For Immediate Release

Transcription

1 For Immediate Release REIT Issuer: ORIX JREIT Inc. (TSE: 8954) Hiroshi Yasuda President and Executive Director Asset Management Company: ORIX Asset Management Corporation Yoshitaka Kamemoto President and CEO Inquiries: Junko Kanazawa Director, Corporate Senior Vice President TEL: ORIX JREIT Announces Property Acquisitions DUPLEX GINZA TOWER 2/11, VIA INN SHINSAIBASHI BLDG., HOTEL KEIHAN SAPPORO, and Richmond Hotel Yamagata Ekimae TOKYO, August 14, 2015 ORIX JREIT Inc. ( OJR ) announced that our asset management company, ORIX Asset Management Corporation ( OAM ), passed a resolution on the property acquisitions as described below. 1. Summary of Properties to be acquired Property Type Area (Note 2) Seller (Note 3) Acquisition Price (million yen) Appraisal Value (million yen) NOI Yield (%) (Note 4) Yield after Depreciation (%) (Note 5) DUPLEX GINZA TOWER 2/11 Offices 6 Central Tokyo Wards (Chuo-ku) Sponsor 5,200 5, VIA INN SHINSAIBASHI BLDG. Others (Hotel) Other Areas (Osaka-shi) Sponsor (Development) 3,100 3, HOTEL KEIHAN SAPPORO Others (Hotel) Other Areas (Sapporo-shi) Sponsor (Development) 2,550 2, Richmond Hotel Yamagata Ekimae Others (Hotel) Other Areas (Yamagata-shi) Sponsor (Development) 2,300 2, Total 13,150 13, Existing Portfolio (Note 6) Notes: 1. Properties to be acquired refers to the each property or collectively to all the properties indicated above Central Tokyo Wards refers to Chiyoda, Chuo, Minato, Shinjuku, Shibuya and Shinagawa wards and Remaining Tokyo Wards refers to the remaining Tokyo wards other than the 6 Central Tokyo Wards. Other Parts of the Greater Tokyo Area refers to parts of Tokyo other than the 6 Central Tokyo Wards and Remaining Tokyo Wards, Kanagawa, Saitama and Chiba Prefectures. Other areas refers to areas other than the 6 Central Tokyo Wards, Remaining Tokyo Wards and Other Parts of the Greater Tokyo Area. 3. As to the Seller, Sponsor indicates ORIX Group including ORIX Corporation and its group companies. Sponsor (Development) indicates properties that were planned, developed and tenanted by the ORIX Group. ORIX Group refers to ORIX Corporation and its group companies. 1/27

