United Urban Investment : Notice Concerning Acquisition and Agreements Concerning Development Project (Miyanomori Nijo Development Project)

For Translation Purposes Only

July 15, 2021

For Immediate Release

United Urban Investment Corporation

Ikuo Yoshida

Executive Officer

(Securities Code: 8960)

Asset Management Company:

Japan REIT Advisors Co., Ltd.

Norimasa Gaun

President and CEO

Inquiries:

Takehide Sasaki

Chief Financial Officer

TEL: [phone]

Notice Concerning Acquisition and Agreements Concerning Development Project

(Miyanomori Nijo Development Project)

United Urban Investment Corporation ("United Urban") hereby announces that Japan REIT Advisors Co., Ltd. ("JRA"), the asset management company to which United Urban entrusts asset management services, decided today to acquire a real estate (the "Acquisition") for a development site (the "Property") as well as to conclude agreements associated with the development project of an elderly housing on the Property (the "Project") as set forth below.

1. Summary of the Acquisition

1.	Asset to be Acquired	:	Real estate (Note 1)
2.	Property Name	: Miyanomori Nijo Development Site
3.	Scheduled Acquisition Price	:	¥370 million (Note 2)
4.	Scheduled Agreement Date	:	July 16, 2021
			(conclusion of the purchase and sale agreement of real estate)
5.	Scheduled Acquisition (Delivery) Date	:	September 30, 2021
			(transfer of ownership)
6.	Seller	:	Individual
7.	Financing	: Cash on hand (scheduled) (Note 3)
8.	Scheduled Date of Payment	: September 30, 2021 and after the move-out date
			(December 23, 2021 and onward) (Note 1, 4, 5)

(Notes)

1. The Asset to be Acquired includes the existing building on the Property. Until the start of the Project, United Urban will conclude a temporary lease agreement with the seller. The existing building will be demolished after the seller's move-out.
2. The Scheduled Acquisition Price is the sales price stated in the purchase and sale agreement, and excludes acquisition costs, property taxes, city planning taxes and consumption taxes and other costs. The same shall apply hereafter.
3. As of today, the Financing measure is scheduled to be cash on hand. In case of borrowing, etc., it will be announced once it is determined.
4. For details of the Scheduled Date of Payment etc., please refer to "5. Methods and Scheduled Dates of Settlement for the Acquisition and Construction Cost".
5. The completion of the seller's move-out of the existing building is scheduled on December 23, 2021, but it may be extended until the end of March 2022 in consultation with the seller.

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2. Details of the Acquisition

1. Reasons for the Acquisition and the Project

United Urban proceeds the Acquisition and the Project to further enhance its portfolio in accordance with the basic asset management policy and its investment approach prescribed in its Articles of Incorporation. The details are as follows.

1) Location

The Property is a 9-minute walk from Nishi nijuhatchome Station on the Tozai Subway Line. It has a good access to Odori Station, the center of Sapporo City, via a 7-minute subway ride from Nishi nijuhatchome Station. Miyanomori area, a location of the Property, is full of nature, and is positioned as a high-class residential area centered on single-family housing in Sapporo. In addition to retail facilities such as supermarkets and drug stores, hospitals and schools, Miyanomori area is also a location of Maruyama Park, which includes an athletics track field and a baseball stadium and makes the area one of the most sought-after residential areas in the city.

2) The Project

United Urban acquires the Property and develops an elderly housing, as residential demand for the elderly is on the rise. This is the first project that United Urban leads as a business owner, and is also the first initiative to invest in an elderly housing. United Urban invests in real estate for all asset types and regions by making full use of various measures, and strives to improve portfolio's profitability and mid- to long- term unitholder's value. United Urban sets the Project as an important milestone in line with the investment policy.

JRA has professionals with knowledge about real estate development obtained through different types of investment schemes for development projects. In addition, Marubeni Corporation, a sponsor of United Urban and who has completed many development projects on their own, is responsible for a project management of the Project. As such, all the risks associated with the development, including schedule delays, cost overruns, and risks related to administrative laws and ordinances related to real estate development, will be managed.

Construction and design works are conducted by NIHON KENSETSU CO.LTD., a construction company with full of track records and experience in a wide range of construction works including elderly facilities. Risks of physical and legal defects in the developed housing and risks of completion of the construction works will be controlled.

Based on the "Guidelines for Utilization of Healthcare REIT for Elderly Housing, etc. (Ministry of Land, Infrastructure, Transport and Tourism, June 27, 2014)", all the required procedures for investment management of elderly housing are in process. United Urban will announce once it is all set.

