Star Asia Investment : Notice Concerning Acquisition of Real Estate Beneficiary Interests in Trust and Lease Contracts

August 2, 2021

For Immediate Release

Real Estate Investment Trust Securities Issuer

Star Asia Investment Corporation

Representative: Atsushi Kato, Executive Director

(Code: 3468)

Asset Management Company

Star Asia Investment Management Co., Ltd.

Representative: Atsushi Kato

President and CEO

Contact: Akiko Kanno

Director and CFO

TEL: +81-3-5425-1340

Notice Concerning Acquisition of Real Estate Beneficiary Interests in Trust

and entering into Lease Contracts

Star Asia Investment Management Co., Ltd. (the “Asset Manager”), to which Star Asia Investment Corporation (“SAR”) entrusts the management of its assets, announces today its decision to acquire and lease real estate beneficiary interests in trust of the following seven real estate properties (the “Assets to be Acquired” and the entire transaction to acquire these beneficiary interests is referred to as the “Acquisitions”

1. Overview of the Assets to be Acquired

Property

Planned

Asset type

Property name

Location

acquisition price

no. (Note 1)

(mm yen) (Note3)

Office

OFC-22

OHA Building

Tachikawa-shi,

1,804

Tokyo

Office

OFC-23

Urban Center Hakata (Note 2)

Fukuoka-shi,

2,870

Fukuoka

Retail

RTL-05

BAGUS Ikebukuro West

Toshima-ku,

2,984

Tokyo

Residence

RSC-18

Urban Park Ryogoku (Note 2)

Sumida-ku,

1,115

Tokyo

Residence

RSC-19

Urban Park Mizonokuchi (Note 2)

Kawasaki-shi,

2,019

Kanagawa

Residence

RSC-20

Urban Park Miyamaedaira(Note 2) (Note 4)

Kawasaki-shi,

1,060

Kanagawa

Residence

RSC-21

Urban Park Tsurumi (Note 2)

Yokohama-shi,

1,113

Kanagawa

Total (7properties)

12,965

(Note 1) As for “Property no”, please refer to “Reference Material 5 The terms used in the table of Description of Asset to be Acquired” below.

(Note 2) The current names of the properties are as follows. However, it is planned to change the names of the properties to the above, immediately after acquisition of the Assets to be Acquired.

Property no.

Property name

OFC-23

URBAN CENTER HAKATA

RSC-18

City Heim Kamezawa

RSC-19

Rise

Note: This press release does not in any way constitute any part of an offering of securities for investment. This press release has been prepared for the purpose of announcing to the public certain matters relating to the acquisition of real estate beneficiary interests in trust and entering into lease contracts, and not for the purpose of soliciting any investment, within or outside of Japan. Additionally, this press release is not an offer of securities for sale in the United States. The securities referred to herein have not been, and will not be registered under the United States Securities Act of 1933, as amended (the “Securities Act”) and may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act. No offering or sale of securities in the United States will be made in connection with the above-mentioned acquisitions. This press release is not for publication, distribution or release, directly or indirectly in or into the United States of America.

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RSC-20 MIJAS Miyamaedaira EASTWEST

RSC-21 Village Ushioda

(Note 3) “Planned acquisition price” indicates the planned sale and purchase price stated in the sale and purchase agreement with the seller for the Assets to be Acquired, rounded to the nearest million yen. The planned sale and purchase price does not include consumption tax, local consumption tax and various expenses required for the acquisition.

(Note 4) “Urban Park Miyamaedaira” is comprised of 2 buildings (“Urban Park Miyamaedaira EAST” and “Urban Park Miyamaedaira WEST”), and the amount stated above is the total of the planned acquisition price of 2 buildings. Unless specified otherwise, each of the figures stated for “Urban Park Miyamaedaira” shall be for the total of the 2 buildings.

(1)Contract date

August 2, 2021

(2)Planned acquisition date

August 19, 2021 (delivery and settlement date)

(3)Sellers

Please refer to “4. Seller Profile” below

(4)Acquisition financing

Proceeds from the issuance of new investment units

through public offering (Primary offering) (Note 5) for

which resolution was made at the Board of Directors

meeting of SAR held on today, planned new

borrowings(Note 6) to be planned etc.

(5)Settlement method

Payment of entire amount on planned acquisition date

(Note 5) For further details, please refer to “Notice Concerning Issuance of New Investment Units and Secondary Offering of Investment Units” announced today.

(Note 6) For further details, please refer to “Notice concerning Debt Finacing”announced today.

