Make The World
More Sustainable[Provisional Translation Only]
This English translation of the original Japanese document is provided solely for information purposes.
Should there be any discrepancies between this translation and the Japanese original, the latter shall prevail.

January 29, 2020
IssuerIchigo Office REIT Investment Corporation (“Ichigo Office,” 8975)
1-1-1 Uchisaiwaicho, Chiyoda-ku, Tokyo
Representative: Yoshihiro Takatsuka, Executive Director
www.ichigo-office.co.jp/english
Asset Management Company
Ichigo Investment Advisors Co., Ltd.
Representative: Hiroshi Iwai, President
Inquiries: Shinichi Fukasawa, Head of Ichigo OfficeTel: +81-3-3502-4891

Acquisition of Office Asset (Ichigo Nakameguro Building)Consistent with its strategy as a specialized office REIT, Ichigo Office decided today toacquire an office asset, the Ichigo Nakameguro Building.
1. Asset Acquisition Summary
Asset Number
Asset Name1

O-95
Ichigo Nakameguro Building

Asset Type

OfficeDate Built

January 17, 1992

Form of Ownership

Trust beneficiary interest in real estate (juekiken)

Appraisal Value2

JPY 1,670 million

Acquisition Price3

JPY 1,495 million

SellerDomestic GK

Contract Date

January 29, 2020

Closing Date

April 14, 2020

Financing Method4

Cash-on-handSettlement Method

Lump-sum payment

1

Ichigo Office will change the building name from the Nakameguro Aobadai Building
to the Ichigo Nakameguro Building. For purposes of this release, the building isreferred to as the Ichigo Nakameguro Building.
2
Appraisal Value is calculated by Tanizawa Sogo Appraisal as of December 31, 2019,and is in compliance with the appraisal guidelines of Ichigo Investment Advisors(“IIA”) as well as the rules of the Investment Trusts Association of Japan.
3
Acquisition Price excludes incidental expenses such as fees and property, city
planning, and consumption taxes.
4
The seller, a domestic company (GK), did not provide consent to disclose its name.
12. Transaction Rationale
As a specialized office REIT with stable earnings and a diverse portfolio, Ichigo Officecontinues to execute on its strategy to grow shareholder value by focusing its portfolio
on high-quality, mid-size office assets.
The Ichigo Nakameguro Building is located in Nakameguro, a neighborhood adjacent toboth Shibuya and Ebisu, two real estate markets with strong office tenant demand.
Ichigo Office expects earnings growth through value-add capex after the acquisition.
With this asset acquisition, Ichigo Office’s post-transaction portfolio will be 81 officeassets, or 95.6% of the total portfolio. Ichigo Office expects to continue to grow its
specialized, mid-size office portfolio to drive further earnings growth.
The Ichigo Nakameguro Building’s tenants fully comply with the “Financial Report(Yuka Shoken Hokokusho)” (Japanese only) submitted on January 28, 2020.
Please refer to Section 3 “Details of the Ichigo Nakameguro Building” immediately
below for additional details on the asset’s features and characteristics that underpinned
the acquisition decision.
3. Details of the Ichigo Nakameguro Building(1) Location
The Ichigo Nakameguro Building is located in Nakameguro, an area near Shibuya, one
of Tokyo’s commercial centers. The building is an eight-minute walk from Nakameguro
Station on the Tokyu Toyoko Line and Tokyo Metro Hibiya Line, offering convenient
access to two railway lines and Yamate-Dori, a main avenue running through the area.
Despite Nakameguro’s convenient location, rents are affordable compared to those in
Shibuya and Ebisu. As a result, demand for office openings and floor space expansions
has been robust in recent years, and generating the opportunity for strong rental growth
going forward.
(2) Features
Each floor has a standard floor plate of 30 tsubo (99m2) and ceiling height of 2.5 meters,
and is equipped with individual air conditioning systems and raised-access floors,catering to the demands of diverse tenants.
Tenants include a retail store on the ground floor and information-technology and apparelcompanies on upper floors.

