July 19, 2019
For Immediate Release
Real Estate Investment Trust:
MIRAI Corporation
Michio Suganuma, Executive Director(Securities Code: 3476)
Asset Management Company:
Mitsui Bussan & IDERA Partners Co., Ltd.
Michio Suganuma, Representative Director, President
Contact: Shosaku Ikeda, Executive Director, CFO
TEL: +81-3-6632-5950
Real Estate Investment Trust:
Sakura Sogo REIT Investment Corporation
Makoto Muranaka, Executive Director(Securities Code: 3473)
Asset Management Company:
Sakura Real Estate Funds Management, Inc.
Makoto Muranaka, Representative Director and President
Contact: Mayumi Kobiki, Chief Financial Officer
TEL: +81-3-6272-6608

Notice Concerning Execution of Memorandum of Understanding regarding
Merger of MIRAI Corporation and Sakura Sogo REIT Investment Corporation
MIRAI Corporation (hereinafter “MIRAI”) and Sakura Sogo REIT Investment Corporation (hereinafter “Sakura”)
announce that they resolved at the respective board of directors meetings held today to enter into the Memorandum ofUnderstanding (hereinafter the “MOU”) regarding the merger between MIRAI and SAKURA as follows, and entered into
the MOU on the same date.
1.

Purpose of the MOUMIRAI and Sakura, through asset management companies of each (Mitsui Bussan & IDERA Partners Co., Ltd.
(hereinafter “MIP”) and Sakura Real Estate Funds Management, Inc. (hereinafter “SREFM”)) have been discussing
in good faith measures to maximize unitholder value for both MIRAI and Sakura. As a result of such discussions,
MIRAI and Sakura entered into the MOU today setting forth key principles with regards to the merger between
MIRAI and Sakura (hereinafter the “Merger”) having concluded that the Merger will have various synergetic effect(for details of the synergetic effect, please refer to “3. Significance of Merger (1) Realization of Major Synergies ofMerger” below).
MIRAI and Sakura recognize that the Merger leads to strengthening of the governance for further development of
the J-REIT industry. MIRAI and Sakura encourage unitholders to exercise their voting rights in favor of the Merger
after consideration of the rationale and benefits of the Merger (for more details please refer to “Supplementary
Material” announced today).
In accordance with the MOU, MIRAI and Sakura will continue to jointly discuss and consult in order to enter into
the Merger Agreement between MIRAI and Sakura by August 6, 2019.
MIRAI and Sakura will timely and properly announce to unitholders, if there is any new matter to be announced.

1

2.

Background of MOU(1) MIRAIMIRAI has achieved the targets announced in June 2017 under mid-term management plan “Repower 2020”
1.5 years earlier than the original target and newly established the expanded mid-term management plan,“Repower 2020-ER” (Note) in December 2018, for the period ending at the end of 2020. MIRAI has steadily
carried out the measures that can be implemented by a single investment corporation, such as making progressin risk diversification of the portfolio, enhancement of financial base and replacing the assets, in order tomaterialize the various quantitative targets such as the level of distribution per unit and the reduction of therisk premium formulated in such mid-term management plan, “Repower 2020-ER”. MIRAI has also exploredthe opportunity to realize a merger between J-REITs through communicating with multiple asset managementcompanies, in line with the strategic management option internally set from the IPO in December 2016.
During the process by Sakura seeking for a partnership including a merger with third party, MIRAI received arequest for proposal through Mitsui & Co. Asset Management Holdings Ltd, a shareholder of MIP. As a result,
MIRAI has commenced its serious consideration, and now entered into the MOU regarding a merger with
Sakura as a strategic option to achieve the “Repower 2020-ER” earlier than the target.
(Note) For more details please refer to page 8 of “Supplementary Material” announced today.

