, Limited.

700

700

Aozora Bank, Ltd.

500

500

600

600

Resona Bank, Limited

500

500

The Bank of Fukuoka, Ltd.

240

240

200

200

500

500

September 6, 2018

The Nishi-Nippon City
Bank, Ltd.
Sumitomo Mitsui Banking
Corporation

Shinsei Bank, Limited

September 6, 2018

Mizuho Trust & Banking
Co., Ltd.
The Nishi-Nippon City
Bank, Ltd.

－

104

－

0.5300%(Note 3)October 20, 2020

0.2609%February 20, 2019

0.7300%(Note 3)February 20, 2023

0.5126%

October 20, 2021

Lump
payment
at term
end

0.6095%(Note 3)

March 22, 2022

0.8120%
September 20, 2023
(Note 3)(Note 4)

Unsecured,noguarantee

Classification

LenderDrawdown date

Balance at the Balance at the
Average
beginning of end of current
Repaymentinterest rate Repayment date
Application Remarks
current period
periodmethod(Note 1)
(Million yen) (Million yen)

Sumitomo Mitsui Banking
Corporation

-

2,200

Mizuho Bank, Ltd.

-

2,050

-

1,250

Sumitomo Mitsui Trust
Bank, Limited.

Long-term
borrowings Aozora Bank, Ltd.
(Note 2)

April 22, 2019-700

Shinsei Bank, Limited-

700

Resona Bank, Limited-

700

Mizuho Trust & Banking
Co., Ltd.

-400

51,88051,58052,34051,580Subtotal
Total

0.7532%(Note 3)

April 22, 2024

Lump
payment
at term
end(Note 4)

Unsecured,noguarantee(Note 1) “Average interest rate” is the weighted average during the fiscal period based on the number of days.
(Note 2) “Long-term loans payable” includes the current portion of long-term loans payable.
(Note 3) Interest rate swaps are undertaken to hedge against the risk of interest rate fluctuations. The interest rates shown are therefore rates reflecting theeffect of interest rate swaps (effective fixing of interest rates).
(Note 4) The use of funds includes the purchase of real estate beneficiary interests in trust and repayment of borrowings.

(3) Investment corporate bonds
Not applicable.
(4) Short-term investment corporate bonds
Not applicable.
(5) Subscription rights for new investment units
Not applicable.

－

105

－

6. Acquisitions and transfers during the fiscal period(1) Acquisitions and transfers of real estate, asset-backed securities, infrastructure assets, andinfrastructure-related assets

Name of real estate, etc. &asset-backed securities, etc.

Hakata-eki Higashi
OFC- 113 Building
07(51% of quasi-coownership interest)
OFC- Amusement Media
13
Gakuin Shinkan
Silent partnership
equity interest in
TKI-02
Godo Kaisya SAPR7(Note 2)Acquisition

Transfer

Acquisitio
Acquisition n price
Date(Millionyen)

Transfer Book
price
value
(Million (Million
yen)
yen)

-

-

Transfer
Date

February
1, 2019

Gain orloss onsale(Million
yen)

1,453

994

422

February
1, 2019

1,020

-

-

-

-

February28, 2019

100

-

-

-

-

1,453

994

422

Total

1,120

(Note 1) “Acquisition price” indicates the sale and purchase price stated in the sale and purchase agreement or the investment amount stated in the silent
partnership investment agreement for each investment asset, and does not include consumption tax and local consumption tax related to thesale/purchase or the acquisition expenses.
(Note 2) Assets under management are trust beneficiary interests in a trust mainly comprised of OHA Building.

(2) Purchases and sales of other assets
Not applicable.
(3) Surveys on the prices, etc. of specific assets
1) Real estate, etc.

Name of realestate, etc.

TransactiondateAcquisitio
n price ortransfer
price(Millionyen)

Acquisiti Amusement
Media Gakuin
onShinkanFebruary 1,
2019

1,020

Acquisitionortransfer

Transfer

Hakata-eki
Higashi 113
Building(51% of quasico-ownershipinterest)

February 1,
2019

1,453

Appraisal
value(Millionyen)(Note 1 )Appraisal
institution

Date ofappraisal

1,120Japan Real
Estate InstituteNovember
1,
2018

1,065
(Note 2)

Daiwa Real
EstateAppraisal Co.,Ltd.

July 31,2018(Note 1) The “Real Estate Appraisal Standards Detailed Discussion Chapter 3 Appraisal on Prices of Securitized Real Estate” has been applied for theabove appraisal.
(Note 2) Appraisal amount for Hakata-eki Higashi 113 Building indicates the amount obtained by multiplying its real estate appraisal value by 51%, theportion of quasi-co-ownership interest transferred on February 1, 2019, with July 31, 2018 as the date of value (2,090 million yen).

－

106

－

2) Other
For transactions conducted by SAR that require a survey on prices, etc. as prescribed in Article
201-2 of the Act on Investment Trusts and Investment Corporations, these surveys are contracted
to Fukunaga Certified Public Accountant Office for transactions other than those stated in “(1)Real estate, etc.” above. There was one transaction subject to surveys from February 1, 2019 toJuly 31, 2019: the acquisition of silent partnership equity interest described in “(1) Acquisitions
and transfers of real estate, asset-backed securities, infrastructure assets, and infrastructurerelated assets” above, and an interest rate swap. Survey reports on these transactions have beenobtained from Fukunaga Certified Public Accountant Office.
(4) Status of transactions with interested persons, etc.
1) Status of transactions
Not applicable.

－

107

－

2)

Amounts of commissions paid, etc.
Total
Breakdown of transactions
amount of with interested persons, etc.
commission
Paid
Categorys paid, etc.
amount (B)(A)
Paid to(Thousand(Thousandyen)
yen)Real estate,Star Asia Assetetc. brokerage
21,802 Advisors Co.,
21,802fee
Ltd.

As a percentage of total amount
(B/A)
(%)

100.0

(5) Status of transactions between the Asset Management Company related to concurrent
operations conducted by that Asset Management Company
Although Star Asia Investment Management Co., Ltd. that is the Asset Management Company of
SAR is concurrently engaged in the real estate brokerage business, there are no such transactions.
In addition, the Asset Management Company is not concurrently engaged in the type I financial
instruments trading business, type II financial instruments trading business, and real estate
specified joint enterprise business, and thus there are no such transactions.
7. Accounting status(1) Status of assets, liabilities, capital, and profit and loss
For details, refer to “II. Balance Sheet,” “III. Statement of Income,” “IV. Statement of Unitholders’Equity,” “V. Notes,” and “VI. Statement of Cash Distributions” below.
(2) Changes in the method for calculating depreciation
Not applicable.
(3) Changes in the appraisal method for real estate and infrastructure assets
Not applicable.
8. Status of investment trust beneficiary certificates set by own company
Not applicable.
9. Disclosures relating to overseas real estate holding company
Not applicable.
10. Disclosures relating to real estate held by overseas real estate holding company
Not applicable.
11. Others(1) Notices
1) Unitholders’ Meeting
Not applicable.
2) Board of Directors of SAR
Not applicable.
(2) Rounding of amounts and percentages
Unless otherwise specifically noted, amounts are rounded down to the unit displayed andpercentages are rounded to the first decimal place in this document.
－

108

－

II. Balance Sheet(Unit: thousand yen)
6th fiscal period(reference)(As of January 31,
2019)

7th fiscal period(As of July 31, 2019)

2,310,545
3,953,328
52,568120,684
184,8637,153
6,629,144

1,743,631
3,940,970
55,906
132,744－
11,2985,884,550

33,050,199(1,712,512)
31,337,686
11,621(1,423)
10,19845,723(4,982)

33,118,834(2,106,616)
31,012,218
15,784(1,893)
13,89046,680(7,236)40,741

39,44430,828(5,807)33,338(8,460)25,02024,877

68,467,885
222
99,881,755

68,602,052－
99,692,483

3,459,138
3,459,138

3,459,138
3,459,138

628,893
300,000
160,951
10,9628,255
1,109,062
104,449,955
111,079,100

723,220300,000
168,174
10,962
2,024
1,204,382
104,356,004
110,240,555

AssetsCurrent assets
Cash and deposits
Cash and deposits in trust
Operating accounts receivable
Prepaid expenses
Consumption taxes receivable
Other
Total current assets
Non-current assets
Property, plant and equipment
Buildings in trust
Accumulated depreciation
Buildings in trust, net
Structures in trust
Accumulated depreciation
Structures in trust, net
Machinery and equipment in trust
Accumulated depreciation
Machinery and equipment in trust,net
Tools, furniture and fixtures in trust
Accumulated depreciation
Tools, furniture and fixtures in trust,net
Land in trust
Construction in progress in trust
Total property, plant and equipment
Intangible assets
Leasehold rights in trust
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Long-term prepaid expenses
Lease and guarantee deposits
Other
Total investments and other assets
Total non-current assets
Total assets

－

109

－

(Unit: thousand yen)

Liabilities
Current liabilities
Operating accounts payable
Short-term loans payable
Current portion of long-term loans payable
Accounts payable - otherAccrued expenses
Income taxes payable
Accrued consumption taxes
Advances received
Other
Total current liabilities
Non-current liabilities
Long-term loans payable
Tenant leasehold and security deposits
Tenant leasehold and security deposits in
trust
Other
Total non-current liabilities
Total liabilities
Net assets
Unitholders’ equity
Unitholders’ capital
Surplus
Unappropriated retained earnings(undisposed loss)
Total surplus
Total unitholders’ equity
Valuation and translation adjustments
Deferred gains or losses on hedges
Total valuation and translation adjustments
Total net assets
Total liabilities and net assets－

110

6th fiscal period(reference)(As of January 31,
2019)

7th fiscal period(As of July 31, 2019)291,171460,000
8,300,000
335,845
10,017
22,611－
624,323
14,11910,058,089

254,637－
7,300,000
293,558
10,030605
199,468
517,389
30,5528,606,243

43,580,000
6,669

44,280,000
6,669

2,514,819

2,478,925

79,644
46,181,133
56,239,222

128,960
46,894,554
55,500,798

52,745,966

52,745,966

2,163,215

2,115,855

2,163,215
54,909,181

2,115,855
54,861,822(69,303)(69,303)*1 54,839,877
111,079,100(122,065)(122,065)*1 54,739,757
110,240,555－

III. Statement of Income(Unit: thousand yen)
6th fiscal period(reference)
From: August 1, 2018
To: January 31, 2019

7th fiscal period
From: February 1, 2019
To: July 31, 2019

*1 3,028,065*1
196,270*2
598,163
22,092
3,844,592*1 3,092,125*1
242,455*2
422,504
28,185
3,785,271*1*1Operating revenue
Lease business revenue
Other lease business revenue
Gain on sales of real estate property
Other revenue
Total operating revenue
Operating expenses
Expenses related to rent business
Asset management fee
Asset custody and administrative service
fees
Directors’ remuneration
Other operating expenses
Total operating expenses
Operating income
Non-operating income
Interest income
Interest on refund
Total non-operating income
Non-operating expenses
Interest expenses
Borrowing related expenses
Investment unit issuance expenses
Total non-operating expenses
Ordinary income
Income before income taxes
Income taxes - current
Total income taxes
Net income
Retained earnings brought forward
Unappropriated retained earnings(undisposed loss)

－

111

－

1,088,373
260,206

1,214,656
251,121

22,377

23,5832,400
64,945
1,438,302
2,406,289

2,400
67,5481,559,310
2,225,961

24
848
872

30
883
913

145,156
150,949
37,238333,3442,073,818
2,073,818
24,172
24,172
2,049,646
113,568

155,935
105,827－
261,763
1,965,111
1,965,111
605
605
1,964,506
151,349

2,163,215

2,115,855

IV. Statement of Unitholders’ Equity
6th fiscal period (reference) (from August 1, 2018 to January 31, 2019)(Unit: thousand yen)
Valuation and translation
adjustments

Unitholders’ equity
Surplus
Unappropriatedretainedearnings(undisposed
loss)

Unitholders’capitalBalance at beginning of theperiod45,832,670

Total
Total
Deferredvaluation andunitholders’ gains or losses
translation
equityon hedges
adjustments

Total
surplus1,418,609

1,418,609

47,251,279

35,88935,889Total
net assets

47,287,168

Changes of items during theperiodIssuance of new
investment units

6,913,296

6,913,296

6,913,296

Dividends from surplus(1,305,040)(1,305,040)(1,305,040)(1,305,040)

Net income

2,049,646

2,049,646

2,049,646

2,049,646

Net changes of items otherthan unitholders’ equity
Total changes of items during
the period
Balance at end of the period(105,192)(105,192)(105,192)

6,913,296

744,605

744,605

7,657,901(105,192)(105,192)

7,552,709*1 52,745,966

2,163,215

2,163,215

54,909,181(69,303)(69,303)54,839,877

7th fiscal period (from February 1, 2019 to July 31, 2019)(Unit: thousand yen)
Valuation and translation
adjustments

Unitholders’ equity
Surplus
Unappropriatedretainedearnings(undisposed
loss)

Unitholders’capitalBalance at beginning of the

Total
surplus(69,303)(69,303)Total
net assets

2,163,215

2,163,215

54,909,181

Dividends from surplus(2,011,865)(2,011,865)(2,011,865)(2,011,865)

Net income

1,964,506

1,964,506

1,964,506

1,964,506

period52,745,966

Total
Total
Deferredvaluation andunitholders’ gains or losses
translation
equityon hedges
adjustments

54,839,877

Changes of items during theperiodNet changes of items otherthan unitholders’ equity
Total changes of items during
the period
Balance at end of the period(52,761)(52,761)(52,761)－(47,359)(47,359)(47,359)(52,761)(52,761)(100,120)*1 52,745,966

2,115,855

2,115,855

54,861,822(122,065)(122,065)

54,739,757

－

112

－

V. Notes[Notes on the Going Concern Assumption]
6th fiscal period (reference)
From: August 1, 2018
To: January 31, 2019
Not applicable.