2(3) Building Exterior and Location

3

Asset Name
Legal Form of Asset
Trustee
Period of Trust Contract
Location
Property Right
Area
Land
ZoningCoverage Ratio
Floor Area Ratio
Property Right
Use
Building Structure
Total Floor Area
Date Built
Appraiser
Appraisal Value

Asset Overview
Ichigo Nakameguro Building
Trust beneficiary interest in real estate (juekiken)
Mitsubishi UFJ Trust and Banking Corporation
April 14, 2020 – April 30, 2030 (expected)
2-21-6 Aobadai, Meguro-ku, Tokyo
Freehold278.69m2
Commercial
80%500%
Freehold
Office, Retail
Steel, B1F/10F
1,360.72m2
January 17, 1992
Tanizawa Sogo Appraisal Co., Ltd.
JPY 1,670 million
December 31, 2019

Appraisal Date
Value by Direct Capitalization
JPY 1,750 million
MethodMiyata Architects & Engineers Co., Ltd.
Architect1
1
Builder
Tokai Kogyo K.K.
1
Structural Designer
Miyata Architects & Engineers Co., Ltd.
1
Inspection Agency
Meguro Ward
PML (Assessor)
4.02% (Sompo Risk Management & Health Care Inc.)
Collateral
None
Lease Details (as of December 31, 2019)
Tenant Overview
6
Number of Tenants
Monthly Rental Income
The seller did not provide consent to disclose the information.
Tenant Security Deposits
Leasable Area
Leased Area
Occupancy
Property Management
Company
Master Lease Company
Master Lease TypeThe seller did not provide consent to disclose the information.
1,037.30m2
1,037.30m2
Apr 2018 Oct 2018 Apr 2019 Oct 2019 Dec 2019
100%
100%
100%
100%
100%
To Be Determined
Ichigo Office REIT Investment Corporation (expected)
Pass-through (expected)

4

Special Items
1. An engineering report indicates the following issues with the building. The seller has
agreed to rectify them at the seller’s expense by the Acquisition Date.
a. There is no obvious escape route from the building’s balcony. Access to a nearby fireescape ladder on the second-floor rooftop is blocked by air-conditioning equipment.
b. The ground floor tenant does not have permits for two outdoor signboards.
c. One of those signboards is not properly anchored to the building, causing a possible
safety risk.
d. A door to the outdoor emergency stairway on the north side of the building swings out
into a public road.
e. A fire shutter in the ground-floor entrance hall that leads to an outdoor stairway isdefective and stuck open.
f. There is insufficient emergency lighting in a stairway to the basement.
g. An air-conditioning pipe through a ventilation hole on the west side of the building
prevents the fire damper from closing.
h. In its regular fire safety inspection, the fire department cited a problem with obstructive
objects.
2. Part of the land was acquired on January 30, 2004 by the Tokyo Metropolitan Government
in line with its plan to expand the width of the road running along the southwest side of thebuilding. The resulting reduction in land area has a created a code violation in which thebuilding’s total floor space exceeds that permitted under current building codes.
3. There are also plans to widen the road adjacent to the southeast side of the building(designated Route 50 in the urban planning blueprint of April 25, 1946). If the road is
expanded, the property’s southeast border will be pushed back 2.4m.
4. Pursuant to Article 42, paragraph 2 of the Building Standards Act, 20.84m2 of land on thenortheast side of the property is used as a public road.
5. A concrete platform sticks out into the road on the southwest side. There is no agreement torectify the situation.
6. A lease termination notification was received from one of the tenants (leased area:
100.86m2) on December 6, 2019, effective May 15, 2020. Occupancy is expected to be
90.3% after the termination.
1

Names of the architect, builder, structural designer, and inspection agency are those as of
the building’s construction date.

5Asset Name
Appraisal Value
Appraiser
Appraisal Date
Appraisal Value
Value by Direct
Capitalization Method
IncomeForecast FullOccupancy Rental
IncomeForecast Decrease
in Rental Income
due to Vacancy
Expenses
Administrative &MaintenanceExpensesUtility Expenses
Repair Expenses
PM FeeLeasing
Brokerage Fees
Taxes
Insurance
Premiums
Other Expenses
Net Operating
Income (NOI)
Income from
Investments of
Deposits
CapitalExpenditure
Net Profit

Appraisal Details
Ichigo Nakameguro Building
JPY 1,670,000,000
Tanizawa Sogo Appraisal Co., Ltd.
December 31, 2019
AmountNote
Based on a DCF valuation and verified
JPY 1,670,000,000
using a direct capitalization valuation
JPY 1,750,000,000
JPY 88,595,598
Based on an analysis of potential rental
JPY 93,128,204 income, common area service income,and other income
JPY 4,532,606 Based on long-term vacancy rates
JPY 17,441,270
JPY 3,995,680 Based on actual amounts
JPY 4,891,907 Based on actual amounts
JPY 2,200,000 Based on engineering reports
JPY 1,507,321 Based on current rate
JPY 615,285 Based on a 10% p.a. turnover rate
JPY 3,809,100 Based on FY2019 actual amounts
JPY 156,190 Based on insurance estimates
JPY 265,787 Based on actual amounts
JPY 71,154,328
JPY 589,404 Based on a 1.0% investment yield
JPY 5,280,000 Based on engineering reports
JPY 66,463,732
Based on transactions of similar assets
and a comprehensive assessment of the
3.8% asset’s location, its specificcharacteristics, and the discount rate
appropriate to the asset