(2) Sakura
Sakura has revaluated the growth strategies including the possibility of the future merger recognizing that
Sakura has not realized the external growth in line with the initial plan after IPOin September 2016. Sakurareceived a request on May 10, 2019 from Lion Partners Godo Kaisha, a minority unitholder controlled by Star
Asia Group holding approximately 3.6% of the outstanding units of Sakura, to convene a unitholders’ meeting.
The agenda items for the requested unitholders’ meeting are replacing the executive director of Sakura and its
asset management company with a person related to Star Asia Group and the asset management company ofStar Asia Investment Corporation (hereinafter “Star Asia REIT”), as a first stage toward the merger between
Sakura and Star Asia REIT. The proposal of Star Asia Group is to replace Sakura’s management with Star Asia
Group through such a general meeting of unitholders which requires a lower approval threshold than applicablefor a normal merger approval without proposing any merger terms or other key information, including themerger ratio, at such time, and, determine all economic terms, such as calculation of merger ratio virtually byStar Asia Group, the related party to the counterparty of the merger, Star Asia REIT, after such managementchange. This proposal therefore entails risk of damage to Sakura’s unitholder value when determination merger
ratio and creating serious conflict of interest within Star Asia Group resulting from managing two listed JREITs having same investment target and policy and having material difference in ownership ratio of Star Asia
Group (Note). Based on such serious concern, Sakura and SREFM retained an independent financial advisor
and made requests for proposal to around 20 candidates, including multiple investment corporations anddomestic and foreign funds other than Star Asia Group, for an alliance or other measures including a merger
while examining Sakura’s standalone growth strategies.
(Note) For more details of such serious conflict of interest issue, please refer to “Take No Action in respect of any instruction from Star
Asia regarding their Proposals” announced on June 20, 2019 by Sakura.

(3) Discussion and Entrance into MOU
Sakura, with guidance and advice from its independent financial advisor, selected three proposals as final
candidates from multiple proposals. These were assed based on their potential to contribute to maximizing
unitholders’ value considering the situation that external growth is not easy by the overheated real estate market
conditions, their feasibility, synergistic effects, and consideration provided to investors. In assessing each
proposal, Sakura, with the assistance of its financial adviser, consistently focused on which proposal would
contribute to maximize the unitholders’ value, and conducted calm and fair comparative considerations. With
regard to such considerations, Sakura discussed with each such candidate under the thought that unitholder
value will be maximized by negotiating the economic terms of the merger or other transactions on an armslength, equal footing basis and present such proposal to unitholders for approval at the general meeting ofunitholders including the final economic terms as determined through such negotiation. From the beginning ofJuly 2019, Sakura chose the merger with MIRAI as the most attractive proposal, and both investment
corporations have since specifically discussed the feasibility of the merger, and determined to entered into the
MOU. Both investment corporations believe that the Merger will contribute to maximize the unitholder valueof both as described in “3. Significance of the Merger” below, particularly in comparison with the proposal byStar Asia Group. For more details of the comparison with the proposal by Star Asia Group, please refer to page
9 to 11 of “Supplementary Material” announced today.

2

3.

Significance of Merger(1) Major Synergies of Merger
MIRAI and Sakura confirm in the MOU that both parties aim to realize the following synergies throughintegration of the real estate portfolio of MIRAI and Sakura and the sponsor support after the Merger. MIRAIand Sakura recognize the rationale and benefits for the Merger as stated in “2. Background of MOU” above,and believe that synergetic effect of the Merger will eliminate such issues and lead to the medium to term
growth.
<Major Synergetic Effect of Merger>(i) Improvement of the management cost efficiency(ii) Enhancement of the profitability and the distribution per unit(iii) Increase in aggregate market capitalization and liquidity of units(iv) Improvement in diversification of assets and tenants(v) Improvement in the growth prospect and the reduction of the cost of capital(2) Governance System that takes into consideration the Maximization of Unitholders’ Interest
MIRAI and Sakura confirmed and agreed in the MOU that MIP will serve as the asset management companyof the investment corporation after the Merger and there is no plan of current and former directors andemployees of SREFM to become directors of MIP upon the Merger. Further, there is no plan of SRFEM andits sponsor Galileo Group and NIPPON KANZAI Group, to participate in management of MIP, the asset
management company after the Merger (Note).
(Note) SREFM will agree to terminate each sponsor support agreement with Galileo Sydney Holdings Pty Limited, NIPPON KANZAI
Co., Ltd. and Tokyo Capital Management Co., Ltd. on the effective date of the Merger (Please refer to“8. Post-Merger Statue (5)Amendment to Agreement with Sponsor, etc.”).