7th fiscal period
From: February 1, 2019
To: July 31, 2019
Not applicable.

[Notes on Matters Concerning Significant Accounting Policies]
6th fiscal period (reference)
7th fiscal period
Item
From: August 1, 2018
From: February 1, 2019
To: January 31, 2019
To: July 31, 2019
1. Evaluation standards
Other securities:
Other securities:
and methods ofThose with fair value
Those with fair value
valuation of securities
Fair value method or market
Fair value method or market
value method (Variances arevalue method (Variances are
directly included in net assets.)
directly included in net assets.)Those with no fair value
Those with no fair value
Cost method through movingCost method through movingaverage method
average method
As for silent partnership equity
As for silent partnership equity
interests, the method ofinterests, the method ofincorporating the amountincorporating the amountequivalent to equity interests
equivalent to equity interests
corresponding to net amountcorresponding to net amountof gain or loss from silentof gain or loss from silent
partnership is adopted.
partnership is adopted.
2. Method of
Property, plant and equipment
Property, plant and equipment
depreciation of non(including trust assets)(including trust assets)
current assets
The straight-line method is
The straight-line method isadopted. The useful life ofadopted. The useful life ofprimary property, plant andprimary property, plant andequipment is as follows:
equipment is as follows:
Buildings
Buildings
5-69 years
5-69 years
Structures
Structures
10-15 years
10-30 years
Machinery and equipment
Machinery and equipment
10 years
10 years
Tools, furniture and fixtures
Tools, furniture and fixtures
3-15 years
3-15 years
3. Accounting forInvestment unit issuance
Not applicable.
deferred assets
expenses
The entire amount is expensed
as incurred.
4. Standards for revenue
Accounting for fixed property tax, Accounting for fixed property tax,
and expense
etc.
etc.
recognition
Accounting for fixed property tax, Accounting for fixed property tax,
city planning tax, depreciablecity planning tax, depreciable
asset tax, etc. (“fixed property
asset tax, etc. (“fixed property
tax, etc.”) on real estate ortax, etc.”) on real estate or
beneficiary interests in trust for
beneficiary interests in trust forreal estate held is that, of the tax real estate held is that, of the tax
amount assessed andamount assessed anddetermined, the amountdetermined, the amountcorresponding to the concerned corresponding to the concerned
calculation period is expensed as calculation period is expensed as
expenses related to rent
expenses related to rent
business.
business.
The amount equivalent to fixed
The amount equivalent to fixed
property tax, etc. in the initialproperty tax, etc. in the initialfiscal year borne by SAR upon
fiscal year borne by SAR uponacquisition of real estate or
acquisition of real estate or
beneficiary interests in trust for
beneficiary interests in trust forreal estate is not recognized asreal estate is not recognized as
expenses but included in the cost expenses but included in the costof acquisition of the concernedof acquisition of the concerned
－

113

－

real estate, etc. In the 6th fiscal
period, the amount equivalent to
fixed property tax, etc. includedin the cost of acquisition of realestate, etc. was 31,134 thousand
yen.

5.

Method of hedge
accounting

real estate, etc. In the 7th fiscal
period, the amount equivalent to
fixed property tax, etc. includedin the cost of acquisition of realestate, etc. was 3,367 thousandyen.

(1) Hedge accounting approach(1) Hedge accounting approach
Deferral hedge accounting isDeferral hedge accounting is
adopted.
adopted.
(2) Hedging instruments and(2) Hedging instruments andhedged items
hedged items
Hedging instruments:
Hedging instruments:
Interest rate swap
Interest rate swap
transaction
transaction
Hedged items: Interest on
Hedged items: Interest on
loans
loans
(3) Hedging policy(3) Hedging policy
SAR conducts derivative
SAR conducts derivativetransactions for purposes oftransactions for purposes ofhedging the risks provided in
hedging the risks provided in
its Articles of Incorporation
its Articles of Incorporation
pursuant to rules andpursuant to rules andregulations.
regulations.

－

114

－

6th fiscal period (reference)
7th fiscal period
From: August 1, 2018
From: February 1, 2019
To: January 31, 2019
To: July 31, 2019(4) Method of assessing the(4) Method of assessing theeffectiveness of hedging
effectiveness of hedging
The effectiveness of
The effectiveness ofhedging is assessed byhedging is assessed bycomparing the cumulative
comparing the cumulativechange in cash flows of thechange in cash flows of thehedging instruments withhedging instruments withthe cumulative change inthe cumulative change incash flows of the hedged
cash flows of the hedged
items and verifying the ratio
items and verifying the ratioof the amount of change inof the amount of change inthe two.
the two.
Other significant(1) Accounting for beneficiary(1) Accounting for beneficiary
matters serving as theinterests in trust for realinterests in trust for realbasis for preparation of
estate, etc.
estate, etc.
financial statements
Concerning beneficiary
Concerning beneficiaryinterests in trust for realinterests in trust for realestate, etc. held, allestate, etc. held, allaccounts of assets andaccounts of assets andliabilities within trust assets
liabilities within trust assets
as well as all accounts ofas well as all accounts ofrevenue and expenses fromrevenue and expenses fromthe trust assets are
the trust assets arerecognized in the relevant
recognized in the relevant
account item of the balanceaccount item of the balance
sheet and the statement ofsheet and the statement ofincome.
income.
The following material
The following material
items of the trust assets
items of the trust assets
recognized in the relevant
recognized in the relevant
account item are separately
account item are separately
listed on the balance sheet.
listed on the balance sheet.
1) Cash and deposits in trust
1) Cash and deposits in trust2) Buildings in trust;2) Buildings in trust;
Structures in trust;
Structures in trust;
Machinery andMachinery andequipment in trust;equipment in trust;Tools, furniture andTools, furniture andfixtures in trust; Land in
fixtures in trust; Land intrust; Construction in
trust
progress in trust3) Leasehold rights in trust3) Leasehold rights in trust4) Tenant leasehold and4) Tenant leasehold andsecurity deposits in trust
security deposits in trust(2) Accounting for consumption (2) Accounting for consumption
tax, etc.
tax, etc.
Item

6.

－

115

－

The accounting for
consumption tax and local
consumption tax is thetaxes are excluded from thetransaction amounts.
Non-deductible
consumption tax onacquisition of assets is
included in the acquisition
cost of each asset.

The accounting for
consumption tax and local
consumption tax is thetaxes are excluded from thetransaction amounts.
Non-deductible
consumption tax onacquisition of assets is
included in the acquisition
cost of each asset.

[Notes to the Balance Sheet]
6th fiscal period (reference)
7th fiscal period(As of January 31, 2019)(As of July 31, 2019)*1 Minimum net assets as provided in Article *1 Minimum net assets as provided in Article
67, Paragraph 4 of the Act on Investment
67, Paragraph 4 of the Act on Investment
Trusts and Investment Corporations
Trusts and Investment Corporations
50,00050,000 thousand yen
thousand yen

－

116

－

[Notes to the Statement of Income]
6th fiscal period (reference)
7th fiscal period
From: August 1, 2018
From: February 1, 2019
To: January 31, 2019
To: July 31, 2019
*1 Breakdown of operating income (loss) from *1 Breakdown of operating income (loss) fromreal estate leasing
real estate leasing(Unit: thousand yen)
(Unit: thousand yen)A.
Operating revenue fromA.
Operating revenue fromreal estate leasing
real estate leasing
Lease business revenue
Lease business revenue
Rental revenue 2,661,656
Rental revenue 2,718,786
Common area maintenanceCommon area maintenance
260,412266,210revenuerevenue
Parking revenue
93,509Parking revenue
94,978
Facility use revenue
10,064
Facility use revenue
9,924
Other rental revenue
2,422
Other rental revenue
2,225
Total 3,028,065
Total 3,092,125
Other lease business revenue
Other lease business revenue
Utilities reimbursement
177,469
Utilities reimbursement 165,375
Other revenue
18,800
Other revenue
77,080Total
196,270
Total 242,455
Total operating revenue fromTotal operating revenue from
3,224,335
3,334,581
real estate leasing
real estate leasing
Operating expenses
from real estate leasing
Expenses related to rent
business
Management fee
152,418
Utilities expenses
178,464
Taxes and dues
173,735
Repair expenses
77,155
Trust fee
13,049Insurance premium
4,801
Depreciation
409,467
Other expenses
79,280Total operating expenses from
1,088,373
real estate leasing

Operating expenses
from real estate leasing
Expenses related to rent
business
Management fee 148,449
Utilities expenses 179,347
Taxes and dues 238,101
Repair expenses 114,653
Trust fee
13,129Insurance premium
4,727
Depreciation 415,829
Other expenses 100,418
Total operating expenses from
1,214,656
real estate leasing

C.

C.

B.

B.

