Ichigo Preserves and Improves Real Estate[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.

March 16, 2018
REIT Issuer
Ichigo 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: Wataru Orii, President
Inquiries: Hiroto Tajitsu, Head of Administration
Tel: +81-3-3502-4891

Sale of Two Retail Assets(Ichigo Sapporo Minami 2 Nishi 3 Building, Ichigo Daimyo Balcony)
Ichigo Investment Advisors (“IIA”), the asset management company of Ichigo Office,decided today to sell two retail assets, the Ichigo Sapporo Minami 2 Nishi 3 Building
and Ichigo Daimyo Balcony in Fukuoka.
The sale prices of the Ichigo Sapporo Minami 2 Nishi 3 Building and Ichigo Daimyo
Balcony are 1.9X and 1.3X book value, respectively, generating gains on sale of c. JPY
610 million.
1. Asset Sale Summary
Total appraisal value: JPY 1,255 million
Asset Number
Asset Name
Asset Type
Date Built
Legal Form of Asset
Acquisition Date
Appraisal Value1
Sale Price2
Book Value3
Gain on Sale4
Contract Date
Transaction Date
Closing Date
Transaction Method

Total sale price: JPY 1,800 million

Z-07
Ichigo Sapporo Minami 2
Nishi 3 Building

Z-08
Ichigo Daimyo Balcony

RetailJune 5, 1990
Real estate
November 1, 2011
(Ichigo Office merger)
May 16, 2006
(Original acquisition date)
JPY 588 million
JPY 1,020 million
JPY 545 millionc. JPY 440 million
March 16, 2018
March 30, 2018
March 30, 2018
Sale

RetailJune 4, 2007
Real estate
November 1, 2011
(Ichigo Office merger)
March 28, 2008
(Original acquisition date)
JPY 667 million
JPY 780 million
JPY 580 millionc. JPY 170 million
March 16, 2018
April 20, 2018
April 20, 2018
Sale

1

1

Appraisal Value is as calculated by either Rich Appraisal Institute Co., Ltd. or Japan
Real Estate Institute as of October 31, 2017, and is compliant with the appraisal
guidelines of IIA as well as the rules of The Investment Trusts Association, Japan.
2
Sale Price excludes incidental expenses such as fees and property, city planning, andconsumption taxes.
3Book Value is an estimate based on the most recent book value (October 2017 fiscal
period), adjusted for expected capital expenditures and depreciation through the
Closing Date.
4
Gain on Sale is an estimate calculated as the Sale Price less Book Value and forecast
sale expenses, and is subject to change.
2. Sale Rationale
Ichigo Office continues to execute on its strategy to grow long-term value for Ichigo
Office shareholders by focusing its portfolio on high-quality office assets. Consistent
with this strategy, Ichigo Office is selling two non-office retail assets and expects to
deploy the funds for growth investments.
Ichigo Office regularly reviews its portfolio for profitability and determines whether it
is in the best interest of shareholders to continue to own each asset. In this case, Ichigo
Office decided to sell the Ichigo Sapporo Minami 2 Nishi 3 Building based upon its
maintenance needs and rental outlook, and Ichigo Daimyo Balcony, despite its current
full occupancy, based upon concerns about its competitiveness with nearby assets andrental outlook.
The total sale price of the two assets is 1.6X book value and 1.4X appraisal value,
resulting in gains on sale of c. JPY 610 million.

2

3. Asset Overview
Ichigo Sapporo Minami 2 Nishi 3 Building
Asset Name
Form of Ownership
Address
Property Right
Area
Land
ZoningCoverage Ratio
Floor Area Ratio
Property Right
Use
Building
Structure
Total Floor Area
Date Built
Number of Tenants
Monthly Rental Income1
Tenant Security Deposits1
Leasable Area
Leased Area
Occupancy
Acquisition PriceAppraiser
Appraisal Date
Value