The sponsors of the investment corporation after the Merger will be Mitsui & Co. Asset Management Holdings,
which is a wholly-owned subsidiary of Mitsui & Co., LTD. (Established in July 1947, listed on Tokyo Stock
Exchange 1st section, business results for the fiscal year ended March 31, 2019：consolidated revenue 6,957.5
billion yen, net income 414.2 billion yen, consolidated total assets 11,945.7 billion yen) and IDERA CapitalManagement Ltd. Each of the sponsors has independently supported MIRAI’s asset management andmaintained firmly the compliance system of MIP.
Upon completion of the Merger, Sakura’s portfolio will be integrated into MIRAI’s portfolio and will benefit
from a strong financial base and management by MIP which has a reliable and transparent compliance system.
In addition, MIP has determined the cost allocation between MIRAI and MIP based on the cost allocation items
as set forth in the asset management agreement between MIRAI and MIP, and sunk costs for failed acquisitionof properties has been borne by MIP. This cost allocation policy will continue after the Merger as MIP will be
the asset management company, and it is expected that the Merger leads to strengthen the governance for
Sakura’s unitholders.
(3) Overview of Investment Corporation after Merger and Realization of Synergetic Effect
MIRAI and Sakura consider that the early implementation of the Merger is expected to realize synergetic effectstated in “(1) Major Synergies of Merger” above and currently envisage the major indices after the Merger asfollows. MIRAI and Sakura continue to discuss the merger terms in order to explain further synergetic effectwhen the Merger Agreement will be executed. For the overview of the investment corporation after the Merger,
please refer to page 6 to 7 of “Supplementary Material” announced today.
(i) A high-quality diversified J-REIT with a significant weighting to offices in the Tokyo area (the ratio of
offices in Tokyo area: 46.9%)(ii) Strong financial base backed by creditworthiness of Mitsui & Co. Group (average remaining maturity:
7.2 years, average interest rate: 0.53%, credit rating: JCR A+ (positive), R&I A (stable))(iii) Improvement in the market presence through enhancing asset size and increasing the liquidity throughthe Merger (asset size: 200.7 billion yen, market capitalization: 112.0 billion yen (Note))(Note) (i) is based on the acquisition price of assets of MIRAI and Sakura (excluding the asset to be disposed), (ii) is the information of
MIRAI only as of the end of April 2019 and (iii) is a simple sum (approximate) of the acquisition price of assets of MIRAI and
Sakura (excluding the asset to be disposed and market capitalization (closing price as of June 28, 2019) of MIRAI and Sakura,
respectively).

3

4.

Summary of Merger
MIRAI and Sakura confirmed and agreed as follows regarding the schedule of, method for and allocation of units
upon, the Merger.
(1) Schedule of Merger
Public Notice on Record Date for the
General Meeting of Unitholders
Record Date for the General Meetingof Unitholders
Board of Directors Meeting toApprove Merger Agreement
Execution Date of Merger Agreement
Date of the General Meeting ofUnitholders
Date of Delisting
Effective Date of Merger
Registry Date of Merger

MIRAI

SakuraJuly 10, 2019

June 29,2019

July 25, 2019

June 30,2019
By August 6, 2019 (Note1)

A date separately agreed between
August 30, 2019 (Note1)
MIRAI and Sakura (Note2)
October 30, 2019 (Scheduled)
November 1, 2019 (Scheduled)
November 2019 (Scheduled)(Note1) At the general meeting of unitholders of Sakura to be held on August 30, 2019, Sakura plans to submit the agenda for approval of themerger agreement with MIRAI. In regard with such schedule, Sakura will enter into the merger agreement with MIRAI on or prior toAugust 6, 2019.
(Note2) The date of the general meeting of unitholders of MIRAI approving the merger agreement will be a date separately agreed between
MIRAI and Sakura. Such date will be announced immediately upon determination.