Operating income (loss)
from real estate leasing [A - 2,135,962
B]

－

117

Operating income (loss)
from real estate leasing [A - 2,119,924
B]

－

*2

Breakdown of gain on sales of real estate
property(Unit: thousand yen)
Urban Park Shin-Yokohama
Real Estate Sale Income
2,775,000
Real Estate Sale Cost
2,554,283
Other Real Estate Sale
28,250
ExpensesGain on Real Estate Sale
192,466*2

Breakdown of gain on sales of real estate
property(Unit: thousand yen)
Hakata-eki Higashi 113 Building(51% of quasi-co-ownershipinterest)
Real Estate Sale Income
1,453,500
Real Estate Sale Cost
994,157
Other Real Estate Sale
36,837
ExpensesGain on Real Estate Sale
422,504

Hakata-eki Higashi 113 Building(49% of quasi-co-ownershipinterest)
Real Estate Sale Income
1,396,500
Real Estate Sale Cost
955,390
Other Real Estate Sale
35,412
ExpensesGain on Real Estate Sale
405,696－

118－

[Notes to the Statement of Unitholders’ Equity]
6th fiscal period (reference)
From: August 1, 2018
To: January 31, 2019

7th fiscal period
From: February 1, 2019
To: July 31, 2019*1

Total number of investment units
authorized and total number ofinvestment units issued and outstanding
Total number ofinvestment units
10,000,000 units
authorized
Total number ofinvestment units issued
540,824 units
and outstanding*1

Total number of investment units
authorized and total number ofinvestment units issued and outstanding
Total number ofinvestment units
10,000,000 units
authorized
Total number ofinvestment units issued
540,824 units
and outstanding[Notes on Tax-Effect Accounting]
6th fiscal period (reference)
7th fiscal period(As of January 31, 2019)(As of July 31, 2019)
1. Breakdown of main causes for occurrence
1. Breakdown of main causes for occurrenceof deferred tax assets and deferred tax
of deferred tax assets and deferred tax
liabilities
liabilities(Unit: thousand yen)
(Unit: thousand yen)
(Deferred tax assets)(Deferred tax assets)
Non-deductible accrued enterprise
Acquisition cost of securities
1,359
1,930
tax
Accounts payable - other204
Acquisition cost of securities
1,364
Deferred gains or losses on
38,401
Deferred gains or losses onhedges21,893hedgesSubtotal
39,965
Subtotal
25,188Valuation allowance(39,965)
Valuation allowance(25,188)
Total
−
Total
−
Deferred tax assets, net−
Deferred tax assets, net−
2. Breakdown of major components that
2. Breakdown of major components thatcaused any significant differences
caused any significant differences
between the statutory tax rate and the
between the statutory tax rate and theeffective income tax rate after
effective income tax rate after
application of tax-effect accounting
application of tax-effect accounting(Unit: %)(Unit: %)Statutory tax rate
31.51 Statutory
31.74 tax31.74
rate
31.51
[Adjustments][Adjustments](30.57)(31.30)(31.43)
Deductible distributions payable
Deductible(28.57)
distributions payable
0.22(0.40)
0.79(0.05)
Other
Other
Effective income tax rate
Effective income tax rate
1.17
0.05application
3.96of tax-effect
0.03
after application of tax-effectafter
accounting
accounting[Notes on Fixed Assets Exercised Through a Lease]

－

119

－

31.51
(30,57)0.22
1.17

6th fiscal period (reference)
From: August 1, 2018
To: January 31, 2019

7th fiscal period
From: February 1, 2019
To: July 31, 2019

Not applicable.

Not applicable.

－

120

－

[Notes on Financial Instruments]
6th fiscal period (reference) (from August 1, 2018 to January 31, 2019)
1. Matters concerning status of financial instruments(1) Policy for handling financial instruments
SAR shall procure funds to allocate to acquisition of real estate related assets, repayment ofinterest‐bearing liabilities, etc. through mainly issuance of investment units, borrowing fromfinancial institutions, issuance of investment corporation bonds, etc. Upon procuring funds
through interest‐bearing liabilities, due consideration shall be given to fund procurement
agility and financial stability.
(2) Description of financial instruments and associated risks, and risk management system
The funds procured through loans, which shall be for purposes of mainly acquisition of assets,are exposed to liquidity risk until the repayment date, but the concerned risks are managedby taking such measures as lengthening the procurement periods and staggering thematurities. In addition, loans with floating interest rates are exposed to interest rate
fluctuation risk, but derivative transactions (interest rate swap transactions) are utilized as
hedging instruments to, in effect, convert interest rates to fixed rates in order to mitigate thatrisk. For the hedge accounting approach, hedging instruments, hedged items, hedging policy
and method of assessing the effectiveness of hedging, please refer to “5. Method of hedge
accounting” described under “Notes on Matters Concerning Significant Accounting Policies”
earlier in this document.
(3) Supplementary explanation to matters concerning fair value, etc. of financial instruments
Not applicable.
2. Matters concerning fair value, etc. of financial instruments
The carrying amount and fair value as of January 31, 2019, and the amount of difference
between these, are as follows:
Financial instruments for which estimation of fair value is recognized to be difficult are notincluded. Please refer to "Note 2."(Unit: thousand yen)Amount ofCarrying amount
Fair value
difference(1) Cash and deposits
2,310,545
2,310,545(2) Cash and deposits in trust

3,953,328

3,953,328-(3) Investment securities(4)Long-term
loans
receivable
Assets total

526,000

526,000-

300,000

300,000-

7,089,874

7,089,874-

460,000

460,000-

8,300,000

8,300,000-

43,580,000

43,580,000-

52,340,000

52,340,000-(69,303)(69,303)-(5)
Short-term loans payable(6) Current portion of long-termloans payable(7) Long-term loans payable
Liabilities total(8) Derivative transactions (*)(*)

Assets and liabilities arising from derivative transactions are offset and presented in the net amount, with the balance shown in parentheses ( )when in a net liability position.

(Note 1) Method of calculation of the fair value of financial instruments(1) Cash and deposits; (2) Cash and deposits in trust; (5) Short-term loans payable; (6) Current portion of long-term loans payable

－

121

－

Because these are settled in a short period of time, the fair value is approximately the same as the book value and thus stated at that bookvalue.
(3) Investment securities; (4) Long-term loans receivable
Because interest income etc. from mezzanine loan debt (corporate bonds, trust beneficiary rights and loans receivable) are based on floatinginterest rates under terms and conditions that interest rates be reviewed at regular intervals, the fair value is approximately the same as thebook value and thus stated at that book value.
(7) Long-term loans payable
Because long-term loans payable is with floating interest rates under terms and conditions that interest rates be reviewed at regular intervals,
the fair value is approximately the same as the book value and thus stated at that book value.
(8) Derivative transactions

－

122

－

1) Derivative transactions to which hedge accounting is not applied: Not applicable.
2) Derivative transactions to which hedge accounting is applied: The following is the contract amount or the amount equivalent to theprincipal provided in the contract as of the date of settlement of accounts for each hedge accounting approach.
(Unit: thousand yen)Hedge
accounting
approachPrinciple

Interest rate swap transaction

Long-term loans

accounting(floating receivable; fixed payable)

payable(*1)(*2)

Contract amount, etc. (*1)

Mainhedged item

Type, etc. of derivative transaction

43,580,000

Fair value

Of which,later than 1 year(*2)

36,280,000(69,303)

Contract amount, etc. is based on notional principal.
Fair value is calculated based on the price quoted by lending financial institutions, etc.

(Note 2) Financial instruments for which estimation of fair value is recognized to be difficult(Unit: thousand yen)
Category

Carrying amount

Tenant leasehold and security deposits (*1)

6,669

Tenant leasehold and security deposits in trust (*1)

2,514,819

Investment securities (*2)
(*1)

(*2)

102,893

Tenant leasehold and security deposits and tenant leasehold and security deposits in trust are not subject to valuation at fair value, because areasonable estimation of cash flows is recognized to be extremely difficult due to there being no market price and difficulty of calculating theactual deposit period from when lessees move in to when they move out.
Fair values of silent partnership equity interest in investment securities are not subject to disclosure of fair value as they have no market value
and their fair values are extremely difficult to recognize.

(Note 3) Amount of redemption of monetary claims and securities with a maturity scheduled to be due after the date of settlement of accounts(January 31, 2019)(Unit: thousand yen)
Later than 1 year Later than 2 years Later than 3 years Later than 4 years
Not later thanand not later than and not later than and not later than and not later than Later than 5 years
1 year
2 years
3 years
4 years
5 years
Cash and deposits

2,310,545

-

-

-

-

-

Cash and deposits in trust

3,953,328

-

-

-

-

-

Investment securities

-

-

-

-

526,000-

Long-term loans
receivable

-

-

-

-

300,000-

Total

6,263,874---

826,000-(Note 4) Amount of repayment of loans scheduled to be due after the date of settlement of accounts (January 31, 2019)(Unit: thousand yen)
Not later than
1 yearLater than 1 year Later than 2 years Later than 3 years Later than 4 years
and not later than and not later than and not later than and not later than Later than 5 years
2 years
3 years
4 years
5 years

Short-term loans payable

460,000

-

-

-

-

-

Long-term loans payable

8,300,000

11,300,000

14,600,000

8,150,000

9,530,000

-

Total

8,760,000

11,300,000

14,600,000

8,150,000

9,530,000-

7th fiscal period (from February 1, 2019 to July 31, 2019)
1. Matters concerning status of financial instruments(1) Policy for handling financial instruments
SAR shall procure funds to allocate to acquisition of real estate related assets, repayment ofinterest‐bearing liabilities, etc. through mainly issuance of investment units, borrowing fromfinancial institutions, issuance of investment corporation bonds, etc. Upon procuring funds
through interest‐bearing liabilities, due consideration shall be given to fund procurement
－

123

－

agility and financial stability.
(2) Description of financial instruments and associated risks, and risk management system
The funds procured through loans, which shall be for purposes of mainly acquisition of assets,are exposed to liquidity risk until the repayment date, but the concerned risks are managedby taking such measures as lengthening the procurement periods and staggering thematurities. In addition, loans with floating interest rates are exposed to interest rate
fluctuation risk, but derivative transactions (interest rate swap transactions) are utilized as
hedging instruments to, in effect, convert interest rates to fixed rates in order to mitigate thatrisk. For the hedge accounting approach, hedging instruments, hedged items, hedging policy
and method of assessing the effectiveness of hedging, please refer to “5. Method of hedge
accounting” described under “Notes on Matters Concerning Significant Accounting Policies”
earlier in this document.
(3) Supplementary explanation to matters concerning fair value, etc. of financial instruments
Not applicable.
2. Matters concerning fair value, etc. of financial instruments
The carrying amount and fair value as of July 31, 2019, and the amount of difference between
these, are as follows:
Financial instruments for which estimation of fair value is recognized to be difficult are notincluded. Please refer to "Note 2".
(Unit: thousand yen)Amount ofCarrying amount
Fair value
difference(1) Cash and deposits
1,743,631
1,743,631(2) Cash and deposits in trust

3,940,970

3,940,970-(3) Investment securities

525,370

525,370-(4) Long-term loans receivable

300,000

300,000-

Assets total(5) Current portion of long-termloans payable(6) Long-term loans payable

6,509,971

6,509,971-

7,300,000

7,300,000-

44,280,000

44,280,000-

51,580,000

51,580,000-(122,065)(122,065)-

Liabilities total(7) Derivative transactions (*)(*)

Assets and liabilities arising from derivative transactions are offset and presented in the net amount, with the balance shown in parentheses ( )when in a net liability position.

(Note 1) Method of calculation of the fair value of financial instruments(1) Cash and deposits; (2) Cash and deposits in trust; (5) Current portion of long-term loans payable
Because these are settled in a short period of time, the fair value is approximately the same as the book value and thus stated at that bookvalue.
(3) Investment securities; (4) Long-term loans receivable
Because interest income etc. from mezzanine loan debt (corporate bonds, trust beneficiary rights and loans receivable) are based on floatinginterest rates under terms and conditions that interest rates be reviewed at regular intervals, the fair value is approximately the same as thebook value and thus stated at that book value.
(6) Long-term loans payable
Because long-term loans payable is with floating interest rates under terms and conditions that interest rates be reviewed at regular intervals,
the fair value is approximately the same as the book value and thus stated at that book value.
(7) Derivative transactions
1) Derivative transactions to which hedge accounting is not applied: Not applicable.
2) Derivative transactions to which hedge accounting is applied: The following is the contract amount or the amount equivalent to theprincipal provided in the contract as of the date of settlement of accounts for each hedge accounting approach.

－

124

－

(Unit: thousand yen)Hedge
accounting
approachPrinciple

Interest rate swap transaction

Long-term loans

accounting(floating receivable; fixed payable)

payable(*1)(*2)

Contract amount, etc. (*1)

Mainhedged item

Type, etc. of derivative transaction

44,280,000

Fair value

Of which,later than 1 year(*2)

36,980,000(122,065)

Contract amount, etc. is based on notional principal.
Fair value is calculated based on the price quoted by lending financial institutions, etc.

(Note 2) Financial instruments for which estimation of fair value is recognized to be difficult(Unit: thousand yen)
Category

Carrying amount

Tenant leasehold and security deposits (*1)

6,669

Tenant leasehold and security deposits in trust (*1)

2,478,925

Investment securities (*2)
(*1)

(*2)

197,850

Tenant leasehold and security deposits and tenant leasehold and security deposits in trust are not subject to valuation at fair value, because areasonable estimation of cash flows is recognized to be extremely difficult due to there being no market price and difficulty of calculating theactual deposit period from when lessees move in to when they move out.
Fair values of silent partnership equity interest in investment securities are not subject to disclosure of fair value as they have no market value
and their fair values are extremely difficult to recognize.

