Japan Real Estate Investment : Announcement of Acquisition of Trust Beneficiary Interest in Domestic Real Estate

NEWS RELEASE

September 28, 2021

For Immediate Release

Investment Corporation

Japan Real Estate Investment Corporation

Yutaka Yanagisawa, Executive Director

(TSE code: 8952)

Asset Management Company

Japan Real Estate Asset Management Co., Ltd.

Naoki Umeda, President & CEO

Contact: Masaru Motooka

Executive Officer & General Manager

Planning Department

Phone: +81‐3‐3211‐7951

Announcement of Acquisition of

Trust Beneficiary Interest in Domestic Real Estate

Japan Real Estate Investment Corporation ("JRE") hereby announces that Japan Real Estate Asset Management Co., Ltd. ("JRE‐AM"), the asset management company to which JRE entrusts asset investment, today decided to acquire trust beneficiary interest in domestic real estate as follows:

1. Outline of the Acquisition

	GRAND FRONT OSAKA		GRAND FRONT OSAKA
Property name	(Umekita Plaza and
	(North Building)
	South Building)
Acquisition price (planned)	JPY 11,250 million		JPY 9,750 million
Seller	Mitsubishi Estate Co., Ltd.
Brokerage		No
Decision date	September 28, 2021
Contract date	October 1, 2021
Transfer date (scheduled)	October 1, 2021
Payment date (scheduled)	October 1, 2021

2. Reason for the Acquisition

In recent years, the roles and functions expected of offices have undergone change against the backdrop of the development of IT, growing environmental awareness, diversification of work styles, and such. In view of the change in the business environment resulting from these new trends, JRE has established a policy to strategically replace its portfolio properties under a proactive perspective, focusing on the medium‐ to long‐term competitiveness of the portfolio.

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GRAND FRONT OSAKA (Note) is a large‐scale complex facility consisting of office, retail, hotel and other sections and is located in the Umeda area which contains the largest terminal in western Japan. JRE believes that the acquisition of the property is in line with its portfolio property replacement policy and that its acquisition will lead to enhancing the portfolio's competitiveness in the medium to long term.

(Note) "GRAND FRONT OSAKA" refers collectively to the properties to be acquired, namely "GRAND FRONT OSAKA (Umekita Plaza and South Building)" and "GRAND FRONT OSAKA (North Building)."

The properties were evaluated for the following points in particular:

1. Superior location
   The north district of the Osaka Station in which GRAND FRONT OSAKA is situated is the largest terminal in western Japan where seven stations and 12 railway lines converge. The property is directly connected to JR Osaka Station via a pedestrian deck and enjoys close proximity to Umeda Station on the Hankyu and Ha nshin lines as well as various subway lines, making transportation extremely convenient.
   Moreover, in the adjacent redevelopment area, the Umekita 2nd Phase project is underway, headed by Mitsubishi Estate, and Umekita (Osaka) Underground Station is scheduled to be opened in spring 2023 by JR West Japan while mutual operation of a new railway line passing through the station is also planned, and further enhancement of terminal functions is anticipated.
2. Excellent building and facility
   GRAND FRONT OSAKA consists of three high‐rise buildings completed in 2013. The office floors of each building provide expansive spaces with no columns, offering comfortable office environments where the latest technologies as of the time of completion have been introduced.
   Moreover, there are excellent amenity spaces which increase comfort for employees, such as green rooftop gardens, lounges exclusively for tenants and relaxation corners with pleasant views.
   In terms of the environment, the property has a high standard of safety due to its excellent earthquake resistance from adoption of the latest damping structure. The property also forms a network of water and greenery in unison with the several blocks with greening, water features, etc. on rooftops and on the ground, realizing a harmonious environment as a whole.
   Moreover, the property employed highly effective low‐CO2 technologies such as natural ventilation, high‐efficiency heat source systems, and solar power generators as well as establishing a network of Building Energy Management Systems (BEMS) of each of its buildings which centralizes control of energy consumption as an entire property. As initiatives for the entire development area, an organization called Town Management Organization (TMO) is set up and it develops city‐wide CO2 reduction management in a bid to realize a low‐carbon society.
   As such, the property has been selected by the Ministry of Land, Infrastructure, Transport and Tourism as "Leading Low‐CO2 Model Business for Residences and Buildings", serving as an "environmental showcase leading the realization of a sustainable society."
3. Knowledge Capital: A base for the creation of knowledge
   Umekita area, where the property is located, is a core base of Osaka's special growth strategy zone, and has been redeveloped for the purpose of enhancing the international competitiveness of the Kansai's urban area.
   The anterior development district of Umekita forms a base for the gathering and interaction of international information and personnel with the concept of a "city" that generates diverse innovation. GRAND FRONT OSAKA, which is located in this district, is host to Knowledge Capital, an intellectual creation base suitable for generating new businesses.
   Knowledge Capital has large and small offices, salons, labs, showrooms, theaters and other facilities where people can interact, as well as functions for their operation.

