MORI TRUST Sogo Reit : Notice of Sale of Asset (Shinbashi Ekimae MTR Building) and Acquisition and Lease of Asset (Sendai MT Building)

July 28, 2022

Press Release

Issuer of Real Estate Investment Trust Securities

MORI TRUST Sogo Reit, Inc.

4-3-1 Toranomon, Minato-ku, Tokyo Masayuki Yagi,

Executive Director (TSE code 8961)

Asset Management Company:

MORI TRUST Asset Management Co., Ltd. Michio Yamamoto

President and Representative Director Contact:

Hiroshi Naito

General Manager, Strategic Management Department,

Sogo REIT Management Division

Phone: [phone]

Notice of Sale of Asset (Shinbashi Ekimae MTR Building) and Acquisition and Lease of Asset (Sendai MT Building)

Tokyo, July 28, 2022-Mori Trust Asset Management Co., Ltd., the asset management company which manages assets on behalf of Mori Trust Sogo Reit, Inc. (MTR), has announced the partial sale ("the Sale") of an asset and the acquisition ("the Acquisition") and the lease ("the Lease"; "the Acquisition", "the Lease" and "the Sale" are hereinafter referred to collectively as "the Transactions") of an asset. Details are as follows:

１． Summary of the Transactions
Ⅰ . Summary of the Sale
(1)	Type of asset:	Real estate trust beneficiary right
		(ⅰ)	co-ownership interest: 1/3
		(ⅱ)	co-ownership interest: 1/3
		(ⅲ)	co-ownership interest: 1/3
		Total co-ownership interest: 3/3
(2)	Property name:	Shinbashi Ekimae MTR Building (Hereinafter "the Property for Sale")
(3)	Sale price:	(ⅰ) 7,266,666,667 yen
		(ⅱ) 7,266,666,667 yen
		(ⅲ) 7,266,666,666 yen
(4)	Book value:	Total 21,800,000,000 yen (excluding sale overheads and taxes)
17,257 million yen（at the end of March 2022）
(5)	Profit:	(ⅰ) Approximately 1.3 billion yen
		(ⅱ) Approximately 1.3 billion yen

(ⅲ) Approximately 1.4 billion yen Approximately 4.1 billion yen in total

(The amounts include expenses for construction scheduled to be undertaken by the time of sale and expenses for this sale. The amounts are estimates because all expenses have not been finalized.)

Disclaimer:

This English language document is provided as a service and is not intended to be an official statement. Should a discrepancy be found, the Japanese original will always govern the meaning and interpretation.

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(6)	Planned contract date:	July 29, 2022
(7)	Planned closing date:	(ⅰ) February 28, 2023
		(ⅱ) August 31, 2023
		(ⅲ) February 29, 2024
(8)	Buyer:	MORI TRUST CO., LTD. (see 5. Buyer and Seller Overview below）
(9)	Settlement method:	Payment on each scheduled sale date
(10) Forward	The Sale falls under the category of Forward Commitment, etc. (denotes
	commitment, etc.:	postdated Purchase and Sales agreement where the settlement and delivery of
		the asset are to take place one month or more after the conclusion of agreement
		or similar; the same applies hereinafter) as provided in the Comprehensive
		Guideline for Supervision of Financial Instruments Business Operators, etc.
		set by the Financial Services Agency. Only when there is wilful or gross
		negligence on the part of the seller or the buyer in the Sale shall the
		counterparty be able to cancel the Purchase and Sales Agreement on the
		grounds of a serious breach of obligations under the Purchase and Sales
		Agreement pertaining to the Sale by the counterparty. When the Sale is
		canceled due to a breach of obligations, the breaching party shall pay an
		amount equivalent to 20% of the purchase/sales price as a penalty fee to the
		counterparty.
Ⅱ. Summary of the Acquisition
(1)	Type of asset:	Real estate trust beneficiary right
		(ⅰ)	co-ownership interest: 90,845/300,000
		(ⅱ)	co-ownership interest: 90,845/300,000
		(ⅲ)	co-ownership interest: 90,845/300,000
(2)	Property name:	Total co-ownership interest: 90,845/100,000
Sendai MT Building (Hereinafter "the Property for Acquisition")
(3)	Acquisition price:	(ⅰ)	5,266,666,667 yen
		(ⅱ)	5,266,666,667 yen
		(ⅲ)	5,266,666,666 yen