Cap Rate

6

Value via DCF Method

JPY 1,640,000,000

Discount Rate

Based on yields of similar real estate
assets and of Japanese financial assets,
3.8%
taking into account the asset’s specificcharacteristics

Terminal Cap Rate

4.0% Based upon risk-adjusted NOI

Accounting ValueLand
Building

JPY 1,570,000,000
89.1%
10.9%
Notes

None
Note: Appraisal NOI Yield: 4.8% (calculated by dividing NOI by Acquisition Price)
4. Seller Profile
Name

The seller, a domestic GK unrelated to Ichigo Office, did notprovide consent to disclose its name.

Relationship with Ichigo
Office or IIA

The seller does not have any material capital, personnel, ortransactional relationship with Ichigo Office or IIA. In
addition, the seller is not a related party as defined in the
Enforcement Ordinance of the Investment Trust andInvestment Corporation Law or the internal rules of the AssetManagement Company.

5. No Buyer/Seller Relationship
The seller is a third-party unrelated to Ichigo Office and IIA.
6. Broker Profile
Name

The broker did not provide consent to disclose its name.

Relationship with Ichigo
Office or IIA

The broker does not have any material capital, personnel, ortransactional relationship with Ichigo Office or IIA. In
addition, the broker is not a related party as defined in the
Enforcement Ordinance of the Investment Trust andInvestment Corporation Law or the internal rules of theAsset Management Company.

Broker Fee

JPY 44,910,000 (excluding consumption tax)

7. Acquisition Schedule
Ichigo Office Board Resolution Date
Contract Date
Closing Date

January 29, 2020
January 29, 2020
April 14, 2020 (expected)

78. Forward Commitment
Because the Transaction Date is April 14, 2020, the acquisition of the Ichigo
Nakameguro Building (the “Acquisition”) constitutes a “forward commitment” by
Ichigo Office as stipulated in the “Comprehensive Guidelines for Supervision of
Financial Instruments Business Operators” by the Financial Services Agency1.
In the event of a violation of the provisions of the Acquisition by Ichigo Office or theseller, the other party shall have the right to terminate the Acquisition and claim up to
5% of the purchase price as a penalty.
Because Ichigo Office is the buyer, and will finance the transaction with cash on hand,which suggests that there is a limited financing risk, it is highly unlikely that Ichigo
Office will incur the penalty or suffer a negative material impact on its financial
position.
1

Refers to a post-dated purchase and sales agreement under which payment andproperty delivery shall be made at least one month after the conclusion of theagreement, or any other agreement similar thereto.

9. Earnings Outlook
The impact of this acquisition on Ichigo Office’s April 2020 and October 2020 fiscal
period earnings announced on December 13, 2019 is minimal, and therefore the forecast
is unchanged. The acquisition is consistent with Ichigo Office’s strategy to grow its
specialized, mid-size office portfolio to drive further earnings growth.

8Reference
1. Earnings Profile of Asset Being Acquired(JPY million)
Forecast1
A. Rental Income
B. Rental Expenses(excluding depreciation)3
C. NOI (A-B)

At Acquisition2
86

69

17

16

69

53

D. NOI Yield4

4.6%

3.5%

E. Depreciation5

11

11

F. Post-depreciation NOI (C-E)

57

41

G. Post-depreciation NOI Yield4

3.9%

2.8%

H. Occupancy6

96%

100%

1

Amounts exclude one-off factors in the year of acquisition and are calculated based on
current and future anticipated fluctuations in occupancy.
2
Shows first-year amounts used to calculate the DCF-based valuation, excluding one-off
factors in the year of acquisition.
3
Rental Expenses include incidental expenses such as service provider expenses, property,
city planning, and consumption taxes, and other fees.
4
Forecast NOI Yield and NOI Yield At Acquisition are calculated by dividing theForecast NOI and NOI At Acquisition, respectively, by the Acquisition Price.
5
Depreciation is as estimated by Ichigo Office.
6
Occupancy is as of December 31, 2019.
2. Engineering Report Summary
Asset Name
Inspector Name
Inspection Date
Short-Term Repair Expenses1
Long-Term Repair Expenses2
Current Replacement Cost

Ichigo Nakameguro Building
Tokio Marine & Nichido Risk Consulting Co., Ltd.
November 2019–
JPY 66.23 million
JPY 440.7 million

1

Short-Term Repair Expenses are defined as repair expenses beyond the scope ofordinary maintenance within a year from the time of inspection.
2
Long-Term Repair Expenses are defined as cumulative repair expenses considerednecessary for the maintenance of the asset within twelve years from the time ofinspection.