Asset Overview
Ichigo Sapporo Minami 2 Nishi 3 Building
Real estate
3-11-1 Minami Nijo Nishi, Chuo-ku, Sapporo City,
Hokkaido
Freehold200.36m2
Retail80%
800%
Freehold (ownership ratio: 100%)
Retail, medical clinic
SRC2 7 Floors plus 1 Basement Floor
1,396.39m2
June 5, 1990
7 (as of February 28, 2018)
JPY 4.263 million (as of February 28, 2018)
JPY 46.812 million (as of February 28, 2018)
1,162.52m2 (as of February 28, 2018)
1,017.11m2 (as of February 28, 2018)
Apr 2016 Oct 2016 Apr 2017 Oct 2017 Feb 2018
100%
100%
100%
87.5%
87.5%
JPY 558 million
Rich Appraisal Institute Co., Ltd.
October 31, 2017
JPY 588 million

1Monthly Rent (including cost of utilities) and Tenant Security Deposits refer to thosestated in the lease agreement.
2
SRC = Steel-Reinforced Concrete

3Asset Name
Appraisal Value
Appraiser
Appraisal Date

Appraisal Details
Ichigo Sapporo Minami 2 Nishi 3 Building
JPY 588 million
Rich Appraisal Institute Co., Ltd.
October 31, 2017
Amount (JPY)

Appraisal Value
Value by Direct
Capitalization Method
IncomeMaximum
Obtainable
Rental Income
Vacancy Loss
Expenses
Administrativeand MaintenanceExpensesUtility Expenses
Repair Expenses
PM Fees
Leasing
Brokerage Fees
Taxes
Insurance
Premiums
Other Expenses
Net Operating
Income (NOI)
Income on
Investment of
Deposits
Received
CapitalExpenditures
Net Profit
Cap Rate
Value via DCF
MethodNotes
on a DCF valuation, and verified
588,000,000 Basedusing a direct capitalization valuation
584,000,000
63,471,571
on rental income, common area
66,743,180 Basedservice income, and other income
3,271,609 Based on long-term vacancy rate
26,890,896
on similar assets and past actual
6,300,000 Basedamounts
on similar assets and past actual
8,440,000 Basedamounts
on engineering reports and similar
3,095,000 Basedassetson similar assets and past actual
2,027,816 Basedamounts
on the expected turnover rate and343,040 Basedtenant acquisition costs for similar assets
5,662,000 Based on FY2017 actual amounts
62,140 Based on FY2017 actual amounts
960,900 Based on FY2017 actual amounts
36,580,675
445,951 Based on a 1.0% investment yieldon engineering reports and similar
7,223,000 Basedassets29,803,626
Based on transactions of similar assets andcomprehensive assessment of the asset’s
5.1% alocation,
its individual characteristics, andmarket trends
590,000,000

Discount Rate

Based on transactions of similar assets and5.0% the yields of financial assets with the asset’s
individual characteristics taken into account

Terminal Cap Rate

5.3% Based on risk-adjusted NOI

4

Value via Cost Approach
Land
Building

Amount (JPY)544,000,000
78.7%
21.3%
Notes

None

5

Notes

Ichigo Daimyo Balcony
Asset Overview
Asset Name
Form of Ownership
Address
Property Right
Area
Land
ZoningCoverage Ratio
Floor Area Ratio
Property Right
Use
Building
Structure
Total Floor Area
Date Built
Number of Tenants
Monthly Rental Income1
Tenant Security Deposits1
Leasable Area
Leased Area
Occupancy
Acquisition PriceAppraiser
Appraisal Date
Value
1

Ichigo Daimyo Balcony
Real estate
1-12-39 Daimyo, Chuo-ku, Fukuoka City, Fukuoka
Freehold208.63m2
Retail80%
400%
Freehold
RetailSteel 7 Floors
830.21m2
June 4, 2007
7 (as of February 28, 2018)
JPY 3.569 million (as of February 28, 2018)
JPY 33.766 million (as of February 28, 2018)765.61m2 (as of February 28, 2018)765.61m2 (as of February 28, 2018)
Apr 2016 Oct 2016 Apr 2017 Oct 2017 Feb 2018
100%
100%
100%
84.9%
100%
JPY 638 million
Japan Real Estate Institute
October 31, 2017
JPY 667 million

Monthly Rent (including cost of utilities) and Tenant Security Deposits refer to thosestated in the lease agreement.

