Industrial & Infrastructure Fund Investment : Notice Concerning Disposition of One Property in Japan【IIF Osaka Nanko IT Solution Center】

July 6, 2022

To all concerned parties:

Investment Corporation

Industrial & Infrastructure Fund Investment Corporation

(Tokyo Stock Exchange Company Code: 3249）

Representative:	Kumi Honda, Executive Director
	URL: https://www.iif-reit.com/english/
Asset Management Company
KJR Management
Representative:	Naoki Suzuki,
	President & Representative Director
Inquiries:	Hidehiko Ueda,
	Head of Industrial Division

TEL: [phone]

Notice Concerning Disposition of One Property in Japan

【IIF Osaka Nanko IT Solution Center】

Industrial & Infrastructure Fund Investment Corporation ("IIF") announced today that KJR Management, IIF's asset manager (the "Asset Manager"), decided to dispose (the" Anticipated Disposition ") trust beneficiary rights in real estate (the" Property to be disposed" or the "Property") as outlined below.

1. Summary of the Anticipated Disposition

		Disposition	Book value	Difference between	Appraisal value	Contract	Delivery
Property		price	disposition price and
name	Type of asset	(Note 1)	(Note 2)	book value (Note 3)	(survey price)	signing date	date	Buyer
	(million yen)	(million yen)	(scheduled)	(scheduled)
		(million yen)	(million yen)
IIF Osaka	Trust							Special Purpose
Nanko IT	beneficiary	2,700	1,156	1,544	2,420	July 8,	August 17,	Company
Solution	right in real	2022	2022	(Not disclosed)
Center	estate							(Note 4)

(Note 1) The disposition price excludes expenses related to the disposition.

(Note 2) The book value is as of January 31, 2022.

(Note 3) The difference between disposition price and book value is shown for reference. The actual gain on sale is different from that value.

(Note 4) The buyer's profile cannot be disclosed as we have not obtained consent from the buyer with respect to disclosure. For the details, please refer to the following "4. Profile of Buyer".

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2. Reasons for Disposition

IIF has decided to dispose of this property from the viewpoint of creating a stable portfolio in med- to-long term. The Property has been under management since its acquisition in February 2013, however, risks such as decrease in future cash flow and tenant leaving are concerned as the fixed-term lease agreement with the current tenant expires at the end of February 2023, thus we have considered the future management policy of the Property. On the other hand, the building specifications and location characteristics of the Property, compared to the latest data centers, are insufficient in terms of building structure, floor height, load-bearing capacity, and securing available electricity supply, etc. Moreover, it is difficult to reconstruct the Property into the latest-model data center or convert it to other uses such as office, etc., in terms of its location characteristics and profitability. Furthermore, in the event of tenant replacement in the future, it is assumed that capital expenditures are incurred and the period to recruit new tenant takes longer.

As a result of comprehensively taking the above into consideration, we have determined that an early disposition of the Property at a price significantly higher than its book value and appraisal value, compared to holding and managing the Property in mid-to-long term, contributes to improving unitholder's value.

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3. Information about Property to be disposed

Property name

IIF Osaka Nanko IT Solution Center

Type of asset

Trust beneficiary right in real estate

Trustee

Mitsubishi UFJ Trust and Banking Corporation

Location

1-1-23,Nanko-Kita,Suminoe-ku,Osaka-shi, Osaka

Acquisition date

February 7, 2013

Acquisition price

1,150 million yen

Book value

1,156 million yen（As of January 31, 2022）

Land area

13,200.07 m2

Zoning

Semi-industrial area/Exclusive industrial area

Land

Floor area ratio/

400% (Note 1) /70%

building-to-land ratio

Type of possession

Ownership

Building structure/

Main Building:1-story basement and 6-story above ground: steel-

framed & reinforced concrete building with deck roofing

stories

Attached Building: Reinforced concreate structure with deck roof

Construction

Main Building: March 26, 1992

completion

Attached Building: March 31, 1992

Building

Total floor area

18,429.14 ㎡

Type of possession

Ownership

Use

Main Building: Office

Attached Building: Guard station

Earthquake PML

5.4%

Tenant

Nomura Research Institute, Ltd (One company)

(Number of tenants)

Total rental business

Not disclosed (Note 2)

revenue(annual)

Tenant

Security deposit

Not disclosed (Note 2)

summary

Total leased area

18,429.14 m2

Total leasable area

18,429.14m2

July 31,

January 31,

July 31,

January 31,

Current

Occupancy rate

2020

2021

2021

2022

date

(based on leased area)

100%

100%

100%

100%

100%

Collateral conditions

None

Special notes

None

（Note 1）The floor area ration of the Property is expanded to 400% pursuant to the "Sakishima Cosmosquare Area Project" though the original ratio is 281.62%.

（Note 2）This is not disclosed as we have not obtained the tenant's consent for disclosure.