3) Tenants

Tenant with whom United Urban enters into a reservation lease agreement has sufficient track records and proven credentials for nursing care business and is one of the leading operators in the business in terms of both the number of operating facilities and units. Under the reservation lease agreement, United Urban will mitigate risks of tenant leasing.

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(2) Overview of the Property

Property Name	Miyanomori Nijo Development Site
Type of the Asset	Real estate
Location (Lot number) (Note)	6-35 Miyanomori Nijo, Chuo-ku,Sapporo-shi, Hokkaido
Access	9-minute walk from Nishi nijuhatchome Station (Tozai Subway Line)
Site Area (Note)	1,441.46m2
Type of Ownership	Proprietary Ownership
Scheduled Acquisition Price	¥370 million
Appraisal Value	¥371 million
Date of Value Estimate	July 1, 2021
Appraisal Method	Appraisal by The Tanizawa Sōgō Appraisal Co., Ltd.
Collateral	None
Special Notations	None

(Note) Each piece of information in the "Location (Lot number)" and "Site Area" is described as it appears on the real estate register.

1. The Seller's Profile
   The seller is an individual. Details of the seller are not disclosed as the relevant consent has not been obtained. As of today, the seller falls under neither the category of "interested parties, etc." (the "Interested Party") under the Act on Investment Trusts and Investment Corporations of Japan (Act No. 198 of 1951, as amended) nor the category of the sponsor/stakeholder (the "Sponsor/Stakeholder") under the self-imposed rules (rules for conflicts of interest) of JRA. In addition, United Urban and JRA have no significant capital ties, personal relationships and transactions with the seller, and the seller does not fall under a related party of United Urban and JRA.
2. Aspects of the Owners of the Property and Others

The Asset to be Acquired will not be acquired from any special related parties of United Urban or JRA.

(5) Overview of Intermediary

1) Broker A
a. Broker
		Company Name		Mitsui Fudosan Realty Sapporo Co., Ltd.
		Address		17F Sapporo Mitsui JP Building, 4-1Kitanijo-nishi,Chuo-ku, Sapporo-
			shi, Hokkaido
		Representative		Hisashi Egawa, President and CEO
		Principal Business		Brokerage Business, Parking Lot Business, etc.
		Capital		¥100 million (as of March 31, 2021)
		Date of Foundation		January 1993
		Relationship with United Urban or JRA
				Capital Ties		There are no significant capital ties.
				Personal Relationship		There are no significant personal relationships.
						Mitsui Fudosan Realty Sapporo Co., Ltd. serves as master lessee and
				Business Relationship		has been entrusted the property management for one property of United
						Urban.
				Standing to Related Party		Mitsui Fudosan Realty Sapporo Co., Ltd. falls under neither the category
					of the Interested Party nor the category of the Sponsor/Stakeholder.

b. Commission

¥7,400 thousand (excluding consumption taxes, etc.)

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2) Broker B
a. Broker
	Company Name		Design Craft Co., Ltd.
	Address		6-2-24Kitarokujo-nishi,Kita-ku,Sapporo-shi, Hokkaido
	Representative		Shinji Sakaide, CEO
					・Design supervision, construction, and contracting of civil engineering
	Principal Business		and construction work
					・Real estate leasing, brokerage, sales and management
	Capital		¥20 million
	Date of Foundation		March 2000
	Relationship with United Urban or JRA
			Capital Ties		There are no significant capital ties.
					There are no significant personal relationships.
			Personal Relationship
			Business Relationship		There are no significant business relationships.
			Standing to Related Party		Design Craft Co., Ltd. falls under neither the category of the Related
				Party nor the category of Sponsor/Stakeholder.

b. Commission

¥3,760 thousand (excluding consumption taxes, etc.)

3. Summary of the Project

United Urban plans to enter into the relevant contracts associated with the Project on July 16, 2021. After the seller's move-out from the existing building by December 23, 2021, the elderly housing constructed and completed (the "Building") by May 2023 will be delivered by NIHON KENSETSU CO.LTD. Details of the Building are under consideration and United Urban will announce once they are determined.