2. Reason for the Acquisition and Leasing

The purpose of the Acquisition is to promote the external growth strategy aiming to achieve the goal of “Asset Size of JPY 300 billion by 2026” which was established in SAR’s Mid-term Business Plan (announced in March, 2021), as well as to secure stability of income mainly in the mid- to long-term. The Assets to be Acquired include properties which have potential for earnings growth, and SAR believes that it is possible to incorporate growth as well as to secure stability.

The Assets to be Acquired include a property developed by the Sponsor Group (Note 1) (the first office development project by Star Asia Sogo Kaihatsu Co. Ltd. (hereinafter referred to as “Star Asia Sogo Kaihatsu”)), a property which utilizes the warehousing function (Note 2) of Star Asia Group (Note 1), and properties for which cooperation was obtained to secure the property by sponsor forward commitment (Note 3), and SAR is expecting to realize external growth by receiving these strong sponsor support. Furthermore, the Assets to be Acquired also include properties to be acquired as bilaterally negotiated transactions by leveraging the Asset Manager’s own unique network. Also going forward, SAR will aim to achieve the asset size target included in the Mid-term Business Plan by utilizing sponsor support and the Asset Manager’s own unique network.

The main reasons for deciding on the acquisition and leasing of the Assets to be Acquired are outlined below.

The tenants of the Assets to be Acquired satisfy the tenant selection standards described in the “Report on the Management Structure and System of the Issuer of Real Estate Investment Trust Units and Related Parties” dated April 28, 2021.

(Note 1) “Star Asia Group” means group of related entities and invested entities lead by the co-founders Malcolm F. MacLean IV and Taro Masuyama who are the key players of the Group even today (and includes funds at which the two are involved in decision-making, as well as investment destinations of such funds). The “Sponsor Group” means the group of entities within Star Asia

Note: This press release does not in any way constitute any part of an offering of securities for investment. This press release has been prepared for the purpose of announcing to the public certain matters relating to the acquisition of real estate beneficiary interests in trust and entering into lease contracts, and not for the purpose of soliciting any investment, within or outside of Japan. Additionally, this press release is not an offer of securities for sale in the United States. The securities referred to herein have not been, and will not be registered under the United States Securities Act of 1933, as amended (the “Securities Act”) and may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act. No offering or sale of securities in the United States will be made in connection with the above-mentioned acquisitions. This press release is not for publication, distribution or release, directly or indirectly in or into the United States of America.

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Group which are closely related to SAR and which assume support functions for SAR based on sponsor support agreements. The same applies below.

(Note 2) The “warehousing function” refers to cases where the Sponsor Group, based on request received from SAR to temporarily hold real estate properties, acquires real estate properties etc. for the purpose of promoting smooth acquisition of the same properties by SAR in the future. The same applies below.

(Note 3) The “sponsor forward commitment” refers to execution of a sales and purchase agreement between the Sponsor Group and the seller stating that the sponsor group will acquire certain real estate, etc., on the premise of transferring or selling the status of the property to SAR in the future. The same applies below.

Office

1 OHA Building

OHA Building is a multi-tenant type office building located at an approximate 9-minute walk from “Tachikawa” station on the JR Chuo Line and the JR Nambu Line. In addition to having good access to central Tokyo by taking the JR Chuo Line, the property is located along Midorikawa-dori which is directly connected to Ome-kaido street which is a main highway, and the location has good traffic convenience by both train and cars.

With respect to the property characteristics, the building has a massive external curtain wall, and is located along Midorikawa-dori directly connected to Ome-kaido street which is a main highway as described above. Given that it will allow commercial vehicles to easily go back and forth, the property is highly appealing to places of business which use vehicles.

The decision to acquire the property was made as a result of having comprehensively considered the above stated location features and property characteristics, as it was determined that the property will generate stable profits in the mid- to long-term and will contribute to the improvement of stability of portfolio income. Upon acquiring the OHA Building, preferential negotiation rights obtained from the Sponsor Group, which provided warehousing function to SAR, has been exercised. Also, property information obtained from a unique network of the Asset Manager is utilized in sourcing this transaction.

2 Urban Center Hakata

Urban Center Hakata is located on the east side of “Hakata” station which is the gateway of Kyushu region and Fukuoka prefecture. It is located at an approximate 9-minute walk from “Higashihie” station on the Fukuoka City Airport Line and an approximate 11-minute walk from “Hakata” station on the JR Kyushu Lines.

This property is the first office development project undertaken by Star Asia Sogo Kaihatsu which belongs to the Sponsor Group, and is a new multi-tenant type office building whose construction was completed in September 2020. Star Asia Group’s construction management division supervised the specifications from interior and exterior design and facilities to the final finishings, assuming the needs of the tenants entering the property.

The Hakata area where the property is located is the business center of the Kyushu region, and there is high demand for offices, and such trend is believed to continue going forward.