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3. Description of the Properties to Be Acquired

1. GRAND FRONT OSAKA (Umekita Plaza and South Building)

Property name	GRAND FRONT OSAKA (Umekita Plaza and South Building)
Type of specified asset	Trust beneficiary interest in domestic real estate
Type of ownership
		49% quasi co‐ownership interest in the following trust beneficiary
		interest:
	Land	・Ownership (co‐ownership interest: 10/100)
		・Leasehold (quasi co‐ownership interest: 10/100)
		*Share of right of site: 4.9%
		49% quasi co‐ownership interest in the following trust beneficiary
	Building	interest:
	・Ownership (co‐ownership interest: 10/100)
		*Share of ownership of building: 4.9%
Trustee	Sumitomo Mitsui Trust Bank, Limited
Location (Building address)	4‐1 (Umekita Plaza)	& 4‐20 (South Building) Ofukacho, Kita‐ku,
Osaka
Usage	Shops (Umekita Plaza); Offices and shops (South Building)
Area
	Land	20,488.08 m2 (area stated in the real property registry)
	*Includes 9,917 m2 of leased area.
	Building	10,226.10 m2 (Umekita Plaza), 181,371.39 m2 (South Building)
	(gross floor area stated in the real property registry)
		RC/S structure with flat roof, 2 stories above the ground and 2
Structure	basement levels (Umekita Plaza)
S/SRC structure with flat roof, 38 stories above the ground and 3
		basement levels (South Building)
Typical floor area	2,678.027 m2 (South Building Tower A)
Completion	February 2013 (Umekita Plaza); March 2013 (South Building)
Matters related to	PML: 3.6% (based on the seismic risk assessment report by Tokio
earthquake resistance	Marine dR Co., Ltd.)
Mortgage	No
Appraisal value	JPY 11,700 million
(Date of value)	(as of September 1, 2021)
Appraisal institution	Chuo Real Estate Appraisal Co., Ltd.
Outline of lease
	Total number of tenants	2 (268)
	Total rent revenues	Undisclosed
	Security deposit	Undisclosed
	Total leased area	5,893 m2 (5,117 m2)
	Net rentable area	5,893 m2 (5,190 m2)
	Occupancy rate	July 31, 2021		100.0% (98.6%)
		Due to the co‐owners principle agreement, transfer of the
Special notes	co‐ownership interest owned by the trustee or trust beneficiary
interest owned by JRE requires the consent of the property's
		co‐owners, etc.
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(Note)

• "Area," "Structure," and "Completion" show the same entries stated in the real property registry. "Usage," however, indicates the main entries, among those listed in the real property registry.
• "Outline of lease" is based on the data provided by the seller and calculated on the basis of JRE's interest. "Total number of tenants" shows the number pertaining to the entire property, but as the property is leased in bulk under pass‐through master lease agreements, the total number of tenants is indicated as 2 based on the number of lessees to whom the property is leased in bulk. The figure indicated in parentheses is the total number of end tenants as of the end of July 2021.
• "Total rent revenues" and "Security deposit" are undisclosed as the consent of the co‐owners, etc. has not been obtained.
• "Net rentable area" and "Total leased area" are indicated as the sum of the contracted areas stipulated in the master lease agreements. The area in parentheses for "Net rentable area" is the area believed to be able to be leased to end tenants as of the end of July 2021 while the area in parentheses for "Total leased area" is the total area contracted with end tenants as of the end of July 2021. Warehouses, parking lots, machine rooms, etc. are not included.
• The figure indicated in parentheses in "Occupancy rate" is the ratio of the area leased to end tenants against the total rentable area as of the end of July 2021.

・NOI (Net Operating Income): JPY 394 million a year (an estimated amount)

・Depreciation: JPY 92 million a year (an estimated amount)

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(2) GRAND FRONT OSAKA (North Building)

Property name	GRAND FRONT OSAKA (North Building)
Type of specified asset	Trust beneficiary interest in domestic real estate
Type of ownership
		49% quasi co‐ownership interest in the following trust beneficiary
	Land	interest:
	・Ownership (co‐ownership interest: 10/100)
		*Share of right of site: 4.9%
		49% quasi co‐ownership interest in the following trust beneficiary
	Building	interest:
	・Ownership (co‐ownership interest: 10/100)
		*Share of ownership of building: 4.9%
Trustee	Sumitomo Mitsui Trust Bank, Limited
Location (Building address)	3‐1 Ofukacho, Kita‐ku, Osaka
Usage	Offices, hotel and shops
Area
	Land	22,680.03 m2 (area stated in the real property registry)
	Building	290,030.59 m2 (gross floor area stated in the real property registry)
Structure	S/SRC structure with flat roof, 38 stories above the ground and 3
basement levels
Typical floor area	2,613.26 m2 (Tower B), 1,739.85 m2 (Tower C)
Completion	February 2013
Matters related to earthquake	PML: 2.7% (based on the seismic risk assessment report by Tokio
resistance	Marine dR Co., Ltd.)
Mortgage	No
Appraisal value	JPY 10,100 million
(Date of value)	(as of September 1, 2021)
Appraisal institution	Chuo Real Estate Appraisal Co., Ltd.
Outline of lease
	Total number of tenants	5 (125)
	Total rent revenues	Undisclosed
	Security deposit	Undisclosed
	Total leased area	8,743 m2 (8,250 m2)
	Net rentable area	8,743 m2 (8,462 m2)
	Occupancy rate	July 31, 2021	100.0% (97.5%)
		Due to the co‐owners principle agreement, transfer of the
Special notes	co‐ownership interest owned by the trustee or trust beneficiary
interest owned by JRE requires the consent of the property's
		co‐owners, etc.

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