		Total 15,800,000,000 yen	(excluding purchase overheads and taxes)
(4)	Planned contract date:	July 29, 2022
(5)	Planned acquisition	(ⅰ) February 28, 2023
	date:	(ⅱ) August 31, 2023
		(ⅲ) February 29, 2024
(6)	Seller:	MORI TRUST CO., LTD. MORI TRUST CO., LTD.(see 5. Buyer and
		Seller Overview below）
(7)	Acquisition financing:	The sale proceeds from the Sale (scheduled)
(8)	Settlement method:	Payment on each scheduled acquisition date
(9)	Forward commitment,	The Acquisition falls under the category of Forward Commitment, etc. Only
	etc.:	when there is wilful or gross negligence on the part of the seller or the buyer
		in the Acquisition shall the counterparty be able to cancel the Purchase and
		Sales Agreement on the grounds of a serious breach of obligations under
		the Purchase and Sales Agreement pertaining to the Acquisition by the

counterparty. When the Acquisition is cancelled due to a breach of obligations, the breaching party shall pay an amount equivalent to 20% of purchase/sales price as a penalty fee to the counterparty.

Disclaimer:

This English language document is provided as a service and is not intended to be an official statement. Should a discrepancy be found, the Japanese original will always govern the meaning and interpretation.

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２． Reasons for the Transactions

With a tenant that had been leasing the whole building moving out in December 2021, MTR started to consider the possibility of either leasing the Property for Sale to new tenants or selling it.

Regarding leasing it to new tenants, demand for the renting of the whole building was weak partly due to the impact of COVID-19. Regarding the possibility of filling vacant spaces by leasing the Property for Sale to multiple tenants, MTR were not able to verify that demand would rise to the degree that all vacant spaces would be filled.

Regarding the sale of the property, MTR took into consideration a number of arrangements, including replacement with other property in particular, with the intent of securing stable revenue after the sale. Although there were a number of inquiries regarding the Property for Sale, MTR received no concrete proposals on replacement candidates from any party other than Mori Trust Co., Ltd. (sponsor). As a result of considering the Property for Acquisition proposed by the sponsor, MTR decided to proceed with the Transaction based on its judgment that drawing on sponsor support for replacement with this property will bolster unitholder value over the medium and long term. More specific reasons for the Transaction are as follows.

• While filling the vacant spaces of the Property for Sale through leasing is expected to require some time, stable revenues are secured quickly through replacement with any property that currently enjoys stable revenues.

• Although there is uncertainty regarding the recovery of the leasing market, stabilizing distributions on a medium-to-long term basis is possible by realizing the unrealized gains of the Property for Sale over three periods on a prorated basis and increasing the level of distributions while at the same time including some of these gains in retained earnings.

• Acquiring office buildings located in main regional cities, namely, properties offering relatively stable occupancy rates and relatively high yields compared with those situated in metropolitan areas, instead of large retail facilities located in metropolitan areas where the impact of COVID-19 is significant, leads to stable revenue and the maintenance of portfolio yields.

The following matters were of particular importance in MTR's decision to proceed with the Acquisition.

(1) Location

The acquired property is a 4-minute walk from JR Sendai Station, the largest terminal station in the Tohoku area. The JR Sendai Station East Exit area is a new office area. With the Tozai Line, a Sendai municipal subway which opened in December 2015, and the Sendai Station Eastside Development project in progress, the vitality of the area is expected to increase.

In addition, with the vacancy rate in Sendai-shi showing signs of decline recently, rent unit price is at stable levels.

Disclaimer:

This English language document is provided as a service and is not intended to be an official statement. Should a discrepancy be found, the Japanese original will always govern the meaning and interpretation.