(2) Method for Merger
The Merger will be an absorption-type merger with MIRAI as the surviving corporation and Sakura as theabsorbed corporation, and Sakura will be dissolved upon the Merger.
(3) Allocation of Units upon Merger
Not yet been determined and will be announced upon determination. In the MOU, MIRAI and Sakura agreed
that they shall separately appoint financial advisors for each and discussed in good faith to determine fair
Merger Ratio (Note).
(Note) “Merger Ratio” is the ratio of the number of MIRAI units which shall be allocated to Sakura unitholders per one unit of Sakura.

MIRAI and Sakura have each appointed their respective financial advisor as set forth below and havecommenced discussions on the Merger Ratio in good faith.
MIRAI
Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.

SakuraSMBC Nikko Securities Inc.

Neither such financial advisors is a related party of MIRAI and Sakura, as defined in Article 67, Paragraph 4of the Ordinance on Accounting of Investment Corporations and do not have any material interests in the
Merger that shall be disclosed.
(4) Amendment to Articles of Incorporation of Surviving Corporation
Not yet been determined and will be announced upon determination.
(5) Agreement on Exclusive Negotiation
Neither MIRAI nor Sakura shall proactively, either directly or indirectly, provide information, solicit, consult,negotiate, agree, or implement any transactions to or with a third party with regard to a transaction similar tothis transaction (including transfer of all or part of important assets, merger and any other act that substantiallyhas the effect of transferring business or important assets irrespective of any other method; the same shall apply
hereinafter), during the effective period of the MOU, except in cases where otherwise agreed upon mutual
consultation.
MIRAI and Sakura shall promptly notify the other party of the facts and contents of any proposals received
from a third party with regard to the similar transactions during the effective period of the MOU and discuss
the response to such proposal in good faith.
(6) Effective Period of MOU
The MOU shall cease to be effective upon the occurrence of any of the following events. Provided, however,the specific rules such as the obligation of confidentiality and the cost and expenses, etc under the MOU shallremain effective after the termination of MOU:(i) The Merger agreement has not been entered into by the end of September 2019 (unless extended as
separately agreed by MIRAI and Sakura);(ii) In the event the Merger Agreement ceases to be effective after the execution of the Merger Agreement;4

(iii) In the event that the Merger Agreement has not been approved by the general meeting of unitholders of
MIRAI or Sakura by the day immediately before the effective date of the Merger or it becomes clear thatsuch approval will not be obtained by such date; or(iv) If otherwise agreed by MIRAI and Sakura.
5.

Grounds for Calculation of Merger Ratio(1) Basis and the Background of Calculation
Not yet been determined and will be announced upon conclusion of the Merger Agreement.
(2) Relationship with Financial Advisors
Will be announced upon conclusion of the Merger Agreement.
(3) Prospect of Delisting and Reasons Thereof
The Merger is expected to be an absorption-type merger, whereby MIRAI is the surviving corporation and
Sakura is dissolved in accordance with Article 143 of the Act Concerning Investment Trusts and Investment
Corporations, and the investment units issued by Sakura are expected to be delisted on October 30, 2019, twobusiness days prior to the effective date of the Merger, in accordance with the criteria for delisting set out by
the Tokyo Stock Exchange, Inc.
(4) Measures to Support the Fairness
Not yet been determined and will be announced upon conclusion of the Merger Agreement.
In the course of their consideration of the MOU, MIRAI and Sakura has reported on a timely manner as to thestatus of the considerations to their respective Board of Directors, with each board being composed of therespective investment corporation’s executive director and its two supervisory directors, whose independence
from the asset management companies is secured pursuant to the Act on Investment Trusts and Investment
Corporations, taking into consideration the advice from each independent financial advisor, and the respective
Board of Directors has deliberated and resolved at their respective meeting to enter into the MOU.
Further, Makoto Muranaka, the executive director of Sakura, does not have any special interests in MIRAI and
its related parties. However, in respect of ensuring fairness, he did not participate in the discussion andresolution of such Board of Directors, because the agenda to approve the MOU with MIRAI is contradicting
the proposal by Star Asia Group which proposes his dismissal.

