Notice concerning Acquisition and Leasing of Assets (Daihakata Building, Daido Life Omiya Building and Yamagami Building)

Transcription

1 Translation Purposes Only To All Concerned Parties October 11, 2017 Name of REIT Issuer: One REIT, Inc Nihonbashi, Chuo-ku, Tokyo, Japan Koji Hashimoto, Executive Director (TSE Code: 3290) Contact: Asset Management Company Simplex REIT Partners Inc. Koji Hashimoto, President and Representative Director Contact Person: Takeshi Akimoto, Head of Finance & Administration Division Tel: Notice concerning Acquisition and Leasing of Assets (Daihakata Building, Daido Life Omiya Building and Yamagami Building) One REIT, Inc. (hereafter referred to as One REIT ) announced that Simplex REIT Partners Inc. (hereafter referred to as the Asset Management Company ), an asset management company to which One REIT entrusts management of its assets, today made a decision to acquire and lease the assets described below (hereafter referred to as the Assets to be Acquired. ). 1. Overview of the Acquisition One REIT is planning to acquire the three Assets to be Acquired described below. One REIT will acquire Daihakata Building by exercising the preferential negotiation rights (Note 1) granted by Godo Kaisha (GK) SIA Bridge No.2 as the seller and Daido Omiya Building and Yamagami Building by exercising the preferential negotiation rights (Note 1) granted by IBJ Leasing Company, Limited as the seller. One REIT has decided to acquire the Assets to be Acquired by utilizing support from Mizuho Trust & Banking Co., Ltd., the sponsor, concerning the provision of property information and formation of bridge funds, etc. as well as know-how in real estate management and management resources, etc. of SIA Group (Note 2). (Note 1) For more details on the preferential negotiation rights, please refer to the Notice concerning Asset Acquisition (Silent Partnership Equity Interest) (GK SIA Bridge No. 2) dated March 23, 2016, Notice concerning Obtainment of Preferential Negotiation Rights for Acquisition of a Property (Daido Life Omiya Building) dated May 20, 2016, and Notice concerning Obtainment of Preferential Negotiation Rights for Acquisition of a Property (Yamagami Building) dated September 9, (Note 2) SIA Group is comprised of three companies; the Asset Management Company, Simplex Investment Advisors Inc., the parent company of the Asset Management Company, (hereafter referred to as SIA ) and Simplex Real Estate Management Inc., the subsidiary of its parent company, (hereafter referred to as SRM ). Property No. Property Name Location (Note 1) Seller 1 / 19 Anticipated acquisition price (million yen) (Note 2) OO-6 Daihakata Building Fukuoka-shi, Fukuoka GK SIA Bridge No. 2 (Note 3) 10,650 OT-16 Daido Life Omiya Building Saitama-shi, Saitama IBJ Leasing Company, Limited (Note 3) 3,000 OT-17 Yamagami Building Toshima-ku, Tokyo IBJ Leasing Company, Limited (Note 3) 2,200 Total (3 properties) 15,850 (Note 1) (Note 2) The Location column contains the minimum independent administrative district where each asset is located. The Anticipated acquisition price column contains the trading value of the Assets to be Acquired (excluding equivalent to