(Note 3) Amount of redemption of monetary claims and securities with a maturity scheduled to be due after the date of settlement of accounts(July 31, 2019)(Unit: thousand yen)
Later than 1 year Later than 2 years Later than 3 years Later than 4 years
Not later thanand not later than and not later than and not later than and not later than Later than 5 years
1 year
2 years
3 years
4 years
5 years
Cash and deposits

1,743,631

-

-

-

-

-

Cash and deposits in trust

3,940,970

-

-

-

-

-

Investment securities

-

-

-

-

525,370-

Long-term loans
receivable

-

-

-

-

300,000-

Total

5,684,601---

825,370-(Note 4) Amount of repayment of loans scheduled to be due after the date of settlement of accounts (July 31, 2019)(Unit: thousand yen)
Not later than
1 yearLater than 1 year Later than 2 years Later than 3 years Later than 4 years
and not later than and not later than and not later than and not later than Later than 5 years
2 years
3 years
4 years
5 years

Long-term loans payable

7,300,000

11,300,000

15,450,000

4,690,000

12,840,000

-

Total

7,300,000

11,300,000

15,450,000

4,690,000

12,840,000

-

－

125

－

[Notes on Investment and Rental Properties]
6th fiscal period (reference) (from August 1, 2018 to January 31, 2019)
SAR owns rental real estate, etc. for purposes of earning revenue from leasing. The carrying amount,amount of increase (decrease) during the period and fair value of these investment and rental
properties are as follows:(Unit: thousand yen)
Carrying amount
Fair value at end of period
Balance at beginning of period

Amount of increase (decrease) during period

87,108,669

16,232,001

Balance at end of period
103,340,671

111,375,500(Note 1) Carrying amount is the amount of the cost of acquisition, less accumulated depreciation.
(Note 2) Of the amount of increase (decrease) in investment and rental properties during the period, the amount of increase is mainly attributable toacquisition of real estate beneficiary interests in trust of 6 properties (19,889,224 thousand yen) and capital expenditure (262,328 thousandyen), while the amount of decrease is mainly attributable to transfer of real estate beneficiary interests in trust of 2 properties (of which, one
property is 49% quasi co-ownership in the property) (3,509,673 thousand yen) and depreciation (409,467 thousand yen).
(Note 3) Fair value at the end of the period is the appraisal value determined by an external real estate appraiser. Of the fair value at the end of theperiod, that of Hakata-eki Higashi 113 Building (51% of quasi-co-ownership interest) transferred on February 1, 2019 is based on transfer price(1,453,500 thousand yen) stated in the trust beneficiary rights quasi co-ownership interest sale and purchase agreement dated July 23, 2018.

The income (loss) concerning investment and rental properties for the fiscal period ended
January 31, 2019 (6th fiscal period) are as stated in “Notes to the Statement of Income” earlier
in this document.
7th fiscal period (from February 1, 2019 to July 31, 2019)
SAR owns rental real estate, etc. for purposes of earning revenue from leasing. The carrying amount,amount of increase (decrease) during the period and fair value of these investment and rental
properties are as follows:(Unit: thousand yen)
Carrying amount
Fair value at end of period
Balance at beginning of period

Amount of increase (decrease) during period

103,340,671(189,048)

Balance at end of period
103,151,622

112,222,000(Note 1) Carrying amount is the amount of the cost of acquisition, less accumulated depreciation.
(Note 2) Of the amount of increase (decrease) in investment and rental properties during the period, the amount of increase is mainly attributable toacquisition of real estate beneficiary interests in trust of 1 property (1,031,741 thousand yen) and capital expenditure (189,197 thousand yen),while the amount of decrease is mainly attributable to transfer of real estate beneficiary interests in trust of 1 property (51% of quasi-coownership interest) (994,157 thousand yen) and depreciation (415,829 thousand yen).
(Note 3) Fair value at the end of the period is the appraisal value determined by an external real estate appraiser.

The income (loss) concerning investment and rental properties for the fiscal period ended July
31, 2019 (7th fiscal period) are as stated in “Notes to the Statement of Income” earlier in thisdocument.
[Notes on Related-Party Transactions]
6th fiscal period (reference) (from August 1, 2018 to January 31, 2019)
Descripti
Percentage
Transact
Name ofon ofof
Descriptionion
Attribut company, business
investmentofamount Account itemeetc. ororunits held transaction (thousand
person occupati
(%)
yen)
on
－

126

－

Balance at
end ofperiod(thousandyen)Long-termloanspayableAsset Sumitomo
custody Mitsui Trust
BankingcompanBank,yLimited

Borrowing
relatedexpenses
Interest
expensesLong-termloans payable
1,400,00 Current
0 portion of
long-termloans payable
Prepaid
expenses
7,911 Long-term
prepaid
expenses
Accrued26,480expenses

6,300,000

1,050,000

14,11022,619
1,672(Note 1) The transaction amount does not include consumption tax, etc., while the balance at the end of the period includes consumption tax, etc.
(Note 2) The transaction terms and conditions are determined based on actual market conditions.

7th fiscal period (from February 1, 2019 to July 31, 2019)
Descripti
Percentage
Transact
Name ofon ofof
Descriptionion
Attribut company, business
investmentofamount Account itemeetc. ororunits held transaction (thousand
person occupati
(%)
yen)
on
Long-termloans payable
Long-term
1,250,00 Current
loans
0 portion of
payablelong-term
Asset Sumitomoloans payable
custody Mitsui Trust
Banking
Prepaid
companBank,
expenses
BorrowingyLimited
7,899 Long-term
relatedexpenses
prepaid
expenses
Interest
Accrued30,359expenses
expenses

Balance at
end ofperiod(thousandyen)
6,500,000

1,050,000

15,06424,933
1,793(Note 1) The transaction amount does not include consumption tax, etc., while the balance at the end of the period includes consumption tax, etc.
(Note 2) The transaction terms and conditions are determined based on actual market conditions.

[Notes on Per Unit Information]
6th fiscal period (reference)
From: August 1, 2018
To: January 31, 2019
101,400 y
Net assets per uniten
Net income per unit

7th fiscal period
From: February 1, 2019
To: July 31, 2019
Net assets per unit

3,889 yen－

Net income per unit

127－

101,215yen
3,632 yenNet income per unit is calculated by dividing
net income by the daily weighted average
number of investment units. In addition,
diluted net income per unit is not stated,because there are no diluted investment
units.
(Note)Net income per unit is calculated by dividing
net income by the daily weighted average
number of investment units. In addition,
diluted net income per unit is not stated,because there are no diluted investment
units.

The basis for calculation of net income per unit is as follows:

6th fiscal period (reference)
From: August 1, 2018
To: January 31, 2019
Net income (thousand yen)
2,049,646
Amount not attributable tocommon unitholders (thousandyen)
Net income attributable tocommon investment units
2,049,646(thousand yen)
Average number of investment
526,980
units during period (units)

7th fiscal period
From: February 1, 2019
To: July 31, 2019
Net income (thousand yen)
1,964,506
Amount not attributable tocommon unitholders (thousandyen)
Net income attributable tocommon investment units
1,964,506(thousand yen)
Average number of investment
540,824
units during period (units)[Notes on Significant Subsequent Events]
6th fiscal period (reference) (from August 1, 2018 to January 31, 2019)
Not applicable.
7th fiscal period (from February 1, 2019 to July 31, 2019)
Not applicable.

－

128

－

VI. Statement of Cash Distributions(Unit: yen)
6th fiscal period(reference)
From: August 1, 2018
To: January 31, 2019
2,163,215,106
2,011,865,280[3,720]2,011,865,280[3,720]151,349,826

I. Unappropriated retained earnings
II. Cash distribution[Cash distribution per unit]
Cash distribution of earnings[Cash distribution of earnings per unit]
III. Retained earnings carried forward

7th fiscal period
From: February 1,
2019
To: July 31, 2019
2,115,855,829
1,960,487,000[3,625]
1,960,487,000[3,625]
155,368,829

Method of calculation of amount of cash distribution
6th fiscal period (reference) (from August 1, 2018 to January 31, 2019):
Pursuant to the cash distribution policy provided in Article 35, Paragraph 1 of SAR’s Articles ofIncorporation, SAR shall distribute in excess of the amount equivalent to 90% of the amount of
distributable earnings of SAR as defined in Article 67-15, Paragraph 1 of the Act on Special Measures
Concerning Taxation. In accordance with such policy, concerning cash distribution of earnings (notincluding cash distribution in excess of earnings), the decision was made to distribute 3,720 yen perunit, 2,011,865,280 yen in total cash distribution, considering the occurrence of gain on sale of realestate of 598,163,538 yen, and within net income, 37,781,023 yen is to be internally reserved.
7th fiscal period (from February 1, 2019 to July 31, 2019):
Pursuant to the cash distribution policy provided in Article 35, Paragraph 1 of SAR’s Articles ofIncorporation, SAR shall distribute in excess of the amount equivalent to 90% of the amount of
distributable earnings of SAR as defined in Article 67-15, Paragraph 1 of the Act on Special Measures
Concerning Taxation. In accordance with such policy, concerning cash distribution of earnings (notincluding cash distribution in excess of earnings), the decision was made to distribute 1,960,487,000
yen in total cash distribution which is an integral multiple of the total number of issued investment
units of 540,824 and more than the amount of minimized tax expenses such as corporate tax, etc.

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VII. Statement of Cash Flows (Reference Information)
6th fiscal period(reference)
From: August 1, 2018
To: January 31, 2019

(Unit: thousand yen)
7th fiscal period
From: February 1,
2019
To: July 31, 2019

2,073,818
409,467
37,238(24)
145,156

1,965,111
415,829－(30)
155,935(1,598)(3,338)25,849184,863(21,000)

199,468(2,507)(12,060)(5,233)(7,223)81,740(51,642)

74,25830,016(12,905)(106,933)

3,509,673

994,157

7,042
6,363,897
24(143,833)(351)

17,477
3,738,710
30(155,922)(25,080)

6,219,737

3,557,738(20,125,244)(1,234,988)

(192)

(72)

6,861

72

(119,296)(172,112)

674,748

136,218(226,511)(101,375)

334,500

5,938(300,000)－

Cash flows from operating activities
Income before income taxes
Depreciation
Investment unit issuance expenses
Interest income
Interest expenses
Decrease (increase) in operating accounts
receivable
Decrease (increase) in consumption taxes
refund receivable
Increase (decrease) in accrued consumption
taxes
Decrease (increase) in prepaid expenses
Decrease (increase) in long-term prepaid
expenses
Increase (decrease) in operating accounts
payableIncrease (decrease) in accounts payable - other
Increase (decrease) in advances received
Decrease from sales of property, plant andequipment in trust
Other, net
SubtotalInterest income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating
activities
Cash flows from investing activities
Purchase of property, plant and equipment in
trust
Repayments of tenant leasehold and security
deposits
Proceeds from tenant leasehold and security
deposits
Repayments of tenant leasehold and security
deposits in trust
Proceeds from tenant leasehold and security
deposits in trust
Purchase of investment securities
Proceeds from redemption of investment
securities
Payments of long-term loans receivable
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－

Other, net
Net cash provided by (used in) investing
activities
Cash flows from financing activities
Increase in short-term loans payable
Decrease in short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Proceeds from issuance of investment units
Dividends paid
Net cash provided by (used in) financing
activities
Net increase (decrease) in cash and cash
equivalents
Cash and cash equivalents at beginning of period

(962)

－

(19,756,096)(1,366,319)

4,290,000(3,830,000)
8,840,000(190,000)
6,876,057(1,304,565)

700,000(1,160,000)
8,000,000(8,300,000)－(2,010,691)

14,681,492(2,770,691)

1,145,133(579,272)

5,118,741

6,263,874

Cash and cash equivalents at end of period*1 6,263,874*1 5,684,601(Note) The statement of cash flows was prepared under the “Regulation on the Terminology,
Forms, and Preparation Methods of Financial Statements” (Ministry of Finance Order No. 59
of 1963) and attached as reference information. This statement of cash flows has not been
audited by an accounting auditor as it is not subject to an audit by an accounting auditor
based on the provisions of Article 130 of the Act on Investment Trusts and Investment
Corporations.