56.

Outline of Merging Parties
Surviving Corporation upon Merger

Absorbed Corporation upon Merger

MIRAI Corporation

Sakura Sogo REIT Investment Corporation

Name
Location

2-1, Nishi-Kanda 3-chome, Chiyoda-ku, Tokyo

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

Name of Executive Directors

Michio Suganuma

Makoto Muranaka

Unitholders’ Capital

69,074 million yen

29,254 million yen

Date of Incorporation
Total Number of Outstanding
Investment Units
End of Fiscal Period

December 4,2015

April 1, 2016

1,581,640 units

333,001 units

April, OctoberJune, December

Main AUMs

Real estate beneficiary interests in trust

Real estate beneficiary interests in trust

Total Number of Assets(as of today)

OfficeRetailHotel
Others
Total

8
5
15
1
29

OfficeRetailResidence
Others
Total

8
4
4
2
18

End Book Value(Note)

OfficeRetailHotel
OthersTotal

80.9 billion yen
27.7 billion yen
29.6 billion yen
86 billion yen
146.9 billion yen

OfficeRetailResidence
OthersTotal

26.5 billion yen
22.2 billion yen
6.5 billion yen
2.3 billion yen
57.7 billion yen

Main Financial Banks

Sumitomo Mitsui Banking Corporation

Large Unitholders and Holding
Ratio (Note)

Sumitomo Mitsui Banking Corporation

The Master Trust Bank of Japan, Ltd.
(Trust account)

13.3%

The Master Trust Bank of Japan, Ltd.
(Trust account)

7.6%

Japan Trustee Services Bank, Ltd. (Trustaccount)

10.7%

Japan Trustee Services Bank, Ltd. (Trustaccount)

6.2%

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

3.7%

Lion Partners Godo Kaisha

3.6%

Mizuho Trust & Banking Co., Ltd.

2.4%

Morgan Stanley MUFG Securities Co.,
Ltd.

1.6%

The Nomura Trust and Banking Co., Ltd.
(Investment trust account)
BNY GCM CLIENT ACCOUNT JPRD
AC ISG (FE－AC)

3.1%
3.0%

Name of Asset Management
Mitsui Bussan & IDERA Partners Co., Ltd.
Sakura Real Estate Funds Management, Inc.
Company
Location of Asset Management
2-1, Nishi-Kanda 3-chome, Chiyoda-ku, Tokyo
8-11, Kudan Minami 3-chome, Chiyoda-ku, Tokyo
Company
Name and Post of Representative Michio Suganuma,
Makoto Muranaka,
of Asset Management Company
Representative Director, President
Representative Director and President
Relationship among Parties
There is no capital, personnel and business relationships required to be disclosed between MIRAI/Sakura andInvolved
MIP/SREFM, and They do not fall under related parties.
(Note) The above figures of the end book value and the status of unitholders are as of April 30, 2019 for MIRAI, and as of June 30, 2019 for Sakura.
The end book value is rounded down to the nearest unit, and the holding ratio is rounded to the nearest tenth. In addition, the end book valueof Sakura is unaudited figures.

6

7.

Business Results for Last 3 Fiscal Periods(million yen unless otherwise specified)
MIRAI Corporation(Surviving Corporation)

Sakura Sogo REIT Investment Corporation(Absorbed Corporation) (Note 1)

Apr. 2018

Oct. 2018

Apr. 2019Feb. 2018

Jun. 2018

Dec. 2018

Operating Revenue

3,958

4,417

4,959

2,662

1,768

2,362

Operating Profit

1,907

2,122

2,531

1,304

854

1,046

Ordinary Profit

1,698

1,867

2,270

1,153

615

885

Net Profit

1,706

1,922

2,271

1,152

615

886

Net Profit per Unit (yen)

5,807

1,440
(Note 2)

1,437
(Note 2)