With respect to the property characteristics, the building has massive curtain walls facing two streets at a corner plot, and the rentable area of standard floor exceeding 100 tsubo is highly scarce in the area. The floor area can be split up flexibly, and the property is believed to be highly appealing to tenant firms from a wide range of industries as a place of business of local firms and as a branch office etc. within the Kyushu region.

For a certain period after SAR’s acquisition (expected to be from August 19, 2021 to August 31, 2022), a rent-guarantee type master lease agreement will be signed by Star Asia Sogo Kaihatsu, and stable income is anticipated. During such period, Star Asia Sogo Kaihatsu and the Asset Manager will cooperate and focus on leasing activities, and it is believed that rent upside can be expected after the termination

Note: This press release does not in any way constitute any part of an offering of securities for investment. This press release has been prepared for the purpose of announcing to the public certain matters relating to the acquisition of real estate beneficiary interests in trust and entering into lease contracts, and not for the purpose of soliciting any investment, within or outside of Japan. Additionally, this press release is not an offer of securities for sale in the United States. The securities referred to herein have not been, and will not be registered under the United States Securities Act of 1933, as amended (the “Securities Act”) and may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act. No offering or sale of securities in the United States will be made in connection with the above-mentioned acquisitions. This press release is not for publication, distribution or release, directly or indirectly in or into the United States of America.

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of the above-mentioned master lease agreement.

The decision to acquire the property was made as a result of having comprehensively considered the above stated location features and property characteristics, as it was determined that the property will generate stable profits in the mid-tolong-term and there is upside potential for revenues. Upon acquiring Urban Center Hakata, preferential negotiation rights obtained from the Sponsor Group has been exercised.

Retail

3 BAGUS Ikebukuro West

BAGUS Ikebukuro West is an urban-commercial facility located at an approximate 2-minute walk from “Ikebukuro” station on the JR Lines and Tokyo Metro Lines.

“Ikebukuro” station is a huge terminal train station with access by 8 railway Lines including Tobu Railway and Seibu Railway, and total number of incoming and outgoing passengers per day of approximately 2.5 million. Ikebukuro station’s west exit (Nishi-guchi) area where the property is located is a very busy downtown district, known as a complex area of business, entertainment, and sightseeing spots etc. Ikebukuro station’s west exit is a high potential area where there are plans for urban development projects, and the area is expected to increase competitiveness going in to the future as well.

Although the property is currently being leased to a single tenant, the structure of the building allows for switching to multiple-tenants. The property is highly visual as it is located at a corner, and it is believed that the property is highly appealing to tenants.

Although the request to stay home given the prolonged COVID-19 pandemic is continuing, if the COVID-19 pandemic converges and consumption activities pick up going forward following higher vaccination ratios etc., it can be expected the ability to attract customers will recover in the Ikebukuro West area and also for the property.

The decision to acquire the property was made as a result of having comprehensively considered the above stated location features and property characteristics, as it was determined that the property will generate stable profits in the mid-tolong-term and will contribute to the improvement of stability of portfolio income. Upon acquiring BAGUS Ikebukuro West, preferential negotiation rights obtained from the Sponsor Group has been exercised.

Residence

4 Urban Park Ryogoku

Urban Park Ryogoku is a family-type residence located at an approximate 9-minute walk from “Ryogoku” station on the Toei Oedo Line and an approximate 11-minute walk from “Kinshicho” station on the JR Sobu Line and Chuo Line and the Tokyo Metro Hanzomon Line.

In the Ryogoku area where the property is located, there is the “Sumida Hokusai Museum”, “Edo-Tokyo Museum”, “Kokugikan (sumo arena)”, and the “Kyu-Yasuda Teien (former Yasuda Garden)” etc. and it is an area which is active in transmitting information about Japanese culture and formulating landscapes. Also, as the property has access to multiple train lines, there is good access to various parts of the central Tokyo and it is also a highly convenient area for commuting.

With respect to the property characteristics, the property consists of a total of 32 housing units which all have a 3LDK room layout, and is highly appealing to families who place importance on convenient access to central Tokyo. Also, there are relatively small numbers of family-type residences in the area surrounding the property, and given its scarcity, stable occupancy is anticipated. In addition, as the property has been managed up to now as Sumida-ku’s Specified Excellent Rental Housing (Note 1) and the current rent levels of existing tenants (Note 2) are relatively low, a rent gap (the difference between the rent levels of existing tenants and the assumed rents for new tenants (Note 3)) exists, providing anticipation for revenues upside.

