Notice Concerning Acquisition and Disposition of Trust Beneficiary Right in Real Estate in Japan (Acquisition: JMF-Residence Sakuranomiya, JMF-Residence Miyakojima, JMF-Residence Ebie, Disposition: Round1 Sannomiya Station)

July 26, 2023

To all concerned parties:

Investment Corporation

Japan Metropolitan Fund Investment Corporation

(Tokyo Stock Exchange Company Code: 8953）

Representative: Masahiko Nishida, Executive Director

URL: https://www.jmf-reit.com/english/

Asset Management Company

KJR Management

Representative:	Naoki Suzuki, President & CEO
Inquiries:	Keita Araki, Executive Officer &
	Head of Metropolitan Division
	TEL: [phone]

Notice Concerning Acquisition and Disposition of Trust Beneficiary Right in Real Estate in Japan (Acquisition: JMF-Residence Sakuranomiya, JMF-Residence Miyakojima, JMF-Residence Ebie, Disposition: Round1 Sannomiya Station)

Japan Metropolitan Fund Investment Corporation ("JMF") announces today that KJR Management, JMF's asset manager (the "Asset Manager"), determined to acquire the trust beneficiary right in real estate in Japan and to dispose of the trust beneficiary right in real estate in Japan (hereinafter the property acquisition is referred to as the "Acquisition," the property disposition is referred to as the "Disposition," and the Acquisition and the Disposition are collectively referred to as the "Replacement") as outlined below.

1. Overview of the Replacement

1. Overview of the Acquisition

	Property name (Note 1)		JMF-Residence		JMF-Residence		JMF-Residence
			Sakuranomiya		Miyakojima		Ebie
	Location		Nakanocho, Miyakojima-ku,		Miyakojimahondori,		Ebie Fukushima-ku,
			Miyakojima-ku,Osaka-shi,
			Osaka-shi, Osaka		Osaka		Osaka-shi, Osaka
	Asset class				Residence
	Type of asset		Trust beneficiary right in real estate (Note 2)
	Acquisition price (Planned)		2,050 million yen		1,470 million yen		1,860 million yen
				Total 5,380 million yen
	Appraisal value (Note 3)		2,270 million yen		1,620 million yen		2,050 million yen
				Total 5,940 million yen
	Contract completion date				July 26, 2023
	Acquisition date (Scheduled)(Note4)		April 30, 2024		April 30, 2025
	Seller (Note 5)				Not disclosed
	Broker				None
	Acquisition funds			Cash on hand, Debt (Planned)

(Note 1) Property name is JMF's management name.

(Note 2) Agreement has been reached with the seller that the JMF-Residence Sakuranomiya, the JMF-Residence Miyakojima and the JMF-Residence Ebie will be established trusts with the properties as trust assets by the time of the acquisition and JMF will acquire the trust beneficiary rights of the trusts.

(Note3) Since the building is currently under construction, an appraisal agency conducted an "uncompleted building appraisal", which was enacted on November 1, 2014, in accordance with the real property appraisal standards (revised on May 1, 2014) specified by the Ministry of Land, Infrastructure, Transport and Tourism, and the appraisal amount indicated in the appraisal report is the appraisal value (this applies hereinafter).

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(Note 4) The properties have not yet been completed and JMF will acquire after construction is completed. The acquisition date is subject to change depending on the progress of the construction.

(Note 5) Not disclosed as the seller has not agreed to the disclosure. There are no capital, personal or business relationships to note between JMF/the Asset Manager and the seller.

1. Overview of the Disposition

Property name	Round1 Sannomiya Station
Location	1-17,Onoe-dori6-chome,Chuo-ku,Kobe-shi, Hyogo
Asset class	Retail
Disposition price (Planned)	3,800 million yen
Book value (Note 1)	3,158 million yen
Gains on disposition (Note 2)	Approx. 600 million yen
Contract completion date	July 26, 2023
Disposition date (Scheduled)	February 29, 2024
Purchaser (Note 3)	Not disclosed
Broker	None

(Note 1) Book value is the actual figures as of the end of February 2023 (the end of the 42nd fiscal period).

(Note 2) Gains on disposition are reference figures as the difference calculated at this time by subtracting book value and disposition-related expenses from the scheduled disposition price, and may differ from the actual gains on disposition.

(Note 3) Not disclosed as the purchaser has not agreed to the disclosure. There are no capital, personal or business relationships to note between JMF/the Asset Manager and the purchaser. The Disposition is mutual sales in exchange for the three residential properties described in "1) Overview of the Acquisition". It is agreed that in the event that the purchase and sale is not executed or is certain to be unable to be executed with respect to any of the assets to be acquired as of the scheduled acquisition date of the Acquisition, the seller and the purchaser will make every practicable and reasonable effort to acquire a comparable replacement property satisfactory to JMF within a reasonable period of time.

(Note 4) The purchaser has agreed to restore the multiple points identified in the engineering reports and other documents regarding each property at the responsibility of JMF.

2. Reason for the Replacement

Highlights

1. Conducting asset replacement of retail property with residential properties with the aim of increasing NAV per unit and NOI yield after depreciation
2. Disposed of retail property at a price 14% above the appraisal value, securing a profit on disposition of 600 million yen
3. Acquired three newly-built residential properties through mutual sales transactions for a price 9% below the appraisal value at a NOI yield of more than 4%

As there have been constant changes to the operating environment surrounding real estate, such as widespread e-commerce and remote working due to the rapid advancement in information technologies, and the trend of mixed-use by area and by property, JMF aims to optimize its portfolio in response to such changes. To this end, JMF will continue to secure stable earnings on a medium to long term basis and ensure steady growth of operating assets by promoting carefully-screened investment in retail facilities, office buildings, residences, hotels, and mixed-use properties used for a combination of those purposes, located mainly in urban areas.

