Starts Proceed Investment : Notice Concerning Disposition Acquisition of Trust Beneficiary Interest in Domestic Real Estate

June 25, 2021

Translation Purpose Only

For Immediate Release

REIT Issuer

Starts Proceed Investment Corporation

3-1-8 Nihonbashi, Chuo-ku, Tokyo

Kazuya Hiraide, Executive Director

(Security Code: 8979)

Asset Management Company

Starts Asset Management Co., Ltd.

Kazuya Hiraide, Representative Director

Inquiries: Hideki Hamaguchi, General Manager of

Financial Control and Administration Division

TEL. [phone]

Notice Concerning Disposition and Acquisition of Trust Beneficiary Interest in Domestic Real Estate

Starts Proceed Investment Corporation ("Starts Proceed") announces that Starts Asset Management Co., Ltd., to which Starts Proceed entrusts the management of its assets (the "Asset Management Company"), today decided to conduct disposition and acquisition of trust beneficiary interest in domestic real estate (respectively the "Disposition" and the "Acquisition," and collectively the "Transaction"). The details are as follows.

Because the counterparty of the Acquisition is an interested party, etc. as defined in the Act on Investment Trusts and Investment Corporations (Act No.198, 1951, as amended (the "Investment Trusts Act")), the Asset Management Company, pursuant to its internal rules, has obtained consent from Starts Proceed to proceed with the transaction based on approval from the board of directors' meeting of Starts Proceed held today.

1. Overview of the Transaction

(1) Asset to Be Disposed Through the Disposition (the "Asset to Be Disposed")

Planned

Amount of

Planned

Planned

Assumed

difference between

disposition

Property

Buyer

contract

disposition

book value

planned disposition

Property name

price

No.

(Note 1)

conclusion

date

(thousand yen)

price and assumed

(thousand yen)

date

(Note 2)

(Note 4)

book value

(Note 3)

(thousand yen)

C-40

Proceed Motoyawata

A domestic

July 1,

July 1,

336,000

263,089

72,911

company

2021

2021

(Note 1) The buyer has not agreed to the disclosure and is thus not disclosed.

(Note 2) The settlement method for the property is scheduled to be settlement of the entire amount on the planned disposition date.

(Note 3) "Planned disposition price" does not include miscellaneous disposition-related expenses, fixed property taxes, city planning taxes, consumption taxes and local consumption taxes.

(Note 4) "Assumed book value" is the book value assumed as of the planned disposition date.

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(2) Asset to Be Acquired Through the Acquisition (the "Asset to Be Acquired")

Planned

Property

Property name

Seller

Planned contract

Planned acquisition date

acquisition price

No.

(Note 1)

conclusion date

(Note 2)

(thousand yen)

(Note 3)

C-86

Proceed Shinkawa

Starts Development

July 2, 2021

July 2, 2021

500,000

Corporation

(Note 1) The seller is an interested party, etc. of the Asset Management Company as defined in the Investment Trusts Act. For details, please refer to "5. Overview of Counterparty of the Transaction" below.

(Note 2) The settlement method is scheduled to be settlement of the entire amount on the planned acquisition date. The acquisition financing is scheduled to be the funds from the disposition of the Asset to Be Disposed and cash on hand.

(Note 3) "Planned acquisition price" does not include miscellaneous acquisition related expenses, fixed property taxes, city planning taxes, consumption taxes and local consumption taxes.

2. Reason for the Transaction

Starts Proceed is promoting an asset replacement strategy to enhance the competitiveness of the portfolio. It conducted a careful examination of its portfolio in terms of management status over the medium to long term as well as individual property characteristics, etc. based on such strategy. As a result, Starts Proceed decided on the Disposition of the Asset to Be Disposed upon comprehensively considering the market trends and the competitiveness of the Asset to Be Disposed as well as the acquisition of the Asset to Be Acquired as an asset replacing the Asset to Be Disposed.

As the property is 17 years old, the disposition of the Asset to Be Disposed was judged to be ideal at this point in time upon comprehensively taking into account the impacts to NOI caused by maintenance overhead including daily repair work.

In addition, the decision was made to acquire the Asset to Be Acquired based on the asset management targets and policies provided in the Articles of Incorporation of Starts Proceed on the judgment that it is an asset featuring a combination of younger property age, profitability, growth potential and stability as outlined in "3. Description of the Asset to Be Disposed and Asset to Be Acquired (2) Description of the Asset to Be Acquired Area/Property characteristics" below.