2 (Note 3) consumption tax, etc.) described in the purchase and sale agreement of trust beneficiary interest related to the said assets (hereafter referred to as the Purchase and Sale Agreement ). The seller does not fall under the category of interested persons, etc. under the Act on Investment Trusts and Investment Corporations (hereafter referred to as the Investment Trust Act ). However, since it entrusts asset management to SRM, a subsidiary of the parent company of the Asset Management Company, it falls under the category of an interested party defined in the interested party transaction rules of the Asset Management Company. (1) The date of execution of the Purchase and Sale Agreements: October 11, 2017 (2) Anticipated acquisition date: October 25, 2017 (3) The seller: Please refer to 4. Outline of Sellers below. (4) Acquisition funds: Borrowings and cash on hand (Note) (5) Settlement method: Lump-sum payment at a time of delivery (Note) For more details, please refer to the Notice concerning Borrowing of Funds and Prepayment of Existing Borrowings separately announced today. 2. Reason for the Acquisition and the Leasing All Assets to be Acquired fall under the category of assets subject to asset management as provided for under the Articles of Incorporation of One REIT. The acquisition was decided as the acquisition of the Assets to be Acquired is judged to contribute to stabilizing the revenue base of the portfolio. Through the acquisition, the portfolio of One REIT will include 24 properties and the total (anticipated) acquisition price will be 80,815 million yen. Tenants of each asset comply with the tenant selection criteria described in the Report on the Management Structure and System of Issuers, etc. of Real Estate Investment Trust Units and Related Parties dated May 30, Outline of the Assets to be Acquired Outline of each Asset to be Acquired is listed in the table below. Description on the information provided in each column and the terms used in the table are as follows. The information provided in the table is as of the end of August 2017 unless otherwise stated. Provided, Trustee and Expiration date of trust period columns are the plan at the time of the acquisition of each Asset to be Acquired. a. The Anticipated acquisition price column contains the trading value of the Assets to be Acquired (excluding equivalent to consumption tax, etc.) described in the Purchase and Sale Agreements related to the said assets. b. The Appraisal value column contains the appraisal value described in the Real Estate Appraisal Report by Morii Appraisal & Investment Consulting, Inc., Chuo Real Estate Appraisal Co., Ltd. or Daiwa Real Estate Appraisal Co., Ltd. based on the appraisal date as of August 31, c. The Anticipated acquisition date column contains the anticipated date when the assets are anticipated to be acquired by One REIT. d. Explanation of the Land column: (i) The Location column contains the lot address as stated in the registry. The (Domicile) column contains the residential address. In case that the domicile is not available, the column contains the building location as stated in the registry (if there are multiple, then one of the locations.) (ii) The Area column contains the parcel area as stated in the registry. (iii) The Zoning column contains the zoning category from Article 8, Paragraph 1, Item 1 of the City Planning Act. (iv) The Building-to-land ratio/floor-area ratio column contains the quantitative values (upper limit) stipulated in accordance with the Building Standards Act, City Planning Act and other relevant laws and ordinances. 2 / 19

3 (v) The Type of ownership column contains the type of rights retained in trust by the trustee concerning the Assets to be Acquired. e. Explanation of Building column: (i) The Construction / Number of floors column contains the structure and numbers of floors as stated in the registry and may differ from the present state. (ii) The Completed column is the initial completion date as stated in the registry. (iii) The Total floor space column contains the sum total of the floor areas stated in the registry and may differ from the present state. (iv) The Use column contains the primary type of use stated in the registry and may differ from the present state. (v) The Type of ownership column contains the type of rights retained in trust by the trustee concerning the Assets to be Acquired. f. The PM Company column contains the property management company to which the property management operation is outsourced as of today. However, as the change of the PM company for Daido Life Omiya Building is scheduled after the anticipated acquisition, the name of the new PM company is disclosed. g. The Master Lease Company column contains the master lease company to which the master lease operation is outsourced as of today or information after the acquisition, if change of master lease company or termination of such outsource is anticipated. h. The Total leasable area column contains the total floor space (in the event that the co-ownership portions are leased out, the area of the said portions is included) that can be leased for office and retail in the building concerning the Assets to be Acquired. The total leasable area does not include the parking lot or land used for other purposes. Total leasable area is not what is stated in the registry, but is calculated based on an area shown in the lease agreement. Therefore, the total leasable area does not necessarily match the total floor space stated in the registry. The data in this column is based on information provided by the current owners of the Assets to be Acquired. i. The Leased area column contains data based on the leased space shown in lease agreements with each tenant (means each end tenant in the event that a master lease agreement has been concluded with regard to the Assets to be Acquired) from among the total leasable area. The leased area does not include the parking lot or land used for other purposes. The data in this column is based on information provided by the current owner of the Assets to be Acquired. j. The Occupancy rate column contains the figure as a percentage obtained by dividing the leased area by the total leasable area and rounded off to the first decimal place. The data in this column is based on information provided by the current owner of the Assets to be Acquired. k. The Total number of tenants column contains the number of tenants described in the following manner; one tenant per asset is described in case that the tenant takes out a lease on multiple rooms in the same Asset to be Acquired, and the total number of end tenants is described in case that a master lease agreement has been concluded with regard to the Assets to be Acquired. l. The Monthly rent (including common area charges) column contains the total monthly rent described in a lease agreement with each tenant (means each end tenant in the event that a master lease agreement has been concluded with regard to the Assets to be Acquired), rounded down to the nearest thousand yen. The data in this column is based on information provided by the current owner of the Assets to be Acquired. Monthly rent for a tenant that falls into a free rent period as of the end of August, 2017 is calculated based on the monthly rent described in the lease agreement. m. The Lease and guarantee deposits column contains the residual amount of lease and guarantee deposits, etc. (excluding the lease and guarantee deposits, etc. related to parking lots and accessory facilities such as warehouse) of each tenant (or each end tenant) as of August 31, 2017, described in the lease agreement concluded with each tenant (each end tenant in the event that a master lease agreement has been concluded with regard to the Assets to be Acquired) provided by the current owner. Amounts are rounded down to the nearest thousand yen (when there is a portion that does not need to be returned, that portion is deducted). n. The Special remarks column contains important issues related to the relationship of rights and the usage, 3 / 19