Taking into consideration tenant substitutability and other future prospects, JMF disposed of the disposition property and has replaced it with three residential properties with stable profitability.

In the Disposition, a disposition price at a level approximately 14% above the appraisal value has been

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achieved, which is expected to result in a gain of approximately 600 million yen in the 44th fiscal period ending February 2024. Meanwhile, in the Acquisition, a NOI yield of more than 4% has been secured, and the acquisition of the three newly-built residential properties for a price approximately 9% below the appraisal value was enabled through mutual sales transactions with the seller and purchaser.

As a result, NAV per unit and NOI yield after depreciation are expected to increase due to the replacement, and it is estimated that this will contribute to an increase in the level of dividend payments in the future. Also, although the acquisition environment conditions in the real estate trading market remain harsh, it is believed that the establishment of new relationships through this replacement will lead to more acquisition opportunities in the future.

JMF will allocate the funds obtained from the Disposition to fund the Acquisition. Also, proceeds of the Disposition of approximately 600 million yen are expected to accrue in the 44th fiscal period ending February 2024, which JMF will allocate to dividend payments to ensure and boost the level of dividend payments.

Please also refer to "Supplemental Material Concerning Today's Press Release and Effect to EPU due to Latest Operating Topics" as of today.

3. Property Summary

For acquisition of the properties, JMF came to the decision based on evaluation of the following.

[JMF-Residence Sakuranomiya]

Location

• The Property is conveniently located within an approximately three-minute walk from Sakuranomiya Station on the JR Osaka Loop Line. From there it is a two-minute ride to Kyobashi Station and a four-minute ride to Osaka Station, so the Property provides good access to major business and commercial areas in Osaka City.
• The area surrounding the Property has convenient facilities such as supermarkets, clinics, drugstores and coin laundromats. It provides a pleasant living environment, being located opposite Kema Sakuranomiya Park and with Miyakojima Chuo Park nearby.

Building Spec

• A new 11-story apartment building with 119 units in total scheduled to be completed in August 2023. The unit layouts, which are all 1K of approximately 20 m2, meet the demands of singles. The units on the west side face Kema Sakuranomiya Park across the street, providing excellent light, ventilation and views.
• In addition to the full range of facilities in the rooms such as a TV monitor intercom, bathroom drying function, motion sensors, etc., the Property allows pets and has a pet foot-washing area on the first floor of the common area, giving it a competitive edge.

Potential

• As the number of households in Miyakojima-ku, where the Property is located, has increased by 1.3% year-on-year as of December 2022, stable residential demand is expected for the Property.

Source: City of Osaka "Estimated Population"

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■ Perspective Drawing / Property Location Map

Wide-area Map

*For enlarged map, please refer to QR code.

* The property is under construction and may	https://goo.gl/maps/uEivMkzx3wZqg3oC8
differ from when completed.

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Property name		JMF-Residence Sakuranomiya
Location		1-1, Nakanocho 5-chome,Miyakojima-ku,Osaka-shi, Osaka
Type of asset		Trust beneficiary right in real estate
Trustee		Sumitomo Mitsui Trust Bank, Limited
Trust period		April 30, 2024 -April 30, 2044 (Scheduled)
Land
		Land area		1,273.51 ㎡		Zoning	Quasi-industrial zone
		FAR / building-to-land ratio		200%／60%		Type of possession	Ownership
Building
		Structure / stories		11 stories above ground, RC-structure (Planned)
		Total floor area		3,318.63 ㎡ (Planned)			Type		Residence (Planned)
		Completion date		August 2023 (Scheduled)			Type of possession		Ownership
		Design		Ikuhara architecture office
		Construction		Okumura Engineering Corporation
		Constructional Inspector		Nihon Kakunin Architectures Inspection Center Co.,Ltd
		PML		－
Acquisition price		2,050 million yen
Appraisal value		2,270 million yen (as of July 1, 2023)
Appraiser		Japan Real Estate Institute
Tenant summary
		Number of tenants		－
		Annual rent		－
		Tenant leasehold / security		－
		deposit
		Total leased area		－			Occupancy rate		－
		Total leasable area		2,451.22 ㎡ (Planned)			(based on leased area)
Collateral conditions		None
Special notes		None
・Figures of less than one million yen are rounded down, and percentages are rounded to the nearest second decimal place.
・For the property, a pass-through master lease agreement is scheduled to concluded.
・"Location" represents the address of the property or the registered address of the building.
・"Land area" is based on descriptions in registry books.
・"Structure / stories", "Total floor area"	and "Type" are based on confirmed certificate notations.

・"Zoning" represents the classification of land by its use, stipulated in Section 1-1, Article 8 of the City Planning Act.

・With regard to "PML", since the construction is not yet completed, JMF plans to obtain an analysis report for earthquake risks by the time of acquisition.

・With regard to "Appraisal value", JMF plans to obtain an appraisal value by the time of acquisition.

・"Number of tenants", "Annual rent", "Tenant leasehold / security deposit", "Total leased area" and "Occupancy rate (based on leased area)" have been left blank (indicated with a dash), as the asset to be acquired is currently under construction.

・"Total leasable area" is based on design documents, etc.

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