December 16, 2022
To All Concerned Parties

Investment Corporation
ESCON JAPAN REIT Investment Corporation
Representative:
Atsumu Sasaki(Securities Code: 2971)
Asset Manager
ES-CON ASSET MANAGEMENT Ltd.
Representative:
Takeharu Kagiyama
President and Representative Director
Kenichi Tanaka
Inquiries:
General Manager of the Department ofFinance and Control
TEL: +81- 3-6230-9338

Notice Concerning ESCON REIT’s Response Concerning Liability Claims Against the AssetManager
ES-CON Japan REIT Investment Corporation (hereinafter "ESCON REIT") hereby announces that it
has decided today to take the following actions concerning actions to enforce liability regarding the breachof fiduciary duty of loyalty committed by ES-CON Asset Management, Ltd. (Hereinafter, the “AssetManager”), which is the asset management company for ESCON REIT.
1. Details of This Matter
On July 15, 2022, the Asset Manager was found to have violated its duty of loyalty as stipulated inArticle 42, Paragraph 1 of the Financial Instruments and Exchange Act by improperly undermining
the independence of real estate appraisers and conducting an inappropriate real estate appraiser
selection process, and received a business suspension order and a business improvement orderpursuant to Article 51 and Article 52, Paragraph 1 of the Financial Instruments and Exchange Act (fordetails, please refer to the "Notice Concerning Administrative Disposition Against the Asset Manager"
dated July 15, 2022).
Since the administrative disposition, the Asset Manager has been improving its business operationsin accordance with the above-mentioned order, and has also conducted various investigations to confirm
whether there were any other violations of its duty of loyalty other than those identified at the time of
the administrative disposition. While the Asset Manager was conducting the investigation, ESCONREIT received a request from one individual unitholder dated October 12, 2022 to file an action toenforce liability against the Asset Manager. In response to this request, ESCON REIT commissioned
an investigation (the "Investigation") by an outside law firm that has no interest in the asset manager,etc., and has secured its independence. Upon receiving a report on the results of the objective andrigorous investigation, and taking the following measures to ensure fairness, we have been considering
whether or not to pursue liability claims against the Asset Manager.

1<Overview of Measures to Ensure Fairness>Among the directors of ESCON REIT, Atsumu Sasaki, who is Executive Director, is also anemployee of the Asset Manager. Therefore, it was decided that the decision on whether or not to takeaction to hold the Asset Manager liable would be made solely by the two supervisory directors, who
are independent directors with no interest in the Asset Manager, and that Executive Director Atsumu
Sasaki would not be involved in the decision-making process.
2. About the InvestigationESCON REIT commissioned an outside law firm with no interest in the Asset Manager, etc. toconduct an investigation as described below, to determine whether or not the Asset Manager hasbreached its duty of loyalty and whether or not any damage has occurred, covering all property
acquisitions held by ESCON REIT.
<Overview of the Investigation>
Entrusted(1) Conduct an investigation into whether or not the Asset Manager has breached
Matters
its duty of loyalty in the acquisition of ESCON REIT's properties, and (2) if it isfound to have breached its duty of loyalty, whether or not ESCON REIT has
incurred damages that have a reasonable causal relationship with the breach ofduty.
Investigation
From October 21, 2022 to December 7, 2022
PeriodInvestigation
Conduct an investigation of the above entrusted matters by examining theMethod
materials provided by the Asset Manager and the results of inquiries made to thepersons in charge of the Asset Manager at the time of property acquisitions andother related persons, covering all properties owned by ESCON REIT.
An overview of the results of the Investigation is as follows.
(1) When real estate is appraised by a real estate appraiser, the appraised value is calculated as aspecific price. However, there is a certain range in the appropriate appraised value of real estate,
as evidenced by the fact that different appraisers sometimes value the same property differently.
However, even if the appraised value is within the range of appropriate appraised values for theproperty in question, if it is found that the acquisition price of a property determined by referringto the appraised value increased due to a breach of duty of loyalty, there is damage due to the breach.
As a result of the Investigation conducted based on this approach, it was found that damage wascaused to ESCON REIT in regard to the following three properties, due to the Asset Manager’s
breach of their duty of loyalty by improperly making efforts to undermine the independence of realestate appraisers. The total amount of such damages was found to be 666 million yen.
Property Name
tonarie Toga・Mikita
SUROY MALL Nagamine
ENEOS
IkawadaniSS(Leasehold land)
Total

Amount ofDamages
340 millon yen
300 millon yen
26 millon yen
666 millon yen(Note)Although it was not found that the appraisal values submitted by the real estate appraisers
for these three properties were inappropriate for each of the properties concerned, it wasdetermined that this does not imply that no damage was caused to ESCON REIT.
2

The breach of duty of loyalty regarding the three properties for which such damages werefound to have occurred is identical to the breach of duty of loyalty regarding the threeproperties found in the above-mentioned administrative disposition dated July 15, 2022, bothin terms of the specific properties and the specific conduct involved.
(2) Other than the three properties listed in (1) above, there is no evidence that any damage wascaused to ESCON REIT through a breach of duty of loyalty due to inappropriate efforts toundermine the independence of a real estate appraiser.
(3) We do not find that any damage was caused to ESCON REIT through the breach of duty of loyalty
to an inappropriate process for selecting real estate appraisers.