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3. Description of the Asset to Be Disposed and Asset to Be Acquired

(1) Description of the Asset to Be Disposed C-40: Proceed Motoyawata

	Overview of specified asset	Overview of leasing (as of May 31, 2021)
Type of specified asset	Trust beneficiary interest	Total number of tenants	1
Use		Rental housing	Number of leased units	24 (25)
Planned disposition price	336,000 thousand yen	(Total number of leasable units)
		5-10-8 Minamiyawata,	Number of leased parking units
Location (Address)	(Total number of leasable parking	1 (1)
Ichikawa, Chiba
		units)
PM Company / ML Company	Starts Amenity Corporation	Leased floor area	577.69 m2
Master lease type	Pass-through	Total leasable floor area	602.39 m2
Trustee		Resona Bank, Limited	Annual rent revenue	21,732 thousand yen
Period of trust agreement	From: February 9, 2007	Security and guarantee deposits, etc.	1,880 thousand yen
To: October 31, 2027	Occupancy rate	95.9%
	Ownership form	Proprietorship	Overview of appraisal report
	Site area	168.80 m2	Appraiser	Chuo Real Estate
	Appraisal Co., Ltd.
Land	Zoning	Commercial district	Date of appraisal	April 30, 2021
	Building-to-land	80%	Appraisal value	336,000 thousand yen
	ratio
	Floor-area ratio	400%	Overview of building condition evaluation report
	Ownership form	Proprietorship	Evaluation company	Japan Constructive
	Inspect Association
	Structure	Steel-frame structure with	Date of evaluation	October 2020
	flat roof / 10F
Building
Construction	January 9, 2004	Building replacement value	205,101 thousand yen
	completion date
	Total floor area	707.68 m2	Long-term repair costs (12 years)	11,344 thousand yen
	Use	Apartment complex	PML (Date of evaluation: April 2021)	4.4%
		Collateral
None

Special notations / Status of the property

(structure and other matters that have significant impact on the price of the investment property)

1. The road abutting the east side of the property is a city planning road (3・5・1 Minamiyawata Yawata Line) established under the City Planning Act. Certain restrictions apply within the line of approx. 3.5 meters from the boundary line of the road (building restrictions as laid out in Article 53 of the City Planning Act) so that the types of buildings allowed for construction are limited and construction requires permission. However, with regard to the property, there are no buildings within the area where limitations apply

Remarks

• 4-minutewalk from Moto-Yawata Station on the JR Sobu Line and a 6-minute walk from Moto-Yawata Station on the Toei Subway Shinjuku Line and Keisei Main Line

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(2) Description of the Asset to Be Acquired

C-86: Proceed Shinkawa

	Overview of specified asset	Overview of leasing (as of May 31, 2021)
Type of specified asset	Trust beneficiary interest	Total number of tenants	1
Use		Rental housing	Number of leased units	17(18)
Planned acquisition price	500,000 thousand yen	(Total number of leasable units)
		1-25-14 Shinkawa,	Number of leased parking units
Location (Address)	(Total number of leasable parking	1(1)
Chuo-ku, Tokyo
		units)
PM Company / ML Company	Starts Amenity Corporation	Leased floor area	540.42 m2
Master lease type	Pass-through	Total leasable floor area	579.96 m2
Trustee		Starts Trust Co., Ltd.	Annual rent revenue	24,744 thousand yen
Period of trust agreement	From: June 1, 2020	Security and guarantee deposits, etc.	1,992 thousand yen
To: April 30, 2051	Occupancy rate	93.2%
	Ownership form	Proprietorship	Overview of appraisal report
	Site area	136.18 m2	Appraiser	Chuo Real Estate
	Appraisal Co., Ltd.
Land	Zoning	Commercial district	Date of appraisal	June 1, 2021
	Building-to-land	100%	Appraisal value	522,000 thousand yen
	ratio
	Floor-area ratio	480%	Overview of building condition evaluation report
	Ownership form	Proprietorship	Evaluation company	Tokio Marine & Nichido
	Risk Consulting Co., Ltd.
		Steel framed reinforced
	Structure	concrete structure with flat	Date of evaluation	May 2021
Building		roof / 10F
Construction	August 5, 2009	Building replacement value	205,900 thousand yen
	completion date
	Total floor area	818.50 m2	Long-term repair costs (12 years)	12,091 thousand yen
	Use	Apartment complex and	PML (Date of evaluation: May 2021)	8.2%
	garage

Collateral

None

Special notations / Status of the property

(structure and other matters that have significant impact on the price of the investment property)

1． The building-to-land ratio of the property is essentially 80% as it stands in a commercial district. However, due to the mitigation measures for fireproof buildings in fire-prevention districts, it is set at 100%.