4 etc. of the Assets to be Acquired, as well as important issues in consideration of the impact on the appraisal value, profitability and liquidity of the Assets to be Acquired. o. The Property Characteristics column contains information based on the appraisal report, etc. in relation to the Assets to be Acquired that has been prepared by an appraiser and the analysis conducted by the Asset Management Company. Time on foot from a station in the column is based on the assumption that it takes a minute on foot in every 80 meters of road distance, in accordance with the Fair Competition Code Concerning Representations of Real Estates (Japan Fair Trade Commission Public Notice No. 23). Any fractional numbers are rounded up to the nearest minute. 4 / 19

5 (1) Daihakata Building Property name Daihakata Building Specified assets category Trust beneficiary interests Trustee Mitsubishi UFJ Trust and Banking Corporation Expiration date of trust period October 31, 2027 Anticipated acquisition price 10,650 million yen Appraisal value 11,000 million yen Appraisal company Morii Appraisal & Investment Consulting, Inc. Anticipated acquisition date October 25, 2017 Location 2-179, Hakataekimae, Hakata-ku, Fukuoka-shi, Fukuoka (Domicile) Hakataekimae, Hakata-ku, Fukuoka-shi, Fukuoka Area 2, m 2 Land Zoning Commercial district Building-to-land ratio/floor-area ratio 100%/800% Type of ownership Proprietary ownership Completed August, 1975 Construction/Number S/RC with flat roof, B3/14F of floors Building Total floor space 30, m 2 Use Office, retail, parking Type of ownership Proprietary ownership Collateral None PML 1.08% PM Company Jones Lang LaSalle, IP, Inc. Master Lease Company None Lease status Total leasable area 15, m 2 Leased area 15, m 2 Occupancy rate 98.5% Total number of tenants 73 Monthly rent (including common 52,867 thousand yen area charges) Lease and guarantee deposits 436,057 thousand yen The floor-area ratio of the property does not comply with the Building Standards Act which is currently applied as there were no stipulations concerning floor-area ratio in the Building Standards Act upon application for building confirmation (existing ineligible building). Accordingly, construction of buildings with the same scale as the Special remarks property may not be possible upon new construction and extension/alteration in the future. The property has been constructed based on the former earthquake-resistance standards but underwent seismic work in 2014 and has been certified based on Article 22, Paragraph 2, of the Act for Promotion of Renovation for Earthquake-Resistant Structures. (Note) The entire exclusive portion of the property is scheduled to be acquired although sectional ownership is registered. Property Characteristics 5 / 19