4. Profile of Buyer

The buyer of the Property is a special purpose company formed in Japan by an overseas operating company, but the buyer's profile cannot be disclosed as we have not obtained consent from the buyer with respect to disclosure. There are no notable capital, personal or business relationships between IIF / the Asset Manager and the buyer, and there are no notable capital, personal or business relationships between interested parties and affiliated companies of IIF / the Asset Manager and those of the buyer. None of the buyer, its interested parties or its affiliated companies falls under the category of related parties of IIF / the Asset Manager.

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5. Broker

1. Profile of the Broker

(1)		Name	Jones Lang LaSalle K.K.
(2)		Location	2-13-10 Nagatacho, Chiyoda-ku, Tokyo
(3)		Name and Title of	President and Representative Director: Toshinobu Kasai
	Representatives
			 Consultancy and research of real estate investment
			 Real estate sales, exchanges, leasing and management, and agency &
(4)		Business	brokerage related to these businesses
			 Valuation and consultancy of real estate
			 All businesses related to or incidental to the preceding items
(5)		Capital	195 million yen (as of June 30, 2022)
(6)		Date Established	April 23, 1985
(7)		Relationship with IIF or Asset Manager
			There is no capital relationship to note between IIF / the asset manager and
		Capital Relationship	the relevant company. In addition, there are no noteworthy capital
		relationships between interested parties and affiliated companies of IIF / the
			asset manager and those of the relevant company.
		Personal Relationship	There is no personal relationship to note between IIF / the asset manager and
		the relevant company.
		Business Relationship	There is no business relationship to note between IIF / the asset manager and
		the relevant company.
			The relevant company does not fall under the category of a related party of IIF
		Related Parties	/ the asset manager. In addition, none of the related parties and affiliated
		Relationship	companies of the relevant company fall under the category of the related
			parties of IIF/ the asset manager.
(ii)	Commission
	The commission pertaining to this transaction cannot be disclosed as we have not obtained the
	necessary permission from the broker of the transaction to disclose the commission.

6. Matters relating to Forward Commitment Contracts

The purchase and sale agreement concerning the Anticipated Disposition falls within the definition of forward commitment contract, etc. (Note) as stipulated in the Comprehensive Guidelines for Supervision of Financial Instruments Business Operators, etc. In the case of a material breach of the contract (including a material breach of the representations and warranties) caused intentionally or negligently by IIF or the buyer, IIF or the buyer may notify fulfillment or correction to the breaching party in writing specifically indicating the breach for a reasonable period. In the event that such breach is not fulfilled or corrected within the period of such notice, the sale and purchase agreement may be cancelled. The breaching party shall compensate damages that the other party suffer due to or related to the breach under the contract (including the case that representations and warranties made in the agreement are untrue in any material respect) up to total amount equivalent to 10% of the disposition price.

(Note) A forward commitment contract, etc. is defined as any purchase and sale agreement or other type of agreement that is signed a month or more in advance of the actual date of the settlement or delivery pursuant to the agreement.

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7. Means of Payment

10% of the disposition price is received as a deposit promptly after execution of purchasing and sales agreement but by July 25, 2022. Remaining 90% of disposition price is received on the scheduled date of delivery. In the event that the buyer does not pay the deposit by the due date described above, IIF may cancel immediately the agreement without notification. In the case, the buyer shall pay a penalty equivalent to 10% of the disposition price to IIF.

8. Scheduled Date of Disposition

	IIF Osaka Nanko IT Solution Center
Contract signing date (scheduled)	July 8, 2022
Payment date of deposit (scheduled)	July 25, 2022
Payment date of remaining balance (scheduled)	August 17,	2022
Delivery date (scheduled)	August 17,	2022

9. Future Outlook of IIF

In connection with the disposition, a gain on sales of real estate is scheduled to be recorded in the fiscal period ending January 31, 2023 (31st fiscal period), and a certain level of increase in operating revenues, etc. is expected. On the other hand, for the fiscal period ending July 31, 2022 (30th Fiscal Period) and the fiscal period ending January 31, 2023 (31st Fiscal Period), we expect to incur temporary expenses such as demolition costs related to the redevelopment of IIF Atsugi Logistics Center III and IIF Hamura Logistics Center, and repair expenses and utilities costs related to IIF Shonan Health Innovation Park. In response to the increase in expenses, we plan to make a temporary distribution in excess of profits (distribution in reduction of capital contribution under the tax law) for the purpose of stabilizing the level of distribution. In addition, as of today, we are reviewing the forecasts of operating status, considering the impact of further increases in utility costs due to soaring energy prices and expenses related to redevelopment, etc., which are yet to be determined at this time. The updated forecast of operating status will be informed as details of the impact become clear.

Since the disposition is scheduled to be executed on August 17, 2022, the impact on the operating conditions for the fiscal period ending July 31, 2022 (30th fiscal period) is not material.

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