6Asset Name
Appraisal Value
Appraiser
Appraisal Date

Appraisal Details
Ichigo Daimyo Balcony
JPY 667 million
Japan Real Estate Institute
October 31, 2017
Amount (JPY)

Appraisal Value
Value by Direct
Capitalization Method
IncomeMaximum
Obtainable
Rental Income
Vacancy Loss
Expenses
Administrativeand MaintenanceExpensesUtility Expenses
Repair Expenses
PM Fees
Leasing
Brokerage Fees
Taxes
Insurance
Premiums
Other Expenses
Net Operating
Income (NOI)
Income on
Investment of
Deposits
Received
CapitalExpenditures
Net Profit
Cap Rate
Value via DCF
MethodNotes
on a DCF valuation, and verified
667,000,000 Basedusing a direct capitalization valuation
674,000,000
56,752,000
on rental income, common area
58,420,000 Basedservice income, and other income
1,668,000 Based on long-term vacancy rate
24,796,000
on similar assets and past actual
5,046,000 Basedamounts
on similar assets and past actual
13,700,000 Basedamounts
on engineering reports and similar
1,128,000 Basedassetson similar assets and past actual
1,200,000 Basedamounts
on the expected turnover rate and254,000 Basedtenant acquisition costs for similar assets
3,434,000 Based on FY2017 actual amounts
30,000 Based on FY2017 actual amounts
4,000 Signage expenses
31,956,000
285,000 Based on a 1.0% investment yieldon engineering reports and similar
546,000 Basedassets31,695,000
Based on transactions of similar assets andcomprehensive assessment of the asset’s
4.7% alocation,
its individual characteristics, andmarket trends
660,000,000

Discount Rate

Based on transactions of similar assets and4.5% the yields of financial assets with the asset’s
individual characteristics taken into account

Terminal Cap Rate

4.9% Based on risk-adjusted NOI

7

Value via Cost Approach
Land
Building

Amount (JPY)542,000,000
70.0%
30.0%

Notes

Notes
None

4. Buyer Profiles
Ichigo Sapporo Minami 2 Nishi 3 Building and Ichigo Daimyo Balcony
The buyers, both of which are Japanese operating
Namecompanies, did not provide consent to disclose their names.

Relationship with
Ichigo Office or IIA

The buyers do not have any capital, personnel, or business
relationship of note with Ichigo Office or IIA. In addition,
the buyers are not an interested party as defined in the
Enforcement Ordinance of the Investment Trust andInvestment Corporation Law or the internal rules of theAsset Management Company.

5. Broker Profiles
Ichigo Sapporo Minami 2 Nishi 3 Building
Name
Mizuho Trust & Banking Co., Ltd.
Address
1-2-1 Yaesu, Chuo-ku, Tokyo
Representative
Tetsuo Iimori, President & CEO
Principal Businesses
Trust banking, banking
CapitalJPY 247.4 billion (as of September 30, 2017)
Establishment Date
March 12, 2003
The broker does not have any capital, personnel, or business
relationship of note with Ichigo Office /IIA. In addition, theRelationship withbroker is not an interested party as defined in the
Enforcement Ordinance of the Investment Trust andIchigo Office or IIA
Investment Corporation Law or the internal rules of theAsset Management Company.
Brokerage Fee
The broker did not provide consent to disclose the fee.
Ichigo Daimyo Balcony
Name

Relationship with
Ichigo Office or IIA
Brokerage Fee

The broker (a Japanese company) did not provide consent todisclose its name.
The broker does not have any capital, personnel, or business
relationship of note with Ichigo Office /IIA. In addition, thebroker is not an interested party as defined in the
Enforcement Ordinance of the Investment Trust andInvestment Corporation Law or the internal rules of theAsset Management Company.
The broker did not provide consent to disclose the fee.