2 4. The "NOI Yield of Properties to be acquired is calculated by using the formula: Net Revenue in the direct capitalization method recorded in the appraisal reports at the time of decision to acquire / Scheduled acquisition price; the figures are rounded to the first decimal place. 5. The "Yield after Depreciation of Properties to be acquired is calculated by using the formula: ( Net revenue in the direct capitalization method recorded in the appraisal reports at the time of decision to acquire estimated depreciation assumed by OAM) / Scheduled acquisition price; the figures are rounded to the first decimal place. 6. Existing Portfolio refers to the properties owned as of February 28, 2015 added by the three properties (PRIME SQUARE HIROSE-DORI, Central Crib Roppongi and ORE Omiya Building) acquired after March 1, 2015 and deducted by the three properties (Belle Face Miyamachi, Belle Face Bansui-Street and Round-Cross Kamata) transferred after March 1, Portion of two properties (Yoyogi Forest Building and Round-Cross Ichi-bancho) transferred after March 1, 2015 is also taken into account. NOI Yield and Yield after Depreciation of existing portfolio are calculated based on the annualized actual figures for properties owned as of February 28, 2015 and the figures for the three properties acquired after March 1, 2015 are calculated based on the figures in appraisal reports at the time of acquisition. 2. Purpose of the Acquisition The economic environment in Japan surrounding OJR has seen the depreciation of yen and high stock prices taking root due to the fiscal stimulus policy and monetary easing, and corporate performances are on a recovery trend. While the global economy as a whole is on modest recovery trend, there still are some underlying downside risks. Under such business circumstances, acquisition competition has seen intensifying regardless of property types in the real estate market and the expected cap rate for all property types is on a downward trend. In the office rental market, the vacancy rate is on a decreasing trend and the rent is on an increasing trend, and such trends have been spreading to regional cities. On the other hand, further heating up of acquisition competition due to lack of investment target properties and rising construction costs have become concerns. In such real estate transaction and rental markets, the abilities to operate properties in a wide range of property types and across various regions have become even more important. With the above perception of the environment, OJR aims to continue to achieve stable growth of its unitholder value by promoting an external growth strategy leveraging the ORIX Synergy (Note 1) as well as its strength as a diversified REIT, and acquiring properties in portfolio from the perspectives of growth potential, profitability and stability based on the following investment policy. Invest selectively regardless of property types by utilizing the strength as a diversified REIT, extensive pipelines of the ORIX Group and expertise backed by ORIX Synergy Continue to consider property replacement by grasping the market environment Furthermore, OJR recognizes that the stability of its portfolio has improved in line with the growth of the asset size. Amid such circumstances, the risk of rent decrease has also been reduced with improved property competitiveness and strengthened relationships with tenants through Direct PM (Note 2). This allows for the stabilization of DPU by allocating a part of gains from property transfer to retained earnings for future withdrawal in accordance with variation in business performance. Against the backdrop of the above, OJR aims to manage risk and achieve stable growth in unitholder value by promoting a combination strategy of external growth, internal growth and financial strategies, seeking further growth opportunities by investing in properties with high revenue growth potential, increasing investment in hotels, and increasing its borrowing capability for flexible future acquisitions. Based on the above strategy, OJR has decided to acquire one office and three hotels from the ORIX Group s pipeline. Note: 1. The ORIX Synergy refers to the cooperative relationship between ORIX Group companies and OJR. 2. Direct PM is the support of property management operations by OAM, through leasing activities, adding of value to properties and other means while utilizing the ORIX Synergy. 2/27

3 3. Acquisition Summary 1) DUPLEX GINZA TOWER 2/11 Property to be acquired : Real estate trust beneficial interest Acquisition price Contract date : August 14, 2015 (Note 1) Scheduled acquisition date : September 30, 2015 Current owner and seller Funding method Payment term : 5,200,000,000 (excluding national and local consumption taxes, etc.) : Godo Kaisha London Silver Proceeds from the issuance of new investment units through public : offering (Note 2) (Note 3) and cash on hand : 100% on delivery 2) VIA INN SHINSAIBASHI BLDG. Property to be acquired : Real estate trust beneficial interest Acquisition price Contract date : August 14, 2015 (Note 1) Scheduled acquisition date : September 30, 2015 Current owner and seller Funding method Payment term : 3,100,000,000 (excluding national and local consumption taxes, etc.) : ORIX Corporation Proceeds from the issuance of new investment units through public : offering (Note 2) (Note 3) and cash on hand : 100% on delivery 3) HOTEL KEIHAN SAPPORO Property to be acquired : Real estate trust beneficial interest Acquisition price Contract date : August 14, 2015 (Note 1) Scheduled acquisition date : September 30, 2015 Current owner and seller Funding method Payment term : 2,550,000,000 (excluding national and local consumption taxes, etc.) : ORIX Corporation Proceeds from the issuance of new investment units through public : offering (Note 2) (Note 3) and cash on hand : 100% on delivery 4) Richmond Hotel Yamagata Ekimae Property to be acquired : Real estate trust beneficial interest Acquisition price Contract date : August 14, 2015 (Note 1) Scheduled acquisition date : September 30, 2015 Current owner and seller Funding method Payment term : 2,300,000,000 (excluding national and local consumption taxes, etc.) : ORIX Corporation Proceeds from the issuance of new investment units through public : offering (Note 2) (Note 3) and cash on hand : 100% on delivery Notes: 1. The trust beneficial interest sale and purchase agreement for Properties to be acquired (the Purchase and Sales Agreements ) fall under the category of Forward Commitment, etc. as provided in the Comprehensive Guideline for Supervision of Financial Instruments Business Operators, etc. set by the Financial Services Agency as they are postdated Purchase and Sales Agreements where the settlement and delivery of the properties are to take place one month or more after the conclusion of agreement and such. 3/27