2． The floor-area ratio of the property is essentially 500% as it stands in a commercial district. However, due to the restriction from the width of the front road, it is set at 480%.

Remarks

A 9-minute walk from Kayabacho Station on the Tokyo Metro Hibiya Line and Tozai Line and a 10-minute walk from Hatchobori Station on the Tokyo Metro Hibiya Line and JR Keiyo Line

Area/Property characteristics

The Shinkawa area is located to the southeast of the Nihonbashi Kabutocho and Nihonbashi Kayabacho areas where the Tokyo Stock Exchange is located in addition to many securities firms. The area therefore hosts an assemblage of related companies. It is also adjacent to Marunouchi, Otemachi, Yaesu and other business areas around Tokyo Station, making it highly convenient. In recent years, there have been developments of many condominiums targeting business people working in downtown Tokyo. Also, the bank along Sumida River has been developed as Chuo Ward's Shinkawa Park, which serves as a place of relaxation for residents.

The area surrounding the property is a mixed commercial-residential area with medium- to high-rise condominiums, office buildings, etc., being located behind Eitai-dori Street and Kajibashi-dori Street and within walking distance of Hatchobori Station and Kayabacho Station.

Strong demand is anticipated for the property as the building and equipment specifications meet the basic standards and the property is suitable for single persons and working bachelors owing to the excellent location, as well as based on the property's occupancy status.

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[Explanation]

1. "Type of specified asset" indicates the type as a specified asset, such as trust beneficiary interests, real estate, etc. "Use" is indicated in accordance with the stated categories in "Part I. Fund Information, Item 1. Situation of the Fund, 2. Investment Policies, (1) Investment Policies, 3) Portfolio Construction Policies" set out in the Securities Report.
2. "Planned disposition price" and "Planned acquisition price" indicate the amount (transaction price stated in the trust beneficiary interest transaction agreement, etc.) excluding the various expenses (real estate transaction brokerage fee, etc.) required for the disposition and acquisition of the Asset to Be Disposed and Asset to Be Acquired.
3. "PM Company / ML Company" indicates the property management company that has concluded a property management agreement and the master lease company that has concluded a master lease agreement, agreements that are effective as of today for each property, or indicates the property management company that is scheduled to conclude a property management agreement and the master lease company that is scheduled to conclude a master lease agreement at the time of acquisition by Starts Proceed. For "Master lease type," "Pass-through" is indicated for a master lease in which the trustee and the master lease company has agreed that the master lease company pays the same amount as the rent stated in the sublease agreement concluded between the master lease company and the end tenant to the trustee.
4. "Trustee" indicates the trustee or planned trustee at the time of disposition or acquisition by Starts Proceed. As to "Period of trust agreement," the starting date is the effective date of the trust agreement that is effective as of today (for trust agreement that is scheduled to be concluded, the scheduled effective date is indicated), and the ending date is the termination date of the trust agreement that is scheduled to be agreed (including agreement for amendments) between the parties of the trust agreement on the same date as acquisition by Starts Proceed.
5. Concerning the description of "Land" and "Building"

• "Site area," "Structure," "Construction completion date" and "Total floor area" are in accordance with information described in the certificate of entry in real estate registration. For properties that have annex buildings, the annex buildings are not included in "Total floor area." However, it may be different if the description has been found incorrect as a result of investigation.
• "Zoning" indicates the type of zoning district classified in accordance with Article 8, Paragraph 1, Item 1 of the City Planning Act (Act No. 100 of 1968, as amended).
• "Building-to-landratio" is the ratio of the building area of the building to the site area as stipulated in Article 53 of the Building Standards Act (Act No. 201 of 1950, as amended; the "Building Standards Act") and indicates the maximum figures stipulated in the city plan in accordance with the zoning, etc. Pursuant to Article 53, Paragraph 3 or Paragraph 5 of the Building Standards Act, corner lots in a block and fireproof buildings, etc. in fire prevention districts may be subject to mitigation of building-to-land ratio or may not be subject to building-to-land ratio restriction itself. There are cases in which separate restrictions, mitigations, etc. may apply in accordance with the Building Standards Act or other administrative laws and regulations. In such cases, figures after application of such restrictions, mitigations, etc. are indicated.
• "Floor-arearatio" is the ratio of the total floor area of the building to the site area as stipulated in Article 52 of the Building Standards Act and indicates the maximum figures stipulated in the city plan in accordance with the zoning, etc. Pursuant to Article 52, Paragraph 2 or Paragraph 9 of the Building Standards Act, restrictions due to frontage road width rules or mitigations due to specified road rules may apply in some cases. There are cases in which separate restrictions, mitigations, etc. may apply in accordance with the Building Standards Act or other administrative laws and regulations. In such cases, figures after application of such restrictions, mitigations, etc. are indicated.
• If more than one zoning exists for one property, pursuant to Article 53, Paragraph 2 or Article 52, Paragraph 7 of the Building Standards Act, "Building-to-