3. ESCON REIT’s Response
Based on the results of the Investigation, discussions were held between ESCON REIT and the AssetManager, and today the Asset Manager expressed its intention to compensate ESCON REIT for the fullamount of damages identified in this investigation by the end of January 2023, subject to the completionof necessary preparations, including the allocation of funds for compensation payments andconfirmation that there are no legal problems.
In response to the Asset Manager's declaration of its intention to pay compensation, ESCON REIT'sboard of directors, under the aforementioned measures to ensure fairness, has diligently reviewed thesituation and concluded that (1) it can be reasonably expected that the Asset Manager will voluntarily
pay the full amount of the damages identified in the Investigation at an early date, and (2) because ofconcerns that pursuit of a liability lawsuit against the Asset Manager may adversely affect themanagement of assets during the period the lawsuit is pending, etc., we have determined that it is in
the best interest of ESCON REIT to refrain from filing a such a lawsuit, subject to receiving a detailedreport from the Asset Manager regarding the status of the necessary preparations described above, andhave decided to do so.
Accordingly, a notice regarding the decision to refrain from filing a lawsuit will be sent to individual
unitholders who have requested that a lawsuit be filed against the Asset Manager pursuant to Article
847, Paragraph 4 of the Companies Act as applied mutatis mutandis to Article 204, Paragraph 3 of theAct on Investment Trusts and Investment Corporations.
Please refer to the attachment for the Asset Manager's view regarding the Investigation and thestatement of intent.

4. ESCON REIT’s Future Asset Management
ESCON REIT and the Asset Manager have mutually confirmed that they will continue to work
together in a strong cooperative relationship and will take every possible measure to ensure that there
will be no hindrance to asset management in the future. In addition, the sponsor, ES-CON JAPAN Ltd.
and its parent company, Chubu Electric Power Company, Inc. have confirmed that they will continue
to support the management of ESCON REIT.
We sincerely request the continued support of our unitholders and all other concerned parties.

35. Future OutlookWhen the compensation is paid by the Asset Manager, ESCON REIT will realize a profit equal tothe amount of the compensation. However, as of today, the necessary preparations, such as theallocation of funds and the confirmation that there are no legal problems have not been completed,and none of the final decisions regarding whether, in what amount, and when the compensation
payment will be made has been finalized. Therefore, we have not revised the current forecast ofESCON REIT’s asset management performance, but we will make a further announcement as soon as
the details of the compensation payment are finalized.
【URL of ESCON REIT: https://www.escon-reit.jp/en/index.html】

4Attachment
To All Concerned Parties
ES-CON ASSET MANAGEMENT Ltd.
President and Representative Director
Takeharu Kagiyama

As announced in the "Notice Concerning Administrative Disposition Against the Asset Manager "dated July 15, 2022, and the "Notice Concerning Submission of Business Improvement Report by theAsset Manager" dated August 15, 2022, ES-CON Asset Management, Ltd. (Hereinafter, the “Company”)
received a business suspension order and a business improvement order on July 15, 2022, andsubsequently submitted a report summarizing the current status of its business improvement measures(the "Business Improvement Report") to the Commissioner of the Financial Services Agency on August15, 2022, which was accepted. In order to realize fair and appropriate business operations, under theguidance of the supervisory authorities and with the support of parent company ES-CON Japan Ltd.
and ultimate parent company Chubu Electric Power Co., Inc. the entire company is working to clarify
management's stance on compliance with laws and regulations, establish responsible compliance andinternal control systems by management, and review business operation methods to ensure the steady
implementation of these measures.
Since the investigation by the Securities and Exchange Surveillance Commission that preceded theabove administrative action, the Company has voluntarily investigated the appropriateness of its past
operations, conducted a variety of investigations to determine whether there were any other violationsof the Company's duty of loyalty other than those identified at the time of the above administrativeaction, and has been improving its operations in accordance with the above orders. In the process ofthese investigations, it was confirmed once again that the appraisal values stated in the real estateappraisal reports for the properties that were the subject of the above administrative action wereappropriate, and it was also confirmed that the appraisal values stated in the real estate appraisal
reports the Company acquired for ESCON REIT for all other properties were appropriate.
Under such circumstances, the Company has accepted the conclusions of the investigationcommissioned by ESCON REIT to an outside law firm, which, even under the understanding that theappraisal values stated in the real estate appraisal reports were appropriate, found that ESCON REIT
should be judged to have suffered damages.
This finding was not necessarily consistent with the opinions of the Company and the opinions ofattorneys of the outside law firm to which the Company referred the case. Therefore, although there isan option for the Company to dispute its liability through a court case, the Company has decided that(1) the Company's breach of its duty of loyalty was what led to this matter, and the Company, which
committed the acts which caused it, has a responsibility to resolve this matter as quickly as possible toensure the proper operation and asset management of ESCON REIT, (2) the results of the investigationcommissioned by ESCON REIT to an outside law firm confirmed that no damage had occurred
5regarding any properties other than the three properties, (3) the appraisal values stated in the realestate appraisal reports obtained at the time of acquisition of the properties by ESCON REIT was notconsidered to be inappropriate, (4) there is concern that unitholders may be greatly inconvenienced if
the dispute is prolonged. Therefore, regarding the payment of the amount of compensation authorized
as a result of the investigation commissioned by ESCON REIT to an outside law firm, the Company
decided, pending confirmation that there are no problems regarding the allocation of funds and laws
and regulations, etc., to accept the finding and express our intention to that effect to ESCON REIT.
We deeply apologize to ESCON REIT’s unitholders and all other concerned parties for any worries
and inconvenience this matter may have caused. All of the Company’s directors and employees areunited in our efforts to restore trust in our company, and we are determined to make efforts to improve
unitholder value by optimizing the management of ESCON REIT’s assets as quickly as possible. We
sincerely request the continued support of ESCON REIT unitholders and all other concerned parties.

6