6 An office building with high visibility an approximate six-minute walk from Hakata Station on the JR and other lines and a one-minute walk from Gion Station on the Subway Kuko line, and located along Taihaku-dori. Accessible from JR Hakata Station through an underground passage and situated in a location with high transportation convenience. Situated in Hakataekimae area where demand for office leasing is among the strongest in Hakata City. Underwent renewal work at the entrance, common area, etc., and stable demand from tenants is expected going forward. 6 / 19

7 (2) Daido Life Omiya Building Property name Daido Life Omiya Building Specified assets category Trust beneficiary interests Trustee Sumitomo Mitsui Trust Bank, Limited Expiration date of trust period October 31, 2027 Anticipated acquisition price 3,000 million yen Appraisal value 3,040 million yen Appraisal company Chuo Real Estate Appraisal Co., Ltd. Anticipated acquisition date October 25, 2017 Location Kishiki-cho, Omiya-ku, Saitama-shi, Saitama (Domicile) Kishiki-cho, Omiya-ku, Saitama-shi, Saitama Area 1, m 2 Land Zoning Commercial district Building-to-land ratio/floor-area ratio 80%/400% Type of ownership Proprietary ownership Completed October, 1991 Construction/Number SRC with flat roof, 8F of floors Building Total floor space 6, m 2 Use Office Type of ownership Proprietary ownership Collateral None PML 4.72% PM Company XYMAX ALPHA Corporation Master Lease Company None Lease status Total leasable area 3, m 2 Leased area 3, m 2 Occupancy rate 100.0% Total number of tenants 15 Monthly rent (including common 15,066 thousand yen area charges) Lease and guarantee deposits 142,128 thousand yen Special remarks None Property Characteristics A medium-scale office building which is approximately a nine-minute walk from Omiya Station on the JR and other lines and situated along the old Nakasen-do Road. Situated in a location with high transportation convenience, offering excellent access to the Metropolitan Expressway Saitama Shintoshin Route and other arterial roads. Can offer office space of various size as the rental space can easily be divided, and stable demand from tenants is expected in the office building leasing market in the Omiya area going forward. 7 / 19

8 (3) Yamagami Building Property name Yamagami Building Specified assets category Trust beneficiary interests Trustee (Note 1) Mizuho Trust & Banking Co., Ltd. Expiration date of trust period October 25, 2027 Anticipated acquisition price 2,200 million yen Appraisal value 2,240 million yen Appraisal company Daiwa Real Estate Appraisal Co., Ltd. Anticipated acquisition date October 25, 2017 Location Higashi Ikebukuro, Toshima-ku, Tokyo (Domicile) Higashi Ikebukuro, Toshima-ku, Tokyo Area m 2 Land Zoning Commercial district Building-to-land ratio/floor-area ratio (Note 2) 80%/700% Type of ownership Proprietary ownership Completed September, 1991 Construction/Number SRC/RC with flat roof, B2/8F of floors Building Total floor space 3, m 2 Use Office, parking Type of ownership Proprietary ownership Collateral None PML 6.14% PM Company Building Management & Strategy Inc. Master Lease Company None Lease status Total leasable area 2, m 2 Leased area 2, m 2 Occupancy rate 100.0% Total number of tenants 7 Monthly rent (including common 10,089 thousand yen area charges) Lease and guarantee deposits 71,493 thousand yen Special remarks None (Note 1) The Trustee falls under the category of interested persons, etc. under the Investment Trust Act and an interested party defined in the interested party transaction rules of the Asset Management Company. (Note 2) The standard floor-area ratio is 651% due to the restriction of width of the front road and relaxation of the floor-area ratio of specified roads. Property Characteristics An office building an approximate eight-minute walk from Ikebukuro Station on the JR lines and other lines. Located in an area where medium- to small-scale office buildings concentrate and where leasing needs from affiliated companies of tenants occupying the nearby Sunshine City 60 as well as IT system-related companies are expected. Since the rental space is mostly regular-shaped and office space that suits the demand of medium- to small-sized tenants can be provided, stable demand from tenants is expected in the office building leasing market in the Ikebukuro area going forward. 8 / 19