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－

[Notes on Matters Concerning Significant Accounting Policies] (Reference Information)
6th fiscal period (reference)
7th fiscal period
Item
From: August 1, 2018
From: February 1, 2019
To: January 31, 2019
To: July 31, 2019
Scope of funds
The funds (cash and cash The funds (cash and cashin the statement equivalents)inthe equivalents)intheof cash flows
statement of cash flows statement of cash flows(cash and cash
comprise cash on hand and comprise cash on hand andequivalents)
cash in trust, demand cash in trust, demand
deposits and deposits in deposits and deposits intrust,
andshort-term trust,andshort-term
investments
witha investments
withamaturity of 3 months or maturity of 3 months orless from the date of less from the date ofacquisition that are readily acquisition that are readily
convertible to cash and that convertible to cash and thataresubject
toan aresubjecttoaninsignificant risk of changes insignificant risk of changes
in value.
in value.
[Notes to the Statement of Cash Flows] (Reference Information)

6th fiscal period (reference)
7th fiscal period
From: August 1, 2018
From: February 1, 2019
To: January 31, 2019
To: July 31, 2019
*1 Reconciliation of cash and cash *1 Reconciliation of cash and cash
equivalents at end of period toequivalents at end of period tothe amount of balance sheet
the amount of balance sheet
items
items
(Unit: thousand yen)
(Unit: thousand yen)
Cash and deposits
2,310,545
Cash and2,000,005
deposits 1,667,713 1,598,847
1,743,631 2,310,545 2,000,005 1
Cash and deposits in trust
3,953,328
Cash and3,118,735
deposits in
3,153,262
trust 3,239,091
3,940,970 3,953,328 3,118,735 3
Cash and cash equivalents
6,263,874
Cash and5,118,741
cash equivalents
4,820,976 4,837,939
5,684,601 6,263,874 5,118,741 4

132Attachment 4
Asset Management Agreement
Sakura Sogo REIT Investment Corporation (“SSR”) and Sakura Real Estate Funds Management, Inc. (“AssetManagement Company”) enter into this Asset Management Agreement (this “Agreement”) with respect tocarrying out the operations of the management of the assets of SSR (“Asset”) pursuant to the Act on
Investment Trusts and Investment Corporations (Act No. 198 of 1951; as amended; “Investment Trusts Act”)
and the Articles of Incorporation of SSR (“Articles of Incorporation”), as follows.

Chapter 1 Entrustment of Operations
Article 1 (Entrustment of Operations)
1. SSR entrusts all of the following operations or administrative affairs concerning themanagement of the Asset (collectively, “Entrusted Operations”) in accordance with theprovisions of the Investment Trusts Act and the Articles of Incorporation to the AssetManagement Company, as provided for in this Agreement, and the Asset Management
Company accepts the same.
(1) Operations concerning the management of the Asset (“Asset Management
Operations”);(2) Operations concerning the fund procurement of SSR (“Fund Procurement
Operations”);(3) Making reports to SSR; and/or(4) Any other operations related to or incidental to each of the Items above which SSR
entrusts as needed (including attending and making reports at the board of directorsof SSR).
2. The Asset Management Company may not entrust all the Entrusted Operations to a third
party.
3. The Asset Management Company shall manage the Asset separately from any other assets,
including the assets of the Asset Management Company.
4. The Asset Management Company shall carry out the Entrusted Operations in good faithand with the care of a prudent manager on behalf of SSR.
5. The specific details and conditions of the Entrusted Operations are as set forth in thefollowing Articles.
6. The Asset Management Company shall prepare management guidelines in accordancewith the standards of the Articles of Incorporation (“Management Guidelines”) and carryout the Entrusted Operations in accordance with the Management Guidelines.
Article 2 (Delegation of Authority of Entrusted Operations)
1. In entrusting the Entrusted Operations set forth in the preceding Article, SSR shall, at its
own discretion, grant any and all authority required for carrying out the Entrusted
Operations on behalf of SSR to the Asset Management Company. If the AssetManagement Company seeks the prior approval of SSR in accordance with its internal
regulations in carrying out the Entrusted Operations, SSR shall promptly consider theappropriateness of the matters with respect to which such prior approval has been sought.
2. If the Asset subject to the Entrusted Operations is a real estate, SSR shall entrust all thedecisions concerning the sale and purchase, exchange or lease of any building lot orbuilding pursuant to Article 50-2 of the Real Estate Brokerage Act (Act No. 176 of 1952;as amended; “Real Estate Brokerage Act”) and shall grant the authority to engage inentrustment-based agency services of such transactions based on such decisions, and theAsset Management Company shall accept the same.
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Article 3 (Asset Management Operations)
1. The Asset Management Company shall manage the Asset in accordance with the Chapter
5 “Asset Management” of the Articles of Incorporation set forth in Appendix 1,
Management Guidelines and internal regulations of the Asset Management Company.
2. The Asset Management Company shall prepare an annual management plan and mid-term
management plan and asset management plan, and endeavor to manage the Asset incompliance therewith.
3. If SSR receives any complaints on the management of the Asset from a third party, theAsset Management Company shall deal with such complaint and take any other necessary
actions on behalf of SSR.
4. The Asset Management Company shall attend any negotiations over the Asset with leased
land owners, co-owners, unit owners, neighboring persons involved and other relevant
government agencies or the like required in terms of management (provided, however, that
if such operations are entrusted to a real estate management company, it shall supervise
and approve of the details of such operations carried out by such real estate managementcompany).
5. The Asset Management Company may carry out any operations related or incidental tothe management of the Asset.
Article 4 (Fund Procurement Operations)
1. With respect to the issuance of additional investment units, issuance, borrowing or
refinancing of investment corporation bonds (including short-term investment corporation
bonds), or fund procurement acts similar thereto (collectively, “Fund Procurement”), theAsset Management shall, for purposes of an effective management of assets, carry out any
operations required on behalf of SSR.
2. At the request from a fund provider to SSR to make any reports in connection with theFund Procurement carried out by SSR, the Asset Management Company shall make suchreports on behalf of SSR.
3. The Asset Management Company shall, on behalf of SSR, apply for any listing ofinvestment units issued by SSR and any other operations concerning such listing, if any.
4. Upon the listing of the investment units issued by SSR, the Asset Management Company
shall, on behalf of SSR, make timely disclosures of information concerning SSR and carryout any other IR activities.
5. In addition to the above, the Asset Management Company may carry out any operations
related or incidental to the Fund Procurement.
Article 5 (Reporting Obligations)
1. The Asset Management Company shall prepare and deliver to SSR a report on the
Entrusted Operations at least once every three (3) months, pursuant to the Investment
Trusts Act.
2. Notwithstanding the preceding Paragraph, the Asset Management Company shall makereports on the Entrusted Operations, at the request of SSR. The Asset Management
Company may not reject the request to make reports from SSR, in the absence of any
grounds deemed reasonable by SSR.
Chapter 2 Term
Article 6 (Term)
This Agreement shall come into effect on the date on which SSR completes the registration
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under the Investment Trusts Act, and the term shall not be fixed.
Article 7 (Termination)
1. If the Asset Management Company ceases to become a member of The Investment Trusts
Association, Japan, SSR may immediately terminate this Agreement by a written noticeto the Asset Management Company after the prior resolution of the general meeting ofunitholders.
2. SSR may terminate this Agreement by a six (6) months’ prior written notice to the AssetManagement Company after the prior resolution of the general meeting of unitholders.
3. The Asset Management Company may request for the termination of this Agreement to
SSR by a six (6) months’ prior written notice, and SSR shall, at the request of suchtermination, immediately seek for the approval of the termination of this Agreement at thegeneral meeting of unitholders, or seek for the permission of the Prime Minister underunavoidable circumstances. If the approval of the general meeting of unitholders or thepermission of the Prime Minister is obtained with respect to the termination of thisAgreement, SSR shall consent to the request for such termination, in which case thisAgreement shall terminate on the date of termination specified in the relevant notice.
4. Notwithstanding the provisions in Paragraphs 1 to 3, SSR may immediately terminate thisAgreement by the resolution of the board of directors, if the Asset Management Company
falls under any of the following Items.
(1) If the Asset Management Company is in breach of the obligations under its duties
or fails to perform its duties (excluding the case where such breach is rectifiable andthe Asset Management Company rectifies the same within 30 business days fromthe date of receipt of the demand for rectification from SSR);(2) If the Asset Management Company is subject to suspension of payment or
insolvency, or is filed a petition for the commencement of bankruptcy proceedings,
rehabilitation proceedings under the Civil Rehabilitation Act, corporate
reorganization proceedings or special liquidation, or is served with an order of
seizure against important assets; and/or(3) In addition to the cases listed in each of the preceding Items, in case of material
events whereby it is difficult to continue to entrust the operations of the managementof assets.
5. SSR shall terminate this Agreement if the Asset Management Company falls under any of
the following Items.
(1) If the Asset Management Company ceases to become a Financial Instruments
Business Operators set forth in the Financial Instruments and Exchange Act (ActNo. 25 of 1948; as amended; “Financial Instruments and Exchange Act”) (limited
to a person who engages in the Investment Management Business set forth in the
Financial Instruments and Exchange Act and a person who is licensed under Article
3, Paragraph 1 of the Real Estate Brokerage Act or is approved under Article 50-2,
Paragraph 1 of the Real Estate Brokerage Act);(2) If the Asset Management Company falls under any of the Items of Article 200 of
the Investment Trusts Act; and/or(3) If the Asset Management Company is dissolved.
6. Even where this Agreement is terminated pursuant to the provisions of this Article, theAsset Management Company shall continue to carry out the Entrusted Operations under
the instructions of SSR until a successor for carrying out the Entrusted Operations is
appointed and the Entrusted Operations are commenced.
Article 8 (Treatments upon Termination of this Agreement)
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135

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1.

2.

Upon the termination of this Agreement, the Asset Management Company shall notify theparties involved in the Entrusted Operations under this Agreement of the termination ofthis Agreement, and deliver to SSR all the records, documents, materials or the likeretained by the Asset Management Company on behalf of SSR (including, but not limited
to, paper-based records, discs, tapes or other media in which records are reasonably kept
in custody) and all copies thereof, if any (“Entrusted Operations-Related Records”). In
addition, upon the termination of this Agreement, if SSR gives any separate instructions,
the Asset Management Company shall follow such instructions of SSR, and shall deliver
the Entrusted Operations-Related Records to the asset management company newly
appointed by SSR and handover the Entrusted Operations.
The obligations to pay damages for breach of obligations or representations and warranties
under this Agreement of SSR and the Asset Management Company, and any and all otherobligations owed against SSR or the asset management company or entrustor of the AssetManagement Company remaining upon the termination of this Agreement shall survive
even after the termination of this Agreement until such obligation has been fully performed.
Chapter 3 Fees and Expenses

Article 9 (Operation Fees)
The fees for the Entrusted Operations carried out by the Asset Management Company set forthin this Agreement (“Operation Fees”) consist of operation fees, acquisition fees, assignment
fees and merger fees, and the specific amounts or calculation methods, timing of payment andpayment methods of each of the fees are as set forth in Annex 2.
Article 10 (Various Expenses)
1. The expenses incurred in carrying out the Entrusted Operations shall be borne by SSR in
principle, and the specified items of such expenses shall be separately confirmed between
SSR and the Asset Management Company. Any expenses with respect to which questions
on which party is to bear the same have been raised shall be determined by separate
consultation between SSR and the Asset Management Company.
2. Various internal expenses of the Asset Management Company shall be included in the
Operation Fees set forth in Paragraph 1 of the preceding Article, and even where any
various internal expenses exceeding the Operation Fees are incurred by the AssetManagement Company, the Asset Management Company may not claim for the paymentof such various internal expenses against SSR. The specified items of such various internal
expenses shall be separately confirmed between SSR and the Asset Management
Company.
3. At the request from the Asset Management Company, SSR shall promptly pay the
expenses required for carrying out the Entrusted Operations in advance.
4. Any expenses paid by the Asset Management Company on behalf of SSR in connection
with the carrying out of its operations shall be reimbursed by SSR; provided, however,that the Asset Management Company shall not, in any case, be liable to temporarily pay
the expenses to be borne by SSR.
5. In addition to the provisions in each of the preceding Items, the burden, payment inadvance, temporary payment, reimbursement or the like of the expenses shall be
determined through consultation between SSR and the Asset Management Company.
Chapter 4 Representations and Warranties
Article 11 (Asset Management Company’s Representations and Warranties)
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136