9

Appendix C: Post-Transaction Portfolio
No.
O-02
O-03
O-04
O-05
O-06
O-07
O-08
O-09
O-10
O-11
O-12
O-14
O-15
O-16
O-17
O-18
O-19
O-20
O-21
O-22
O-23
O-24
O-26

Area1

Asset Name

O-27
O-28
O-29

Ichigo Nishisando Building
Ichigo Mita Building
Ichigo Nanpeidai Building
Ichigo Hanzomon Building
Ichigo Hijirizaka Building
Ichigo Shibuya Kamiyamacho Building
Ichigo Akasaka 5 Chome Building
Ichigo Shibakoen Building
Ichigo Ebisu Nishi Building
Ichigo Ginza 612 Building
Ichigo Uchikanda Building
Ichigo Yotsuya 4 Chome Building
Ichigo Tameike Building
Ichigo Jimbocho Building
Ichigo Hakozaki Building
Ichigo Kudan 2 Chome Building
Ichigo Kudan 3 Chome Building
Ichigo Gotanda Building
Ichigo Shin Yokohama Building
Ichigo Minami Ikebukuro Building
Ichigo Nakano North Building
Ichigo Eitai Building
Ichigo Ikejiri Building
Ichigo Nishi Ikebukuro Building
Ichigo Nishi Gotanda Building
Ichigo Kichijoji Building

O-34

Ichigo Sakae Building

O-37

Ichigo Marunouchi Building

O-38
O-39
O-42
O-46
O-47

Ichigo Toyamaeki Nishi Building
Ichigo Mirai Shinkin Building
Ichigo Takamatsu Building
Ichigo Kanda Nishikicho Building
Ichigo Akihabara North Building

O-48

Ichigo Sakaisuji Honmachi Building

O-49

Ichigo Kanda Ogawamachi Building

Central Tokyo
Central Tokyo
Central Tokyo
Central Tokyo
Central Tokyo
Central Tokyo
Central Tokyo
Central Tokyo
Central Tokyo
Central Tokyo
Central Tokyo
Central Tokyo
Central Tokyo
Central Tokyo
Central Tokyo
Central Tokyo
Central Tokyo
Central Tokyo
Tokyo Metro Area
Tokyo Metro Area
Tokyo Metro Area
Tokyo Metro Area
Tokyo Metro Area
Tokyo Metro Area
Central Tokyo
Tokyo Metro Area
Four Major Regional
CitiesFour Major Regional
CitiesOther Regional Cities
Other Regional Cities
Other Regional Cities
Central Tokyo
Central Tokyo
Four Major Regional
CitiesCentral Tokyo
10

Acquisition
Price2(JPY million)% ofPortfolio3

3,254
2,740
1,920
1,550
1,200
1,505
735
1,100
1,917
1,773
1,140
550
580
1,820
1,150
763
844
5,060
1,816
1,460
764
1,490
2,030
639
765
2,160

1.6
1.3
0.9
0.8
0.6
0.7
0.4
0.5
0.9
0.9
0.6
0.3
0.3
0.9
0.6
0.4
0.4
2.5
0.9
0.7
0.4
0.7
1.0
0.3
0.4
1.1

4,705

2.3

6,710

3.3

1,645
1,158
3,010
2,130
5,500

0.8
0.6
1.5
1.0
2.7

1,940

0.9

2,210

1.1

No.
O-50
O-51
O-52
O-53
O-54
O-55
O-56
O-57
O-58
O-59
O-60
O-61
O-62
O-63
O-64
O-65
O-66
O-67
O-68
O-69
O-70
O-71
O-72
O-73

Ichigo Hatchobori Building
Ebisu Green Glass
Ichigo Omori Building
Ichigo Takadanobaba Building
Ichigo Omiya Building
Ichigo Sagamihara Building
Ichigo Ofuna Building
Ichigo Sendai East Building
Ichigo Kumamoto Building
Ichigo Jingumae Building
Ichigo Shibuya Dogenzaka Building
Ichigo Hiroo Building
Ichigo Sasazuka Building
Ichigo Nihonbashi East Building
Ichigo Sakurabashi Building
Ichigo Shinkawa Building
Ichigo Kudan Building
Ichigo Higashi Gotanda Building
Axior Mita
Ichigo Higashi Ikebukuro Building
Koriyama Big-i (Office Section)
Ichigo Kawasaki Building
Ichigo Shibuya East Building
Ichigo Ningyocho Building