9 4. Outline of Sellers (1) Daihakata Building Name GK SIA Bridge No. 2 Location c/o Clifix Certified Public Tax Accountants Corporation Yurakucho, Chiyoda-ku, Tokyo Position/Name of Representative Representative member: Ippan Shadan Hojin Global REIT Holding No. 2 Person to execute duties: Satoshi Ogawa 1. Acquisition, holding and disposition of real estate Nature of business 2. Leasing and management of real estate 3. Acquisition, holding and disposition of real estate trust beneficiary interests Stated Capital 2 million yen Date of Establishment April 25, 2007 Net assets (Note 1) Not disclosed Total assets (Note 1) Not disclosed Large shareholder and shareholding ratio (Note 1) Not disclosed Relationship with the Investment Corporation or the Asset Management Company Capital relations Personnel relations Business relations Circumstances applicable to related parties There is no capital relationship to be stated with One REIT or the Asset Management Company. One REIT holds approximately 0.28% of the silent partnership equity interests (10 million yen) (Note 2) in the concerned company. There is no personal relationship to be stated with One REIT or the Asset Management Company. In addition, there is no personnel relationship to be specially noted between associated persons or associated companies of One REIT or the Asset Management Company and associated persons or associated companies of the concerned company. There is no business relationship to be stated with One REIT or the Asset Management Company. SRM, a subsidiary of the parent company of the Asset Management Company, is entrusted with the asset management operations of the concerned company. The concerned company does not fall under the category of a related party. However, the concerned company is an interested party as set forth in the internal regulation concerning trading with interested party of the Asset Management Company. (Note 1) Not disclosed as consent from the seller has not been obtained. (Note 2) The silent partnership is scheduled to be dissolved and liquidated with the acquisition of Daihakata Building by One REIT 9 / 19

10 (2) Daido Life Omiya Building & Yamagami Building Name IBJ Leasing Company, Limited Location Toranomon, Minato-ku, Tokyo Position/Name of Representative Representative & CEO Hiroshi Motoyama Main business line General leasing business Stated Capital 17,874 million yen (As of March 31, 2017) Date of Establishment December 1, 1969 Net assets 115,215 million yen (As of March 31, 2017) Total assets 1,356,813 million yen (As of March 31, 2017) Large shareholder and shareholding ratio The Dai-ichi Life Insurance Company, Limited Nissan Motor Co., Ltd.: Retirement Benefit Trust Account Trustee Mizuho Trust & Banking Co., Ltd. Standby Trust Bank/Master Trust Bank Trust & Custody Services Bank, Ltd. Mizuho Bank, Ltd. Relationship with the Investment Corporation or the Asset Management Company Capital relations Personnel relations Business relations Circumstances applicable to related parties 6.87% 4.10% 3.81% There is no capital relationship to be stated with One REIT or the Asset Management Company. In addition, there is no capital relationship to be specially noted between associated persons or associated companies of One REIT or the Asset Management Company and associated persons or associated companies of the concerned company. There is no personal relationship to be stated with One REIT or the Asset Management Company. In addition, there is no personnel relationship to be specially noted between associated persons or associated companies of One REIT or the Asset Management Company and associated persons or associated companies of the concerned company. There is no business relationship to be stated with One REIT or the Asset Management Company. SRM, a subsidiary of the parent company of the Asset Management Company, is entrusted with the asset management operations of the concerned company. The concerned company does not fall under the category of a related party. However, the concerned company is an interested party as set forth in the internal regulation concerning trading with interested party of the Asset Management Company. 10 / 19