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The Asset Management Company represents and warrants to SSR that the following facts aretrue and correct as of the date of execution of this Agreement.
(1) The Asset Management Company is a stock company (kabushiki kaisha) duly
established and validly existing under the laws of Japan, and possesses its own
property and has the authority and power to carry out the operations it currently
engages in.
(2) The execution and performance of this Agreement by the Asset Management
Company are acts within the extent of the corporate purpose of the AssetManagement Company, and the Asset Management Company has carried out any
and all procedures required under laws and regulations and the internal rules of theAsset Management Company with respect to the execution and performance of thisAgreement.
(3) The execution and performance of this Agreement by the Asset Management
Company (i) do not violate or are not contrary to the laws and regulations, rules,
circulars, orders, judgments, decisions, warrants or the like which bind the AssetManagement Company or its property, (ii) do not violate or are not contrary to the
Articles of Incorporation and other internal rules of the Asset Management
Company, or (iii) are not contrary to any agreement to which the Asset Management
Company is a party or any agreement with a third party to which the AssetManagement Company or its property is bound, and do not create or cause any
obligation to create any mortgage, pledge, lien or other burden on the property or
business of the Asset Management Company thereby.
(4) Upon its execution, this Agreement constitutes the legal, valid and binding
obligations of the Asset Management Company, and becomes enforceable inaccordance with the terms and conditions thereof, other than as restricted by the
Bankruptcy Act and other applicable laws and regulations which generally affectthe rights of creditors.
(5) The Asset Management Company has obtained or implemented all permits andlicenses, consents, notices, registrations and other actions required by theadministrative agency or the like with respect to its execution and performance of
this Agreement, if any.
(6) There are no pending litigations, arbitrations, conciliations and administrative
proceedings which may adversely affect the performance of the obligations of theAsset Management Company under this Agreement, and there is neither such risk,
to the best of the Asset Management Company’s knowledge.
Article 12 (SSR’s Representations and Warranties)
SSR represents and warrants to the Asset Management Company that the following facts aretrue and correct as of the date of execution of this Agreement.
(1) SSR is an investment corporation duly established and validly existing under thelaws of Japan, and possesses its own property and has the authority and power tocarry out the operations it currently engages in.
(2) The execution and performance of this Agreement by SSR are acts within the extent
of the purpose of SSR, and SSR has carried out any and all procedures required
under laws and regulations and the internal rules of SSR with respect to the
execution and performance of this Agreement.
(3) The execution and performance of this Agreement by SSR (i) do not violate or are
not contrary to the laws and regulations, rules, circulars, orders, judgments,
decisions, warrants or the like which bind SSR or its property, (ii) do not violate or
are not contrary to the Articles of Incorporation and other internal rules, or (iii) are
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(4)

(5)

(6)

not contrary to any agreement to which SSR is a party or any agreement with a third
party to which SSR or its property is bound, and do not create or cause any
obligation to create any mortgage, pledge, lien or other burden on the property or
business of SSR thereby.
Upon its execution, this Agreement constitutes the legal, valid and binding
obligations of SSR, and becomes enforceable in accordance with the terms andconditions thereof, other than as restricted by the Bankruptcy Act and otherapplicable laws and regulations which generally affect the rights of creditors.
SSR has obtained or implemented all permits and licenses, consents, notices,
registrations and other actions required by the administrative agency or the like withrespect to its execution and performance of this Agreement, if any.
There are no pending litigations, arbitrations, conciliations and administrative
proceedings which may adversely affect the performance of the obligations of SSR
under this Agreement, and there is neither such risk, to the best of SSR’s knowledge.

Article 13 (Indemnification)
1. SSR and the Asset Management Company agree on each of the following Items.
(1) If either party incurs damage or incurs expenses or costs (including damages,
expenses or costs incurred as a result of a third-party claim or litigation or the like)due to or in connection with the breach of the obligations or representations andwarranties of the other party, the party in breach shall compensate the other party at
the request of the other party.
(2) In addition to the preceding Item, if SSR incurs damage or expenses by intention,
gross negligence or material breach of the terms and conditions of this Agreementby the Asset Management Company or its director, agent, employee or contractor(excluding SSR and its affiliate), the Asset Management Company shall compensate
for such damage or expenses at the request of SSR.
2. Even where SSR incurs loss as a result of the Asset Management Company’s managementof the Asset based on its own investment decisions pursuant to this Agreement, unlesssuch loss is incurred for reasons not attributable to the Asset Management Company(including, but not limited to, breach of the obligations set forth in Article 1, Paragraph 4of this Agreement), the Asset Management Company shall not compensate and may notcause a third party to compensate SSR or a third party for such loss.
3. The Asset Management Company may not provide or cause a third party to provide
economic benefits to SSR or a third party to add to the profits of SSR earned as a result of
the Asset Management Company’s management of the Asset based on its own investment
decisions pursuant to this Agreement.
Chapter 5 General Terms and Conditions
Article 14 (Inspection and Investigation of Documents)
1. SSR shall be entitled to conduct necessary investigations and make copies of the books
and records kept in custody by the Asset Management Company on behalf of SSR at thehead office of the Asset Management Company and within the business hours of the AssetManagement Company, and the Asset Management Company is obligated to accept thesame. In addition, SSR shall be entitled to conduct any audit of the Asset Management
Company at the expense of SSR. If SSR finds any matter to be rectified with respect torecordkeeping, the Asset Management Company shall rectify the same within 30 businessdays under the instructions of SSR. The Asset Management Company shall notify SSR ofthe measures taken for such rectification in writing.
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2.

The Asset Management Company shall keep copies of all the documents which the AssetManagement Company has received or prepared at the head office of the AssetManagement Company to enable SSR to conduct investigations or make copies pursuant
to the preceding Paragraph.

Article 15 (No Disposal of Rights and Obligations)
SSR and the Asset Management Company may not assign to a third party, establish security orotherwise dispose of any and all rights and obligations and contractual status under thisAgreement.
Article 16 (Method of Notice)
Any notice, report, instruction, approval or other communication given pursuant to thisAgreement (excluding daily reports) shall be in writing, and sent to the following address by(i) hand delivery (receipt to be collected), (ii) facsimile, or (iii) registered mail or certified mail,return receipt requested and postage prepaid. Each party may change its address by notifying
the other party of such change pursuant to the provisions in this Article.
SSR:ku, Tokyo
Asset Management Company:
ku, Tokyo(Address)

8-11, Kudan Minami 3-chome, Chiyoda-(FAX) 03-6272-6609(Address)
8-11, Kudan Minami 3-chome, Chiyoda(FAX) 03-6272-6609

Article 17 (Confidentiality)
1. Each party to this Agreement may not disclose or divulge to a third party the terms andconditions of this Agreement, the details of the transactions under this Agreement and any
and all information received from the other party pursuant to or in connection with thisAgreement, or use the same for any purpose other than the purpose under this Agreement,
without the prior written consent of the other party; provided, however, that this shall not
apply to the disclosure set forth in each of the following Items.
(1) Disclosure based on any order of the administrative agency or any judgment,
decision or order of the court;(2) Disclosure under the Financial Instruments and Exchange Act, Investments Trusts
Act and other laws and regulations;(3) Disclosure based on the regulations of the financial instruments exchange;(4) Disclosure based on the regulations of The Investment Trusts Association, Japanand other authorized financial instruments firm associations;(5) Disclosure to any professional who assumes confidentiality obligations under laws
and regulations or this Agreement to the receiving party, including attorneys,
certified public accountants, certified public tax accountants and financial advisors,
who give advice with respect to the execution and/or performance of thisAgreement;(6) Disclosure of information which has already been publicly known at the time ofreceipt, information which has become publicly known for reasons not attributable
to the party after the receipt, information which has already been held by thereceiving party without assuming any confidentiality obligations before the time ofreceipt and information which the receiving party has obtained from a duly
authorized third party without assuming any confidentiality obligations;(7) Disclosure to a person who lends or intends to lend money to SSR; and/or
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139

－

(8)

2.

Disclosure to any shareholder of the Asset Management Company (including classshareholders (if any)) (excluding the case where such disclosure is in breach of theobligations set forth in Article 1, Paragraph 4)
The obligations borne by each party to this Agreement pursuant to the provisions of thepreceding Paragraph shall survive even after the termination of this Agreement.

Article 18 (Protection of Personal Information)
In handling personal information of the unitholders of SSR and other personal information set
forth in the Act on the Protection of Personal Information (Act No. 57 of 2003, as amended;“Personal Information Protection Act”) with respect to carrying out the Entrusted Operations,
the Asset Management Company shall appropriately manage the same with the care of a prudent
manager, and shall take necessary and appropriate security management measures forpreventing unauthorized access to personal information and loss, divulgence, theft, falsification,
destruction or the like of personal information, in accordance with the Personal Information
Protection Act and the “Guidelines for Protection of Personal Information in the Finance Sector”
and “Practical Guidelines for Security Management Measures of Guidelines for Protection of
Personal Information in the Finance Sector”.
Article 19 (Insider Transactions)
The Asset Management Company shall take necessary measures to ensure that any director,
agent, employee or other persons engaged of the Asset Management Company who is in chargeof the Entrusted Operations does not engage in any sale or purchase of units in SSR after
learning of information on unpublished material facts (so-called, insider transaction) or
provision of information or recommendation of sale or purchase which is prohibited under the
Financial Instruments and Exchange Act.
Article 20 (Conflicting Interest Transactions)
1. The Asset Management Company shall comply with the prohibited actions set forth in
Article 44-2 and Article 44-3, Paragraph 1 of the Financial Instruments and Exchange Act,obtainment of prior consent of SSR as set forth in Article 201-2 of the Investment Trusts
Act, obligation to deliver documents in engaging in transactions with interested persons
and other close affiliates (means the interested persons and other close affiliates set forthin Article 201, Paragraph 1 of the Investment Trusts Act) and any other persons set forthin Article 203, Paragraph 2 of the Investment Trusts Act and other regulations forpreventing conflict of interest set forth in the Financial Instruments and Exchange Act or
the Investment Trusts Act, and in addition, shall establish rules on conflicting interest
transactions (“Rules on Conflicting Interest Transactions”) as internal rules with respect
to certain transactions which is likely to cause conflict of interest between interested
persons and other close affiliates or persons similar thereto (“Conflicting Interest
Transactions”).
2. In carrying out Conflicting Interest Transactions, the Asset Management Company shallobtain the prior consent of SSR if such consent is required as set forth in the Investment
Trusts Act or the Rules on Conflicting Interest Transactions.
Article 21 (Elimination of Anti-Social Forces)
1. SSR and the Asset Management Company represents that, as of the date of execution ofthis Agreement, they and their respective directors, executive officers, company auditors,
executive officers and supervisory officers (hereinafter “Director” in this Article) do not
fall under an organized crime group, a member of an organized crime group, a former
member of an organized crime group whom five (5) years have not yet passed since
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140

－

2.

3.

4.