O-74 Ichigo Nishi Honmachi Building
O-75 Ichigo Hakata Building
O-76 Ichigo Nishiki First Building
O-77
O-78
O-79
O-80

Area1

Asset Name

Ichigo Ikenohata Building
Ichigo Ikebukuro East Building
Ichigo Motoazabu Building
Ichigo Otsuka Building

O-81 Ichigo Nagoya Building
O-82 Ichigo Fushimi Building
O-83 Ichigo Nishiki Building
O-84 Ichigo Minami Morimachi Building

Central Tokyo
Central Tokyo
Central Tokyo
Central Tokyo
Tokyo Metro Area
Tokyo Metro Area
Tokyo Metro Area
Other Regional Cities
Other Regional Cities
Central Tokyo
Central Tokyo
Central Tokyo
Central Tokyo
Central Tokyo
Central Tokyo
Central Tokyo
Central Tokyo
Central Tokyo
Central Tokyo
Tokyo Metro Area
Other Regional Cities
Tokyo Metro Area
Central Tokyo
Central Tokyo
Four Major Regional
CitiesFour Major Regional
CitiesFour Major Regional
CitiesTokyo Metro Area
Tokyo Metro Area
Central Tokyo
Tokyo Metro Area
Four Major Regional
CitiesFour Major Regional
CitiesFour Major Regional
CitiesFour Major Regional
Cities11

Acquisition
Price2(JPY million)
1,905
5,900
3,850

% of
Portfolio3

1,580
3,430
1,174
2,000
1,840
1,450
7,200
3,650
3,960
4,780
4,700
2,500
2,360
3,190
3,660
1,800
4,570
1,660
1,750
1,350
1,450

0.9
2.9
1.9
0.8
1.7
0.6
1.0
0.9
0.7
3.5
1.8
1.9
2.3
2.3
1.2
1.2
1.6
1.8
0.9
2.2
0.8
0.9
0.7
0.7

2,190

1.1

1,380

0.7

2,000

1.0

5,130
3,010
1,890
2,740

2.5
1.5
0.9
1.3

3,420

1.7

2,340

1.1

1,330

0.6

1,040

0.5

No.
O-85
O-86
O-87
O-88
O-89
O-90
O-91
O-92
O-93
O-94
O-95
Z-09
Z-10
Z-11
Z-12
Z-14

Area1

Asset Name
Ichigo Shibuya Udagawacho Building
Win Gotanda Building
Ichigo Hongo Building
Oimachi Center Building
Win Gotanda Building 2
MIF Building

Central Tokyo
Central Tokyo
Tokyo Metro Area
Central Tokyo
Central Tokyo
Central Tokyo
Four Major Regional
Ichigo Uchi Honmachi Building
CitiesIchigo Minami Otsuka Building
Tokyo Metro Area
Ichigo Nogizaka Building
Central Tokyo
Four Major Regional
Ichigo Hakata East Building
CitiesIchigo Nakameguro Building
Tokyo Metro Area
Subtotal - Office (81 Assets)
Konami Sports Club Izumi Fuchu
Other Regional Cities
Ichigo Shibuya Bunkamura Dori Building
Central Tokyo
Twicere Yokohama Isogo (Retail Section)
Tokyo Metro Area
Lions Square Kawaguchi
Tokyo Metro Area
Ichigo Kamata Building
Tokyo Metro Area
Subtotal - Other (5 Assets)
Total (86 Assets)

TK Equity Investment Tachikawa Holdings GK TK Equity Interest
1

Acquisition
Price2(JPY million)% ofPortfolio3

3,500
3,100
2,300
1,680
3,300
2,200

1.7
1.5
1.1
0.8
1.6
1.1

1,900

0.9

2,780
3,315

1.4
1.6

2,250

1.1

1,495
195,732
1,210
2,400
1,620

0.7
95.6

2,430
1,400
9,060
204,792

0.6
1.2
0.8
1.2
0.7
4.4
100.0

50

–

Central Tokyo refers to Chiyoda, Minato, Chuo, Shinjuku, Shibuya, and Shinagawa Wards. Tokyo Metro
Area refers to Tokyo (excluding the six wards above), Kanagawa, Chiba, and Saitama Prefectures. Four
Major Regional Cities refers to Osaka, Nagoya, Fukuoka, and Sapporo.
2
Acquisition Price excludes incidental expenses such as consumption taxes and other fees.
3% of Portfolio is based upon acquisition price.

12