11 5. Status of Owner, etc. The sellers of the Assets to be Acquired do not fall under the category of interested persons, etc. under the Investment Trust Act. However, since they entrust asset management to SRM, a subsidiary of the parent company of the Asset Management Company, they fall under the category of an interested party as defined in the interested party transaction rules of the Asset Management Company. As a consequence, prescribed procedure has been taken in One REIT and the Asset Management Company in accordance with the said internal regulation when it concluded the Purchase and Sale Agreements. The status of the owner, etc. is as follows. 1 name of the company/person, 2 relationship with the person with a special vested interest, 3 background/reason for the acquisition, 4 acquisition price, 5 acquisition period Property name Current owner/ Previous owner/ holder of trust beneficiary interest holder of trust beneficiary interest Daihakata Building 1 GK SIA Bridge No. 2 2 SRM, a subsidiary of the parent company of the Asset Management Company, has been entrusted with the Person does not have special interest. asset management operations. One REIT holds approximately 0.28% of the silent partnership equity interests in the said company. 3 For the purpose of investment 4 Omitted as the property is owned for more than a year Daido Life Omiya Building Yamagami Building 5 March 30, IBJ Leasing Company, Limited 2 SRM, a subsidiary of the parent company of the Asset Management Company, has been entrusted with the asset management operations. 3 For the purpose of investment 4 Omitted as the property is owned for more than a year 5 May 20, IBJ Leasing Company, Limited 2 SRM, a subsidiary of the parent company of the Asset Management Company, has been entrusted with the asset management operations. 3 For the purpose of investment 4 Omitted as the property is owned for more than a year 5 September 9, Outline of Brokerage There is no brokerage related to the Assets to be Acquired. 11 / 19 Person does not have special interest. Person does not have special interest. 7. Settlement method Borrowings and cash on hand will be utilized for acquiring the Assets to be Acquired, which will be paid in full upon the transfer of properties. 8. Schedule of Acquisition Decision date for acquisition October 11, 2017 Date of execution of Purchase October 11, 2017 and Sale Agreements Payment date October 25, 2017 (Scheduled) Asset transfer date October 25, 2017 (Scheduled)

12 9. Outlook for Financial Results For the outlook of financial results of One REIT after the acquisition of the Assets to be Acquired in the fiscal period ending February 2018 (9th Fiscal Period: September 1, 2017 to February 28, 2018) and the fiscal period ending August 2018 (10th Fiscal Period: March 1, 2018 to August 31, 2018), please refer to the Notice concerning Revisions to Forecast of Financial Results and Cash Distribution for the Fiscal Period Ending February 2018 (9th Fiscal Period) and Forecast of Financial Results and Cash Distribution for the Fiscal Period Ending August 2018 (10th Fiscal Period) separately announced today. 12 / 19

13 10. Overview of Appraisal Report (1) Daihakata Building Overview of Appraisal Report Appraisal value 11,000,000,000 yen Appraisal company Morii Appraisal & Investment Consulting, Inc. Appraisal date August 31, 2017 Item Content Overview, etc. (yen) Income approach value 11,000,000,000 Value based on direct capitalization method 11,100,000,000 Operating revenue 832,586,000 Maximum gross operating revenue 876,389,000 Vacancy loss, etc. 43,803,000 Operating expenses 292,246,000 Maintenance expenses 84,390,000 Utility expenses 100,040,000 Repair expenses 14,093,000 PM fees 11,631,000 Tenant solicitation expenses, etc. 5,178,000 Taxes and public dues 74,353,000 Non-life insurance fees 1,561,000 Estimated by treating equally the value calculated using the direct capitalization method and the value calculated using the discounted cash flow method. Assessed rents that are stable over the medium- to long-term, etc. based on current terms and conditions, etc. Assessed by taking into account normal vacancy rates and property-specific factors of the property Other expenses 1,000,000 Neighborhood association fee, etc. Net operating income 540,340,000 Gain on management of income from lump-sum payment 4,953,000 Capital expenditures 32,883,000 Net income 512,410,000 Capitalization Rate 4.6% Value based on the DCF Method 10,900,000,000 Discount rate 4.4% Terminal capitalization rate 4.8% Cost method value 12,900,000,000 Land ratio 87.3% Building ratio 12.7% Assessed based on actual amounts by reference to the level of similar properties Assessed based on actual amounts by reference to the level of similar properties By judging the estimate in the engineering report to be appropriate, recorded 30% of the levelled amount Referencing the level of similar properties, used the amount in the presented contract (estimate) after judging it to be appropriate Assessed by taking into account the local practice and tenant departure rate of the property Assessed based on actual amounts while considering fluctuation rates, age depreciation, etc. Recorded the amount in the presented material (estimate) after judging it to be appropriate Assessed by multiplying the amount obtained by subtracting vacancy portion equivalent amount from the amount of guarantee deposits at full occupancy, etc., by 1.0% yield By judging the estimate in the engineering report to be appropriate, recorded 70% of the levelled amount Assessed by reflecting profit and fluctuation risk of principal in the discount rate Assessed by comprehensively taking into account market trends, etc. after considering risk factors concerning regional/property-specific factors of the property Assessed based on the capitalization rate with consideration of risks such as future uncertainties Other items considered by appraiser upon appraisal None 13 / 19