5.

leaving the organized crime group, a quasi-member of an organized crime group, anaffiliate of an organized crime group, a corporate racketeer (sokaiya to), a group engaging
in criminal activities under the pretext of conducting social campaigns (shakaiundo tohyobo goro) or a crime group specialized in intellectual crimes, or any other person
equivalent thereto (“Organized Crime Group”) and that they do not fall under any of thefollowing Items, and covenant not to fall under any of the following Items into the future.
(1) Has a relationship with respect to which it is deemed that the Organized Crime
Group has control over management;(2) Has a relationship with respect to which it is deemed that the Organized Crime
Group is substantially engaged in management;(3) Has a relationship with respect to which it is deemed that the Organized Crime
Group is unreasonably used for purposes of promoting illicit profit for oneself, one’s
company or a third party or for purposes of causing damage to a third party;(4) Has a relationship with respect to which it is deemed that funds or the like, or
facilities are provided to the Organized Crime Group; and/or(5) The Director or person substantially engaged in management has a sociallycondemnable relationship with the Organized Crime Group.
SSR and the Asset Management Company covenant that they do not, personally or througha third party, engage in any of the acts falling under any of the following Items.
(1) Violent demand;(2) Unreasonable demand exceeding legal liability;(3) Threatening speech and/or behavior or violence with respect to the Entrusted
Operations;(4) Undermining the trust of the other party or interfering with the business of the otherparty by spreading false rumors or use of fraudulent means or force; and/or(5) Any other acts equivalent to each of the preceding Items.
If either party (including its Director) falls under the Organized Crime Group or any of theItems of Paragraph 1, or engages in any of the acts falling under any of the Items of
Paragraph 2, or is found to have made false statements with respect to the representations
and/or covenants pursuant to the provisions of Paragraph 1, SSR may terminate thisAgreement through the procedures set forth in Article 7, Paragraph 4 and the AssetManagement Company may terminate this Agreement through the procedures set forth in
Article 7, Paragraph 3.
Either party which has received a termination notice pursuant to the preceding Paragraphdoes not have any right to make any claims against the other party with respect to any
damage it has incurred as a result of the termination of this Agreement; provided, however,that this does not preclude the claim for damage from the other party.
Upon the termination of this Agreement pursuant to the provisions of Paragraph 3, thisAgreement shall cease to be effective into the future.

Article 22 (Amendment of this Agreement)This Agreement may be amended based on a written agreement of both parties and inaccordance with the procedures set forth in laws and regulations.
Article 23 (Governing Law and Jurisdiction)
1. This Agreement shall be governed by the laws of Japan.
2. Both parties agree that the Tokyo District Court shall be the exclusive agreed jurisdiction
court for the first instance over any and all disputes concerning this Agreement.
Article 24 (Matters for Consultation)
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Any matter not set forth in this Agreement or any questions arising with respect to the terms
and conditions of this Agreement shall be determined and resolved through consultation in goodfaith between SSR and the Asset Management Company.

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Appendix 1
Investment Target and Asset Management Policy
I (Basic Policy on Asset Management)
SSR shall manage its assets by investing primarily in Real Estate, etc. (as defined II 1. below)
on a continuous basis, with the aim of securing stable earnings in the medium- and long-termand stable growth of the assets under management.
II (Types, Purposes and Scope of Investment Target)
1. SSR shall invest primarily in real estate, real estate leasehold rights and superficies, andbeneficial interests in trusts only of these assets (“Real Estate, etc.”).
2. In addition to Real Estate, etc., SSR may also invest in the Specified Assets listed below:(1) Beneficial interests in trusts of real estate, real estate leasehold rights or superficies(including comprehensive trusts in combination with monies incidental to real estate,
but excluding Real Estate, etc.);(2) Beneficial interests in monetary trusts that manage trust property by investing
primarily in real estate, real estate leasehold rights or superficies (excluding Real
Estate, etc. and assets falling under those listed in the preceding item);(3) Equity interests in investment relating to a contract under which one party makes acapital contribution for purposes of investments by the other party in Real Estate, etc.
or the assets listed in each of the preceding items, and the other party invests thecontributed property primarily in said assets and promises to distribute profits
generated from said investments (“Real Estate-Related Equity in Silent Partnership”);(4) Beneficial interests in monetary trusts that manage trust property by investing
primarily in Real Estate-Related Equity in Silent Partnership;(5) Items listed below of which underlying assets are intended to be invested mainly inReal Estate, etc.-Related Assets (meaning Real Estate, etc. and the assets listed in eachof the preceding items; hereinafter the same shall apply) (“Real Estate-Backed
Securities”);(a) Preferred equity securities (preferred equity securities as defined in Article 2,
Paragraph 9 of the Act on Securitization of Assets (Act No. 105 of 1998, as
amended; the “Asset Securitization Act”));(b) Beneficiary certificates (beneficiary certificates as defined in Article 2, Paragraph
7 of the Investment Trusts Act);(c) Investment securities (investment securities as defined in Article 2, Paragraph 15of the Investment Trusts Act); and(d) Beneficiary certificates of specified purpose trusts (beneficiary certificates of
specified purpose trusts as defined in Article 2, Paragraph 15 of the Asset
Securitization Act) (excluding those falling under Real Estate, etc. and the assets
listed in Items (1), (2) or (4) of this paragraph);(6) Deposits;(7) Call loans;(8) Negotiable certificates of deposit;(9) Securities (as defined in Article 3, Item 1 of the Order for Enforcement of the Act on
Investment Trusts and Investment Corporations (Cabinet Order No. 480 of 2000, as
amended; the “Order for Enforcement of the Investment Trusts Act”) (excluding thosefalling under the other assets listed in this Section II);
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(10) Loan claims or other monetary claims against specific purpose company (tokutei
mokuteki kaisha) or special purpose company (tokubestu mokuteki kaisha) or any othercorporate bodies, etc. with equivalent structure thereto, having the purpose of investingin Real Estate, etc.-Related Assets and Real Estate-Backed Securities;(11) Monetary claims (as defined in Article 3, Item 7 of the Order for Enforcement of theInvestment Trusts Ac) (excluding those falling under the assets listed in Items (6)through (8) or (10) of this paragraph);(12) Corporate bonds (as defined in Article 2, Paragraph 1, Item 5 of the Financial
Instruments and Exchange Act);(13) Specified corporate bonds(tokutei shasai ken) (as defined in Article 2, Paragraph 1,
Item 4 of the Financial Instruments and Exchange Act);(14) Beneficial interests in monetary trusts that manage trust property by investing in theassets listed in Items (6) through (13) of this paragraph;(15) Rights in market transactions of derivatives (as defined in Article 2, Paragraph 21 of
the Financial Instruments and Exchange Act);(16) Rights in over-the-counter transactions of derivatives (as defined in Article 2,
Paragraph 22 of the Financial Instruments and Exchange Act);(17) Renewable energy power facilities (as defined in Article 3, Item 11 of the Order for
Enforcement of the Investment Trusts Act); and(18) Rights to operate public facilities, etc. (as defined in Article 3, Item 12 of the Order for
Enforcement of the Investment Trusts Act).
3. In addition to the Specified Assets prescribed in Paragraphs 1 and 2, SSR may invest in theassets listed below which may be acquired incidentally to investments in Real Estate, etc.Related Assets and Real Estate-Backed Securities (provided, however, that investments inthe assets listed in Item (11) may be made only if such investments are necessary for SSR
to borrow money):(1) Trademark rights or exclusive rights to use trademarks or non-exclusive rights to use
trademarks as prescribed in the Trademark Act (Act No. 127 of 1959, as amended);(2) Rights to use the source of a hot spring as prescribed in Article 2, Paragraph 1 of the
Hot Springs Act (Act No. 125 of 1948, as amended) and facilities, etc. related to such
hot spring;(3) Copyrights, and other similar rights under the Copyright Act (Act No. 48 of 1970, as
amended);(4) Equity interests in partnerships prescribed in Article 667 of the Civil Code (Act No.
89 of 1896, as amended; the “Civil Code”) (limited to those established by contributing
real estate, real estate leasehold rights or superficies, etc. for purposes of leasing,operating and managing them);(5) Movables, as prescribed in the Civil Code (excluding those fall under Paragraph 2.
Item (17));(6) Status as a fund contributor for general incorporated associations prescribed in the Act
on General Incorporated Associations and General Incorporated Foundations (Act No.
48 of 2006, as amended);(7) Other rights acquired incidental to the investments in Real Estate, etc.-Related Assets
and Real Estate-Backed Securities (excluding those falling under the other assets listed
in this Article);(8) Specified equity, as prescribed in Article 2, Paragraph 6 of the Asset Securitization Act;
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(9) Carbon dioxide equivalent quotas or other similar assets, or emission rights (including
emission rights for greenhouse gases) under the Act on Promotion of Global WarmingCountermeasures (Act No. 117 of 1998, as amended);(10) Beneficial interests in monetary trusts that manage trust property by investing in theassets listed in each of the preceding items of this paragraph;(11) Equities under the Shinkin Bank Act (Act No. 238 of 1951, as amended); and(12) Any other assets that can be acquired under rules of financial instruments exchanges
and similar organizations, and are necessary or beneficial to the management of Real
Estate, etc.-Related Assets held by SSR.
4. In the event that securities indicating the rights prescribed in Article 2, Paragraph 2 of the
Financial Instruments and Exchange Act are not issued, said rights shall be deemed to besuch securities, and the provisions of Paragraphs 1 through 3 shall apply thereto.
III (Investment Policy)
1. SSR shall primarily invest in office buildings, commercial facilities, and residential
properties, and shall also invest in other facilities as necessary.
2. SSR shall make investments focused on the Tokyo Metropolitan area and regional major
cities (ordinance-designated cities and the surrounding areas thereof excluding the Tokyo
Metropolitan area), and shall also invest in other areas with the aim of making
geographically diversified investments.
3. SSR may, notwithstanding the preceding two paragraphs, take necessary measures toprotect the interests of unitholders if any unexpected event such as sudden changes inmarket conditions and trends, general economic conditions, or real estate market trends,
occurs and the interests of unitholders are likely to be adversely affected.
4. In the cases referred to in Article 116-2 of the Order for Enforcement of the Investment
Trusts Act, SSR may acquire issued shares or equity in a corporation defined in Article 2212, Paragraph 1 of the Regulation for Enforcement of the Investment Trusts Act (“Foreign
Real Property Holding Corporation”) in excess of the number of issued shares or the amountof equity calculated by multiplying the total number of issued shares or the total amount ofequity (excluding issued shares or equity in the Foreign Real Property Holding Corporation
owned by itself) by the percentage specified in Article 221 of the Regulation for
Enforcement of the Investment Trusts Act.
IV (Investment Restrictions)
1. SSR shall invest in the monetary claims and securities (excluding those which fall under
Real Estate, etc.-Related Assets) by laying weight on the safety and liquidity of suchinvestments, and shall refrain from investing solely for purposes of actively making
investment gains.
2. SSR shall invest in the rights associated with the derivatives transactions specified in
Section II, Paragraph 2, Items (15) and (16) solely for purposes of hedging price fluctuation
risk, interest rate fluctuation risk and other risks arising from SSR’s invested assets or debts.
3. SSR shall manage its assets in such a manner as to cause the ratio of the aggregate value of
specified real estate (meaning real estate, real estate leasehold rights or superficies, or
beneficial interests in trusts of real estate ownership, land leasehold rights or superficies outof Specified Assets acquired by SSR) to the aggregate value of Specified Assets held by it
to be equal to or greater than seventy five one-hundredths (75/100).
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V (Reinvestment, etc. of Revenue and Other Receipts)
SSR may invest or reinvest the proceeds from the sale of invested assets; interest, dividends
and redemption proceeds received on securities; interest, etc.; trust dividends; distributions
received on equity in silent partnerships; and lease income and other income of Real Estate,etc., and leasehold deposits and security deposits.
VI Purpose and Scope of Lending of Portfolio Assets
1. For purposes of securing its stable earnings in the medium- and long-term, SSR shall, as a
general rule, lend real estate belonging to invested assets (including real estate supporting
Real Estate, etc.-Related Assets).
2. When lending real estate, SSR may receive leasehold deposits or security deposits, etc. andother similar money, and shall invest the money so received pursuant to Sections I, IV andV.
3. SSR may lend invested assets other than real estate belonging to invested assets (including
real estate supporting Real Estate, etc.-Related Assets).
END