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(2) Building and facilities

The Property for Acquisition, which is one of the largest properties in the JR Sendai Station East Exit area, is located on Miyagino-dori Avenue which extends from the Station, offering high visibility as a landmark of the east exit area. The area of the floor spaces on the standard floors is approximately 470 tsubo. These floor spaces, which are regularly shaped and divisible, may be leased flexibly to tenants whether they require large floor spaces or small ones.

The property, which is Japan's first high-rise building with a seismic isolation structure, offers an excellent earthquake resistance performance. Basically, the Great East Japan Earthquake caused no damage to the property's facilities, interior decorations, office furniture, fixtures or structure. In addition, equipped with emergency power generators that can be operated for longer than 24 hours and various types of emergency supplies, the property supports tenant companies by ensuring that their business contingency plans (BCP) are implemented effectively.

３． Details of Asset for Sale

Summary of Asset for Sale

	Land	2-28-2 Shimbashi, Minato-ku, Tokyo and other plots
Location	Building	2-28-11 Shimbashi, Minato-ku, Tokyo and other plots
	Address	2-8-5 Shimbashi, Minato-ku, Tokyo
Real estate usage	Retail Facility (Registered types of use: retail, office, storage, and
parking)
Ownership	Land	Owned
Building	Owned
Area	Land	1,069.88 m2 (Registered land area)
Building	7,820.45 m2 (Registered floor area)
		Steel frame, steel-framed reinforced concrete structure, reinforced
Construction		concrete structure flat roof, 8 floors above ground, 2 floors below
		ground (Registered structure)
Completion date	April 1999
Architect		Obayashi Corporation
Construction company	Obayashi Corporation
Acquisition date	April 25, 2007
Acquisition price	18,000 million yen
Appraisal value	21,800 million yen（Appraisal date: June 30, 2022）
Appraisal agency	Chuo-Nittochi Solutions Co.,Ltd.
Seismic risk (PML)	12.2%

Disclaimer:

This English language document is provided as a service and is not intended to be an official statement. Should a discrepancy be found, the Japanese original will always govern the meaning and interpretation.

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Collateral	None
Details of tenants
	Number of tenants	0
	Monthly rent	-
	Total rental area	-
	Total rentable area	8,055.00 m2
	Occupancy rate	-

（Note）MTR plans to split the sale into three parts, creating a trust for a one third co-ownership interest on February 28, 2023 to complete the first part of sale, creating an additional trust for a one third co- ownership interest on August 31, 2023 to complete the second part of the sale, and an additional trust for one third co-ownership interest on February 29, 2024 to complete the third part of the sale.

４． Details of Asset for Acquisition

1. Summary of Asset for Acquisition

Date of trust		February 28, 2023 (planned)
Trustee of trust	Mitsubishi UFJ Trust and Banking Corporation (planned)
Expiration of trust period	March 31, 2053 (planned)
	Land	4-2-1, Tsutsujigaoka, Miyagino-ku,Sendai-shi, Miyagi
Location	Building	4-2-1, Tsutsujigaoka, Miyagino-ku,Sendai-shi, Miyagi
	Address	4-2-3, Tsutsujigaoka, Miyagino-ku,Sendai-shi, Miyagi
Real estate usage	Office building (Registered types of use: office, retail, and parking)
Ownership	Land	Owned
Building	Owned (co-owned interest: 90.8450%)
		5,020.33 m2	(Land area registered for the entire building lot）
Area	Land	4,491.16 m2	(Land area registered for exclusively owned space to be
	owned）
	Building	42,941.53 m2	(Floor area registered for the entire building)
Construction		Reinforced concrete structure flat roof, 18 floors above ground, 2 floors
	below ground (registered structure)
Completion date	March 1999
Architect		TAISEI CORPORATION
Construction company	TAISEI CORPORATION
Construction inspection	Sendai, Miyagi
agency

Disclaimer:

This English language document is provided as a service and is not intended to be an official statement. Should a discrepancy be found, the Japanese original will always govern the meaning and interpretation.

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