14 (2) Daido Life Omiya Building Overview of Appraisal Report Appraisal value 3,040,000,000 yen Appraisal company Chuo Real Estate Appraisal Co., Ltd. Appraisal date August 31, 2017 (yen) Item Content Overview, etc. Income approach value 3,040,000,000 Decided by the DCF Method Value based on direct capitalization method 3,140,000,000 Operating revenue 218,966,000 Maximum gross Used income and expenditure, etc. based on the comparison with the 227,124,000 operating revenue market standard Vacancy loss, etc. 8,158,000 Assessed by referring to the actual results, etc. of similar properties Operating expenses 49,541,000 Maintenance expenses 13,724,000 Assessed based on building management contract and income and expenditure results, etc. Utility expenses 14,486,000 Assessed based on income and expenditure results, etc. Repair expenses 1,592,000 Assessed based on engineering reports and income and expenditure results PM fees 4,029,000 Assessed based on property management contract, etc. Tenant solicitation expenses, etc. 1,894,000 Assessed by referring to the actual results, etc. of similar properties Taxes and public dues 13,484,000 Actual amount Non-life insurance fees 332,000 Actual amount Other expenses 0 - Net operating income 169,425,000 Gain on management of income from 1,219,000 Assessed by referring to rental cases, etc. lump-sum payment Capital expenditures 19,957,000 Recorded the average value of the 12-year cumulative amount of renewal fees of facilities, etc. in the engineering report Net income 150,687,000 Capitalization Rate 4.8% Assessed by revising each standard yield of the area Value based on the DCF Method 3,040,000,000 Discount rate 4.6% Assessed by taking into account the forecast of market trend, etc. based on the capitalization rate Terminal capitalization rate 5.0% Assessed based on the capitalization rate with consideration of risks such as future uncertainties Cost method value 2,050,000,000 Land ratio 78.5% Building ratio 21.5% Other items considered by appraiser upon appraisal None 14 / 19

15 (3) Yamagami Building Overview of Appraisal Report Appraisal value 2,240,000,000 yen Appraisal company Daiwa Real Estate Appraisal,Co., Ltd. Appraisal date August 31, 2017 (yen) Item Content Overview, etc. Income approach value 2,240,000,000 Decided by verifying the value based on the DCF Method by using the value based on the direct capitalization method Value based on direct capitalization method 2,290,000,000 Operating revenue 136,961,467 Maximum gross Recorded by taking into account medium- to long-term 144,454,176 operating revenue competitiveness based on the new rent level, etc. Vacancy loss, etc. 7,492,709 Recorded by taking into consideration standard vacancy rate and competitiveness, etc. of target properties Operating expenses 32,486,814 Maintenance expenses 9,034,560 Assessed and recorded by referring to maintenance expenses and the actual amount of similar properties Utility expenses 7,679,376 Assessed and recorded by referring to the actual amount Repair expenses 2,229,167 Recorded repair expenses in the engineering report PM fees 2,167,846 Recorded based on contracts to be concluded Tenant solicitation Assessed and recorded by referring to tenant solicitation expenses of 1,059,669 expenses, etc. similar properties Taxes and public dues 9,213,800 Assessed and recorded by referring to the actual amount Non-life insurance Assessed and recorded by referring to insurance premiums of similar 198,940 fees properties Other expenses 903,456 Net operating income 104,474,653 Gain on management of income from 779,006 Recorded by multiplying expected deposits, etc. by investment yield lump-sum payment Capital expenditures 6,647,855 Recorded the annual average amount of the 12-year medium- to long-term renewal fees in the engineering report Net income 98,605,804 Capitalization Rate 4.3% Assessed by taking into consideration the locational conditions, building grade, etc. Value based on the DCF Method 2,220,000,000 Discount rate 4.1% Assessed in comparison with discount rates in transactions of similar properties and the yield of other financial instruments. Terminal capitalization rate 4.5% Assessed by taking into consideration the marketability, etc. of target property Cost method value 1,740,000,000 Land ratio 80.3% Building ratio 19.7% Other items considered by appraiser upon appraisal None One REIT corporate website: <Attached Materials> Reference Information 1: Photo and Map of the Assets to be Acquired Reference Information 2: List of Portfolio (after the acquisition of the Assets to be Acquired) 15 / 19