8

6. Forward Commitment
Because the Transaction Date is April 20, 2018, which exceeds one month by four days,
the sale of Ichigo Daimyo Balcony (hereafter, the “Sale”) constitutes a “forward
commitment” 1 by Ichigo Office as stipulated in the “Comprehensive Guidelines forSupervision of Financial Instruments Business Operators” by the Financial Services
Agency.
In the event of a violation of the provisions of the Sale by Ichigo Office or the buyer,
the other party shall have the right to terminate the Sale and claim an amount equivalent
to 20% of the purchase price as penalty.
Because Ichigo Office is the seller, it is highly unlikely that Ichigo Office will not beable to fulfill its obligations under the Sale.
1

Refers to a post-dated purchase and sales agreement under which payment andproperty delivery shall be made at least 1 month after the conclusion of the agreement,or any other agreement similar thereto.

7. Settlement Method(a) Ichigo Sapporo Minami 2 Nishi 3 Building
Lump-sum payment(b) Ichigo Daimyo Balcony
Deposit payment on contract date with the remainder fully paid on closing date
8. Use of Sale Proceeds
Ichigo Office will allocate part of the sale proceeds towards early repayment of existingloans, and the rest will be retained as cash-on-hand for future use, including asset
acquisitions and value-add capex. Details of early repayments of the loans will beannounced as soon as they are determined.
9. Earnings Outlook
Although the sales are forecast to generate gains on sale of c. JPY 610 million, theimpact on Ichigo Office’s earnings and dividend forecast for the April 2018 fiscal
period is minimal and therefore the forecast is unchanged. The gains on sale will be
retained and used by Ichigo Office to fund asset acquisitions and value-add capex togrow value for Ichigo Office shareholders.
For the October 2018 fiscal period, the impact on Ichigo Office’s earnings and dividend
forecast due to the decrease in operating revenue from these sales is also minimal andtherefore the forecast is unchanged.

9Portfolio Reference Information
Post-Sale 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
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

Area1

Asset Name

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

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
Cities10

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

1.7
1.4
1.0
0.8
0.6
0.8
0.4
0.6
1.0
0.9
0.6
0.3
0.3
0.9
0.6
0.4
0.4
2.6
0.9
0.7
0.4
0.8
1.0
0.3
0.4
1.1

4,705

2.4

6,710

3.4

1,650
1,158
3,010
2,130
5,500

0.8
0.6
1.5
1.1
2.8

1,940

1.0

No.
O-49
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 Kanda Ogawamachi Building
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

Central Tokyo
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
Cities11

Acquisition
Price2(JPY million)
2,210
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

1.1
1.0
3.0
2.0
0.8
1.8
0.6
1.0
0.9
0.7
3.7
1.9
2.0
2.4
2.4
1.3
1.2
1.6
1.9
0.9
2.3
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

2.6
1.5
1.0
1.4

3,420

1.7

2,340

1.2

1,330

0.7

No.

Area1

Asset Name

Four Major Regional
CitiesIchigo Shibuya Udagawacho Building
Central Tokyo
Win Gotanda Building
Central Tokyo
Ichigo Hongo Building
Tokyo Metro Area
Oimachi Center Building
Central Tokyo
Subtotal - Office (74 Assets)
Ichigo Fiesta Shibuya Building
Central Tokyo
Tokyo Metro Area
Ichigo Burg Omori Building
Tokyo Metro Area
Ichigo Machida East Building

O-84 Ichigo Minami Morimachi Building
O-85
O-86
O-87
O-88
Z-02
Z-03
Z-05
Z-09
Z-10
Z-11
Z-12
Z-13
Z-14

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 Shin Yokohama Arena Dori Building Tokyo Metro Area
Ichigo Kamata Building
Tokyo Metro Area
Subtotal - Others (9 Assets)
Total (83 Assets)
1

Acquisition
Price2(JPY million)% ofPortfolio3

1,040

0.5

3,500
3,100
2,300
1,680
178,497
1,970
3,218
1,310
1,210
2,400
1,620

1.8
1.6
1.2
0.9
91.2
1.0

2,430
1,700
1,400
17,258
195,755

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.
Assets O-02 through O-42 (31 assets) and assets Z-02 through Z-05 (3 assets) show theappraisal value as of October 31, 2011.
3% of Portfolio is based upon acquisition price.

12

1.6
0.7
0.6
1.2
0.8
1.2
0.9
0.7
8.8
100.0