land ratio" and "Floor-area ratio" indicate the weighted average figures in accordance with the size of area of each zoning that are on the design drawing / completion drawing, etc. from the time of construction.

6. Concerning the description of "Overview of leasing"

• For all Asset to Be Disposed and Asset to Be Acquired, a master lease agreement with Starts Amenity Corporation as a lessee and a sublessor is concluded or scheduled to be concluded among Starts Proceed, the trustee and Starts Amenity Corporation at the time of disposition or acquisition by Starts Proceed. Thus "Total number of tenants" indicates the number with the master lease company as a tenant as of now or after the acquisition.
• "Number of leased units (Total number of leasable units)," "Leased floor area," "Total leasable floor area," "Annual rent revenue" and "Security and guarantee deposits, etc." are indicated in accordance with the same standards as the description of notes for the table illustrated in "Part I. Fund Information, Item 1. Situation of the Fund, 5. Management Status, (2) Investment Assets, 3) Other Major Investment Assets, (iv) Overview of Leasing Status, a. Overview of Leasing Status" set out in the Securities Report. "Number of leased parking units (Total number of leasable parking units)" is indicated in accordance with the same standards as the description of notes at the beginning of "Part I. Fund Information, Item 1. Situation of the Fund, 5. Management Status, (2) Investment Assets, 3) Other Major Investment Assets, (vi) Individual Overview of Real Estate in Trust for Acquired Assets" set out in the Securities Report.
• "Occupancy rate" is the ratio of leased floor area to each tenant to the total leasable floor area of each property and is rounded off to the first decimal place.

7. "Overview of appraisal report" describes the content indicated in the appraisal report prepared for the Asset to Be Disposed and Asset to Be Acquired.

8. Concerning the description of "Overview of building condition evaluation report"

• Contents described in the building condition evaluation report and the seismic risk evaluation report that were prepared for the Asset to Be Disposed and Asset to Be Acquired are provided.
• "Building replacement value" is the total amount of appropriate costs required assuming to reconstruct the subject building on the date of evaluation.
• "Long-termrepair costs" is the total amount of expected long-term repair costs (12 years) based on the building condition evaluation report.
• Figures of "PML" are the figures in the report prepared by Tokio Marine & Nichido Risk Consulting Co., Ltd. "PML" represents the probable maximum loss that the subject facility or group of facilities may suffer from an earthquake with a 10% probability of exceedance in 50 years (earthquake corresponding

to a 475-year return period) by expressing the amount of physical loss corresponding to a 90% non-exceedance probability in the event of such earthquake as a percentage of the building replacement value.

1. "Collateral" describes the existence/non-existence of collateral as on the date of disposition and acquisition of the Asset to Be Disposed and Asset to Be Acquired.
2. Concerning the description of "Special notations / Status of the property (structure and other matters that have significant impact on the price of the investment property)"

• In principle, it describes (1) the rights of third parties other than the tenants housed in the Asset to Be Disposed and Asset to Be Acquired and restrictions, etc. based on such rights, and (2) restrictions, etc. from administrative laws and regulations related to the Asset to Be Disposed and Asset to Be Acquired, as of today. In case a specific description refers to fact situations as on the date of disposition and acquisition by Starts Proceed, description is made based on future prediction that is as rational as possible as of today.
• When the type of a specified asset that Starts Proceed is acquiring is trust beneficiary interest, description of "acquired by Starts Proceed" also refers to

acquisition by Starts Proceed through trust beneficiary interest. In such cases, legal owner or right holder of the real estate that is the trust asset of the trust beneficiary interest is the trustee, and Starts Proceed acquires the trust beneficiary interest.

11. "Area/Property characteristics" is based on the description on the appraisal report, market report, etc. prepared for the Asset to Be Acquired.

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