(1) Property Overview after the Building Completion (scheduled) (Note 1)

Estimated Acquisition Price	¥1,403 million
	Land	¥370 million
	Building Price (Note 2)	¥1,033 million
Building (Note 3)
	Structure and Scale	RC 5F
	Completion Date	May 2023
	Building Area	911.13 m2
	Total Floor Space	3,914.73 m2
	Total Leasable Floor Space	3,914.73 m2
	Type	Elderly housing (62 units)

(Notes)

1. 1. Information in the table is as of today and subject to change depending on a progress of the Project.
   2. The Building price includes the estimated amount of construction cost and design cost of the building (excluding consumption tax and local consumption tax). It does not include expenses related to the construction of the Building.
   3. Building information described in the table is based on the current plan.
2. Schedules

	Purchase and sales agreement of real estate
	Project management contract agreement		July 16, 2021 (scheduled)
	Design and construction contract agreement
	Reservation lease contract agreement
	Building permit		January 2022 (scheduled)
	Construction work		From April 2022 to May 2023 (scheduled)
	Completion		May 2023 (scheduled)
	Opening		July 2023 (scheduled)

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4. Details of the Project

1. Impact on Operating Condition

1. Construction Cost
   Construction related costs pertaining to the Project (exclusive of the land price, hereinafter referred to as "Construction Cost") are assumed to total approximately ¥1,200 million (exclusive of consumption tax and local consumption tax) as of today, of which the building construction cost of ¥1,000 million will be paid in three installments (at the start of construction, in the middle of construction, and at the time of completion). The Construction Cost will be booked as a construction in progress until the time of completion.
2. Income and Expenditure Outlook for the Project

Estimated operating revenues (annualized)	Undisclosed (Note 1)
Estimated NOI (annualized)	¥82 million (Note 2)
Estimated NOI yield	5.8% (Note 2)

(Notes)

1. 1. Undisclosed, due to unavoidable circumstances where the consent for the disclosure has not been obtained from the tenant.
   2. "NOI (Net Operating Income)" means the figure which is equal to an amount subtracting rental expenses (excluding depreciation and amortization) from rental revenues. "Estimated NOI (annualized)" means the estimated NOI for 1 year from the completion of the Project (the opening date of the Building by the tenant), which is calculated based on the terms and conditions of the reservation lease agreement to be concluded between the tenant and United Urban.
2. Profiles of the Contracting Parties

1. Project Management Contract

Company Name		Marubeni Corporation
Address		1-4-2 Otemachi, Chiyoda-ku, Tokyo
Representative		Masumi Kakinoki, President & CEO
Principal Business		General trading company business
Capital (Fund)		¥262.6 billion
Date of Foundation		December 1949
Relationship with United Urban or JRA
		Capital Ties		Marubeni Corporation is the parent company of JRA.
		Personal Relationship		Seven employees seconded from Marubeni Corporation are at JRA.
		Business Relationship		One property of United Urban was acquired from Marubeni Corporation
			in the thirty-third fiscal period ended May 2020.
				Marubeni Corporation falls under the category of the Related Party and
		Standing to Related Party		the category of the Sponsor/Stakeholder. Therefore, in acquiring the
			Property, JRA is abiding by the predetermined limitations and
				procedures of JRA. (Note)

(Note)

In view of avoiding the conflicts of interest, JRA has established the restrictions and procedures for transactions, etc. between United Urban and Sponsor/Stakeholder in its internal rules on transactions (including a brokerage of a sale of the Asset to be Sold) with Sponsor/Stakeholder, which are called the "Investment Committee Rules on Transactions with "Sponsor/Stakeholder".

The specific rules include the following: (i) When acquiring assets from Sponsor/Stakeholder, the acquisition price shall be the same as or less than the appraisal value; (ii) When selling assets to Sponsor/Stakeholder, the sale price shall be the same as or more than the appraisal value; and (iii) When Sponsor/Stakeholder is involved in the brokerage, etc. of acquisition or sale of assets with good reason, the commission for the acquisition or sale of assets shall be not more than 3% of the acquisition or sale price.

In addition, specific procedures set forth are that, when United Urban and Sponsor/Stakeholder engage in a transaction, etc., the deliberation and resolution of the Investment Committee (the JRA's autonomous body that enters into deliberations and makes decisions on asset management and performs asset management evaluations, etc.), which includes a chairman and an outside expert, shall be required, and that the resolution must be passed by the unanimous agreement of the members of Investment Committee who have voting rights (a member of the Investment Committee who has a special interest in the resolution may not participate in the vote). The agenda of the Investment Committee are to be deliberated at the Compliance Committee, the chairman of which is Chief Compliance Officer who is in charge of compliance duties, and which includes an outside expert, from the view point of the compliance with laws and regulations, guidelines, internal rules, etc.

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