The decision to acquire the property was made as a result of having comprehensively considered the

Note: This press release does not in any way constitute any part of an offering of securities for investment. This press release has been prepared for the purpose of announcing to the public certain matters relating to the acquisition of real estate beneficiary interests in trust and entering into lease contracts, and not for the purpose of soliciting any investment, within or outside of Japan. Additionally, this press release is not an offer of securities for sale in the United States. The securities referred to herein have not been, and will not be registered under the United States Securities Act of 1933, as amended (the “Securities Act”) and may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act. No offering or sale of securities in the United States will be made in connection with the above-mentioned acquisitions. This press release is not for publication, distribution or release, directly or indirectly in or into the United States of America.

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above stated location features and property characteristics, as it was determined that the property will generate stable profits in the mid-tolong-term and there is upside potential for income. Upon acquiring Urban Park Ryogoku, Star Asia Sogo Kaihatsu has cooperated in the acquisition of the property by SAR, by securing the property under a sponsor forward commitment and granting preferential negotiation rights to SAR by using property information obtained from a unique network of the Asset Manager.

(Note 1) “Specified Excellent Rental Housing” means rental housing supplied based on the Act on Promotion of Supply of Specified Excellent Rental Housings, where rental housing with satisfactory living environment is supplied to mid-class income persons.

(Note 2) The “current rent levels of existing tenants” for Urban Park Ryogoku means the rent as described in lease agreements (only residence) of Urban Park Ryogoku with respective tenants as of April 31, 2021.

(Note 3) The “assumed rents for new tenants” for Urban Park Ryogoku means the “market rent(yen/)”(only residence) stated in the real estate appraisal report of Urban Park Ryogoku based on the price as of June 1, 2021. It means the contractual rent when a new lessee is recruited in Urban Park Ryogoku, which is assumed by the appraiser who created the appraisal report.

5 Urban Park Mizonokuchi

Urban Park Mizonokuchi is a residence located at an approximate 8-minute walk from “Takatsu” station on the Tokyu Denentoshi Line, and an approximate 15-minute walk from “Mizonokuchi” station on the Tokyu Denentoshi Line and “Musashi Mizonokuchi” station on the JR Nambu Line.

The property has high living convenience as it is within walking distance from “Mizonokuchi” station which is one of the leading commercial centers within Kawasaki-shi, and by using the Tokyu Denentoshi Line, the property has good access to business centers, as it is an approximately 19 minutes to “Shibuya” station and approximately 35 minutes to “Otemachi” station by the Tokyu Denentoshi Line.

With respect to the property characteristics, large-scale renovation works were conducted in 2007, including for the exclusive owned areas, and it is believed that the property has maintained adequate competitiveness. The property has a total of 76 housing units whose floor plans range from exclusive owned floor areas of 36.55 to 91.42 (mainly 40-50: 52 housing units) to accommodate various life stages, and it is believed that the property is highly appealing to a wide range of residents from single persons to DINKs (Note) and also families.

The decision to acquire the property was made as a result of having comprehensively considered the above stated location features and property characteristics, as it was determined that the property will generate stable profits in the mid- to long-term and will contribute to the improvement of stability of portfolio income. Urban Park Mizonokuchi is to be acquired as a bilateral negotiated transaction through the Asset Manager’s own unique network.

(Note) “DINKs” means households where both the husband and wife are working and have 2 sources of income (Double Income) and have no children (No Kids). The same applies below.

6 Urban Park Miyamaedaira

Urban Park Miyamaedaira is a newly built residence (construction completed in June 2021) which is located at an approximate 5-minute walk from “Miyamaedaira” station on the Tokyu Denentoshi Line and an approximate 3-minute walk from the “Kodai” bus stop which is an approximate 7-minute bus ride from “Saginuma” station of the Tokyu Denentoshi Line.

The area where the property is located is a highly convenient area for commuting given good access to central Tokyo, and also, it is a silent residential area with a nice living environment with natural surroundings including many parks and greenery.

With respect to the property characteristics, it is a newly built residence whose construction was completed in June 2021 and has the latest housing facilities and equipments. The floor plans range from single type rooms to 2LDK (duplex type), and are believed to be appealing to a wide range of residents

Note: This press release does not in any way constitute any part of an offering of securities for investment. This press release has been prepared for the purpose of announcing to the public certain matters relating to the acquisition of real estate beneficiary interests in trust and entering into lease contracts, and not for the purpose of soliciting any investment, within or outside of Japan. Additionally, this press release is not an offer of securities for sale in the United States. The securities referred to herein have not been, and will not be registered under the United States Securities Act of 1933, as amended (the “Securities Act”) and may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act. No offering or sale of securities in the United States will be made in connection with the above-mentioned acquisitions. This press release is not for publication, distribution or release, directly or indirectly in or into the United States of America.

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Disclaimer

Star Asia Investment Corporation published this content on 02 August 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 02 August 2021 06:41:08 UTC.