3,460

1,847

2,661

Distributions per Unit (yen)

5,807

5,668

5,745

3,460

1,848

2,662

Net Assets per Unit (yen)

182,253

45,392(Note 2)

44,797(Note 2)

91,312

89,70090,513

Net Asset

53,536

61,59070,85430,40729,87030,141

Total Asset

117,022

131,772

152,493

63,19762,752

61,643(Note 1) Sakura changed its fiscal period end from the end of February and August to the end of June and December of each year, upon a resolution
adopted at the second general meeting of unitholders held on May 31, 2018. As a result, the fiscal period ended June 30, 2018 ended fourmonths from March 1, 2018 to June 30, 2018.
(Note 2) MIRAI implemented a four-for-one investment unit split with April 30, 2019 as record date and May 1, 2019 as effective date. Net Profit
per Unit and Net Assets per Unit are shows pro forma per unit information which has been adjusuted to reflect the unit split as if it had
been effective at the beginning of the fiscal period ended October 31, 2018.

8.

Post-Merger Statue(1) Statues of Surviving Corporation
Name

MIRAI Corporation

Location

2-1, Nishi-Kanda 3-chome, Chiyoda-ku, Tokyo

Name of Executive Directors

Michio Suganuma

Unitholders Capital

Not yet been determined, and will be announced once determined.

Fiscal Period End

April, October

Net Assets

Not yet been determined, and will be announced once determined

Total Assets

Not yet been determined, and will be announced once determined

Name of Asset Management Company

Mitsui Bussan & IDERA Partners Co., Ltd.

Location of Asset Management Company
Name and post representative of AssetManagement Company

2-1, Nishi-Kanda 3-chome, Chiyoda-ku, Tokyo
Michio Suganuma, Representative Director, President(2) Major Unitholders and Unit Holding Ratio before and after Merger

Not yet been determined, and will be announced once determined.
(3) Amendment to Asset Management Agreement

Not yet been determined, and will be announced once determined.
Further, MIRAI, Sakura, SREFM and MIP have agreed that no merger fee will be paid to the asset managementcompany of Sakura upon the Merger under which Sakura will be the absorbed corporation.
(4) Amendment to Investment Policy

Not yet been determined, and will be announced once determined.
(5) Amendment to Agreement with Sponsor, etc.
MIRAI and MIP have entered into the sponsor support agreement each with Mitsui & Co. Asset Management
Holdings LTD. and IDERA Capital Management Ltd., and there is no change to such agreements after the
Merger.
SREFM will agree terminate each sponsor support agreement with Galileo Sydney Holdings Pty Limited,
NIPPON KANZAI Co., Ltd. and Tokyo Capital Management Co., Ltd. on the effective date of the Merger.

7(6) Provisions concerning Officers of Surviving Corporation after the Merger
There is no plan of current and former directors and employees of SREFM to become director of MIP upon the
Merger.
9.

Outline of Accounting Method
Not yet been determined, and will be announced once determined.

10. Outlook
MIRAI and Sakura have not determined the outlook going forward, such as performance after the Merger at thistime, but will announce once determined. The effect of the execution of the MOU on management situation of
MIRAI in the fiscal period ending October 31, 2019 (from May 1, 2019 to October 31, 2019) is minor and there is
no change to the forecast. The effect of the execution of the MOU on management situation of Sakura in the fiscal
period ending December 31, 2019 (from July 1, 2019 to December 31, 2019) is minor and there is no change to theforecast.
(End)

* URL
MIRAI Corporation: http://3476.jp/en
Sakura Sogo REIT Investment Corporation : http://sakurasogoreit.com/en
This press release is the English translation of the announcement in Japanese on MIRAI and Sakura’s
website. However, no assurance or warranties are given for the completeness or accuracy of this English
translation.
(Reference press release, etc.)
Dated 7/19/2019 “Merger of MIRAI Corporation and Sakura Sogo REIT Investment Corporation Execution of Memorandum of Understanding
regarding - Supplementary Material for the Press Release Dated July 19, 2019 -”8