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Appendix 2
Management Fees Payable to the Asset Management Company
The method of calculation and the timing of payments of management fees payable
to the Asset Management Company shall be as follows.
SSR shall pay the Asset Management Company no fees for agency or intermediaryservices prescribed in the Real Estate Brokerage Act.
1.
Management Fee 1
As a consideration for asset management services (i) for the period from the day following
the end of the immediately preceding fiscal period of SSR until the day three months
following the end of such immediately preceding fiscal period of SSR (“Calculation PeriodI”) and (ii) for the period from the day following the last day of Calculation Period I until
the end of the relevant fiscal period (“Calculation Period II”), Management Fee 1 shall be
paid in an amount obtained by: (a) multiplying the total amount of SSR’s assets calculatedby the method specified below by 0.25% (per annum); (b) multiplying the amount obtainedin (a) by the actual number of days in Calculation Period I or Calculation Period II; and(c) dividing the amount obtained in (b) by 365 (the amount calculated shall be rounded
down to the nearest one yen).
<Total Assets in “Calculation Period I”>
The Total Assets in Calculation Period I shall be the total amount of assets stated on thebalance sheet (limited to those approved by the board of officers as provided for in theInvestment Trusts Act; hereinafter the same shall apply) as of the end of the fiscal period
immediately preceding Calculation Period I (provided, however, that if SSR holds sharesor equity in a Foreign Real Property Holding Corporation (the “Foreign Real Property
Holding Corporation-Related Equity”), the amount related to: (a) the Foreign Real
Property Holding Corporation-Related Equity; and (b) monetary claims held by SSR
against the Foreign Real Property Holding Corporation and bonds issued by the Foreign
Real Property Holding Corporation and held by SSR, if any, shall be deducted and the
Total Assets of Foreign Real Property Holding Corporation (as defined below; hereinafter
the same shall apply) related to such Foreign Real Property Holding Corporation shall be
added).
<Total Assets in “Calculation Period II”>
The Total Assets in Calculation Period II shall be calculated by: (a) adding to the Total
Assets in Calculation Period I immediately before the relevant Calculation Period II theacquisition prices of Real Estate-Related Assets (meaning, collectively, Real Estate, etc.Related Assets and Real-Estate-Backed Securities as defined in the Articles ofIncorporation of SSR; hereinafter the same shall apply) and Foreign Real Property Holding
Corporation-Related Equity which have been acquired by SSR during such Calculation
Period I, (meaning that: in the event of purchase of a Real Estate-Related Asset, the pricefor purchasing the Real Estate-Related Asset under the agreement concerning such
purchase; in the event of exchange of Real Estate-Related Assets, the assessed value of aReal Estate-Related Asset acquired by the exchange; and in the event of investment related
to a Real Estate-Related Asset, the amount of investment specified in the agreement
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concerning such investment, and with respect to the Foreign Real Property Holding
Corporation-Related Equity, meaning the acquisition price of the asset acquired by theForeign Real Property Holding Corporation, the nature of which is similar to the Real
Estate-Related Assets, after the conversion into Japanese yen at the foreign exchange rate
as of the date of acquisition, multiplied by the percentage of equity held by SSR in theForeign Real Property Holding Corporation as of the date of acquisition (excluding
national and local consumption taxes; hereinafter the same shall apply)); and (b) deducting
the book values of Real Estate-Related Assets and the Foreign Real Property Holding
Corporation-Related Equity which have been disposed of (including those expropriated)on the balance sheet as of the end of the immediately preceding fiscal period (or theacquisition prices of such Real Estate-Related Assets and the Foreign Real Property
Holding Corporation-Related Equity if their book values have not been recorded on thebalance sheet as of the end of the immediately preceding fiscal period).
<Total Assets of Foreign Real Property Holding Corporation>
The Total Assets of Foreign Real Property Holding Corporation shall be calculated bymultiplying: (a) the total amount of assets of a Foreign Real Property Holding Corporation
recorded on SSR’s financial statements in Japanese yen based on the figures recorded on
the audited financial statements of the Foreign Real Property Holding Corporation as ofthe end of its latest fiscal period (hereinafter in this Paragraph, the “Latest-Fiscal-PeriodEnd”) which occurs before the end of the fiscal period immediately preceding Calculation
Period I (hereinafter in this Paragraph, the “Base-Fiscal-Period-End 1”) (or, if the Foreign
Real Property Holding Corporation has prepared audited financial statements as of a dateduring the period from the Latest-Fiscal-Period-End until the Base-Fiscal-Period-End 1(such date hereinafter in this Paragraph, the “Extraordinary-Fiscal-Period-End;” and suchaudited fiscal statements hereinafter in this Paragraph, the “Extraordinary Audited
Financial Statements”), the Extraordinary Audited Financial Statements as of the latest
Extraordinary-Fiscal-Period-End (hereinafter in this Paragraph the “Latest ExtraordinaryFiscal-Period-End”); by (b) the percentage of equity held by SSR in the Foreign Real
Property Holding Corporation as of the Latest-Fiscal-Period-End or the Latest
Extraordinary-Fiscal-Period-End of the Foreign Real Property Holding Corporation.
SSR shall pay Management Fee 1 for “Calculation Period I” within two months from thelast day of Calculation Period I. The Asset Management Company shall invoice the fee to
SSR within one month from the last day of Calculation Period I.
SSR shall pay Management Fee 1 for “Calculation Period II” within two months from thelast day of Calculation Period II. The Asset Management Company shall invoice the fee
to SSR within one month from the last day of Calculation Period II.
2.
Management Fee 2
As a consideration for asset management services during the fiscal period that ends on theend of the relevant fiscal period, the fee shall be paid in an amount calculated in accordancewith the following formula (the amount calculated shall be rounded down to the nearest
one yen, and the minimum amount shall be zero).
<Formula>
Management Fee 2=NOI (*) × 2%
*NOI: The total amount of SSR’s rental business revenues recorded on the profit and loss
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statement as of the end of the relevant fiscal period after the deduction of the total amountof its rental business expenses (excluding depreciation and loss on retirement of fixed
assets). (If SSR holds any Foreign Real Property Holding Corporation-Related Equity, it
shall exclude rental business revenues and rental business expenses recorded in relation to
the holding of the Foreign Real Property Holding Corporation-Related Equity and include
amounts calculated by multiplying: (a) rental business revenues and rental business
expenses (excluding depreciation and loss on retirement of fixed assets; the same shallapply hereinafter in this Paragraph) of the Foreign Real Property Holding Corporation
recorded on SSR’s financial statements in Japanese yen based on the figures recorded on
the audited financial statements of the Foreign Real Property Holding Corporation as ofthe end of its latest fiscal period (hereinafter in this Paragraph, the “Latest-Fiscal-PeriodEnd”) which occurs before the end of the relevant fiscal period (hereinafter in thisParagraph, the “Base-Fiscal-Period-End 2”) (or, if the Foreign Real Property Holding
Corporation has prepared audited financial statements as of a date during the period fromthe Latest-Fiscal-Period-End until the Base-Fiscal-Period-End 2 (such date hereinafter inthis Paragraph, the “Extraordinary-Fiscal-Period-End;” and such audited fiscal statements
hereinafter in this Paragraph, the “Extraordinary Audited Financial Statements”), eachsuch Extraordinary Audited Financial Statements (excluding any rental business revenues
and rental business expenses that are already included when calculating Management Fee2); by (b) the percentage of equity held by SSR in the Foreign Real Property Holding
Corporation as of the Latest-Fiscal-Period-End or each Extraordinary-Fiscal-Period-Endof the Foreign Real Property Holding Corporation.
Management Fee 2 shall be paid within four months from the end of the relevant fiscal
period. The Asset Management Company shall invoice the fee to SSR within three months
from the end of the relevant fiscal period.
3.
Acquisition Fee
If SSR acquires a Real Estate-Related Asset, the fee shall be 1.0% of the acquisition priceof the Real Estate-Related Asset (the amount calculated shall be rounded down to thenearest one yen). If a Foreign Real Property Holding Corporation in which SSR holds theForeign Real Property Holding Corporation-Related Equity acquires an asset the nature ofwhich is similar to Real Estate-Related Assets, the fee shall be 1.0% of the acquisition
price of the asset paid by the Foreign Real Property Holding Corporation after theconversion into Japanese yen at the foreign exchange rate as of the date of acquisition,
multiplied by the percentage of equity held by SSR in the Foreign Real Property Holding
Corporation as of the date of acquisition (the amount calculated shall be rounded down to
the nearest one yen). If SSR or the Foreign Real Property Holding Corporation acquires a
Real Estate-Related Asset or asset from an interested person specified by SSR, the fee shallbe 0.5% of the acquisition price (the amount calculated shall be rounded down to thenearest one yen).
The Acquisition Fee shall be paid within two months from the date of delivery of therelevant asset (meaning, for the case of acquisition by a Foreign Real Property Holding
Corporation of an asset the nature of which is similar to Real Estate-Related Assets, thedate of delivery of such asset to the Foreign Real Property Holding Corporation). The
Asset Management Company shall invoice the fee to SSR within one month from thedelivery of the relevant asset.
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4.
Transfer Fee
If SSR transfers a Real Estate-Related Asset, the fee shall be 1.0% of its transfer price(meaning: in the event of a sale and purchase transaction, the sale price of the Real EstateRelated Asset under the agreement concerning such sale and purchase transaction; in theevent of transfer by exchange, the assessed value of the Real Estate-Related Assettransferred by exchange; or in the event of redemption of equity, the amount of equity
redeemed (excluding national and local consumption taxes; hereinafter the same shallapply)) (the amount calculated shall be rounded down to the nearest one yen). If a Foreign
Real Property Holding Corporation in which SSR holds the Foreign Real Property Holding
Corporation-Related Equity transfers an asset held by it, the nature of which is similar to
Real Estate-Related Assets, the fee shall be 1.0% of its transfer price after the conversion
into Japanese yen at the foreign exchange rate as of the date of transfer, multiplied by thepercentage of equity held by SSR in the Foreign Real Property Holding Corporation as ofthe date of transfer (the amount calculated shall be rounded down to the nearest one yen).
If SSR or the Foreign Real Property Holding Corporation transfers a Real Estate-Related
Asset or asset to an interested person specified by SSR, the fee shall be 0.5% of the transfer
price (the amount calculated shall be rounded down to the nearest one yen).
The Transfer Fee shall be paid within two months from the date of delivery of the relevant
asset (meaning, for the case of transfer by a Foreign Real Property Holding Corporationof an asset the nature of which is similar to Real Estate-Related Assets, the date of deliveryof such asset by the Foreign Real Property Holding Corporation). The Asset Management
Company shall invoice the fee to SSR within one month from the delivery of the relevant
asset.
5.
Merger Fee
In the event of a consolidation-type merger or absorption-type merger (including bothcases where SSR becomes the surviving corporation and the dissolving corporation;
hereinafter the same shall apply) (collectively, a “Merger”) between SSR and anothercorporation, if such Merger takes effect after the Asset Management Company performs
services in relation to the Merger, such as the investigation and assessment of the assets
held by such corporation and other related issues, the fee shall be 1% of the total amountof the assessed values of the Real Estate-Related Assets and the Foreign Real Property
Holding Corporation-Related Equity that are held by such corporation and succeeded toor held by the newly incorporated corporation in the event of a consolidation-type merger
or the surviving corporation in the event of an absorption-type merger, as of the date on
which the Merger takes effect (or 0.5% of such total amount if SSR carries out such Merger
with an investment corporation that falls under an interested person specified by SSR oran investment corporation to which an interested party specified by SSR has entrusted
asset management services for its assets) (the amount calculated shall be rounded down to
the nearest one yen). However, the amount of the Merger Fee may be zero upon agreement
between the parties in writing.
The Merger Fee shall be paid within two months after the date on which the Merger takes
effect. The Asset Management Company shall invoice the fee to SSR within one monthfrom the date on which the Merger takes effect. In the event of a consolidation-type merger,
the newly incorporated corporation shall pay the Merger Fee, and in the event of an
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absorption-type merger in which SSR becomes the dissolving corporation, the surviving
corporation shall pay the Merger Fee.
6.
Payment Method
When paying asset management fees, SSR shall separately bear the national and local
consumption taxes thereon, and SSR shall pay the asset management fees to be paid plus
the amount equivalent to the national and local consumption taxes thereon to the bankaccount designated by the Asset Management Company by way of bank transfer. The banktransfer fees and the national and local consumption taxes thereon shall be borne by SSR.
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Reference Matters
If any of the proposals submitted to the General Meeting of Unitholders conflicts with anyof the others, the provision of “deemed approval” which is provided for in Article 93, Paragraph
1 of the Investment Trust Act and Article 17, Paragraphs 1 and 2 of the current Articles ofIncorporation will not apply to any of such proposals.

END

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Map to the Location of the 4th General Meeting of Unitholders[omitted]－

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