16 Reference Information 1: Photo and Map of the Assets to be Acquired (1) Daihakata Building 16 / 19

17 (2) Daido Life Omiya Building 17 / 19

18 (3) Yamagami Building 18 / 19

19 Reference Information 2: List of Portfolio (after the acquisition of the Assets to be Acquired) Category Property No. Property name Location (Note 1) (Anticipated) Acquisition price (million yen)(note 2) Investment ratio (%) (Note 3) OT-2 SIA Kanda Square Chiyoda-ku, Tokyo 7, OT-3 Tachikawa Nishiki-cho Building Tachikawa-shi, Tokyo 3, OT-4 CP10 Building Taito-ku, Tokyo 3, OT-5 Yokohama AP Building Yokohama-shi,Kanagawa 3, OT-6 Yushima First Genesis Building Bunkyo-ku, Tokyo 2, OT-7 Miyaji Building Nakano-ku, Tokyo 2, OT-8 36 Sankyo Building Shinjuku-ku, Tokyo 2, OT-9 Minami-Shinagawa JN Building Shinagawa-ku, Tokyo 2, OT-10 Minami-Shinagawa N Building Shinagawa-ku, Tokyo 2, OT-11 Minami-Shinagawa J Building Shinagawa-ku, Tokyo 2, OT-12 MY Atsugi Building Atsugi-shi,Kanagawa 1, Office OT-13 Hachioji SIA Building Hachioji-shi, Tokyo OT-14 Glass City Motoyoyogi Shibuya-ku, Tokyo 7, OT-15 Okachimachi CY Building Taito-ku, Tokyo 2, OT-16 Daido Life Omiya Building Saitama-shi, Saitama 3, OT-17 Yamagami Building Toshima-ku, Tokyo 2, OO-1 Central Shin-Osaka Building Osaka-shi, Osaka 4, OO-2 Karasuma Plaza 21 Kyoto-shi, Kyoto 3, OO-3 Stoke Building Nagoya Nagoya-shi, Aichi 2, OO-4 MY Kumamoto Building Kumamoto-shi,Kumamoto 1, OO-5 Nagoya Fushimi Square Building Nagoya-shi, Aichi 4, OO-6 Daihakata Building Fukuoka-shi, Fukuoka 10, Subtotal (21 properties) 76, R-1 fab Minami-Osawa Hachioji-shi, Tokyo 4, Retail R-2 Niigata Higashibori-dori Parking Building Niigata-shi, Niigata Subtotal (2 properties) Total (24 properties) 4, , Investment Security GK SIA Bridge No. 2 Silent partnership equity interest (Daihakata Building) Fukuoka-shi,Fukuoka 10 - Total (1 property) 10 - (Note 1) The Location column contains the minimum independent administrative district where each asset is located. (Note 2) (Anticipated) Acquisition price column shows the transaction price (excluding the amount equivalent to consumption tax, etc.) described in the purchase and sale agreement of the said real estate or trust beneficiary interest in real estate. (Note 3) Investment ratio is calculated as a percentage of each (anticipated) acquisition price to the aggregate (anticipated) acquisition price, and rounded off to the first decimal place. 19 / 19