4 Financial Impact on OJR in the Event that it Fails to Fulfill the Forward Commitment, Etc. In this regard, the Purchase and Sales Agreements have cancellation provisions that set forth the following conditions. i. When either the seller or the buyer breaches the provisions of the Purchase and Sales Agreement (such a party referred to as the Breaching Party ), the counterparty shall set a certain period and demand the Breaching Party to meet its obligations within the period. If the Breaching Party fails to correct its violations within that period, the counterparty shall be able to cancel the Purchase and Sales Agreement. ii. When either the seller or the buyer breaches the provisions of the Purchase and Sales Agreement, the Breaching Party shall be obliged to compensate or indemnify for the resulting damages, etc. of the counterparty within the scope of an equivalent cause-and-effect relationship. iii. After the conclusion of the Purchase and Sales Agreements, the seller confirms that the buyer is scheduled to acquire funds for the properties to be acquired by issuing additional investment units (the Acquisition Funds ) and if it is the case that the Acquisition Funds for the whole purchase price cannot be reached by the scheduled acquisition date (including cases where the buyer deems the issuance of investment units is unreasonable such as due to the fluctuation of the investment unit price or where it is reasonably assumed that it will not be reached), the buyer may unconditionally terminate the Purchase and Sales Agreements. 2. For details, please refer to the press release ORIX JREIT Announces Issue of New Investment Units and Secondary Offering of Units to be announced at a later date. 3. Borrowing may be subject to be executed depending on the amount of proceeds from the issuance of new investment units through public offering. 4. Summary of Properties to be acquired (1) DUPLEX GINZA TOWER 2/11 Specified asset category Real estate trust beneficial interest Trustee Term of trust agreement Mizuho Trust & Banking Co., Ltd. Scheduled acquisition date September 30, 2015 Acquisition price Appraisal value 5,420,000,000 Date of Appraisal July 1, 2015 Appraiser Address March 23, 2001 September 30, 2025(Scheduled) 5,200,000,000 (excluding national and local consumption taxes, etc.) The Tanizawa Sōgō Appraisal Co., Ltd Ginza, Chuo-ku, Tokyo Public transit access Approx. 2-minute walk from Higashi Ginza Station on Toei Asakusa Line and Ginza-itchome Station on Tokyo Metro Yurakucho Line Registered Area m 2 Land Building Usage restrictions Type of ownership Registered usage Registered completion date Commercial zone Fee simple ownership Retail, Office August 2007 Type of ownership Fee simple ownership Registered Area 3, m 2 Registered construction Architect Structural engineer General contractor Building inspection agency Main facilities and specifications Steel-frame with flat roof, 13 floors with 1 underground floor K.K. TOLTEC Urban Architecs K.K. TOLTEC Urban Architecs Fukuda Corporation Japan ERI Co., LTD Elevator: 2 Parking: 9 vehicles (parking on the premises:1, parking at a distance:8) Leased Area (Standard floor area): Approx m 2 (Approx. 70 tsubo) Ceiling Height: 2,700 mm (Office floors) 4/27

5 Earthquake resistance (with or without earthquake insurance) Previous owner (beneficiary) Scheduled Property Manager Collateral Special notes Special features of the property 2% (without) (Note 1) (based on Sompo Japan Nipponkoa Risk Management, Inc. report) Godo Kaisha London Silver DUPLEX Gathering Co., Ltd. None None Summary of the Engineering Report Reporting Company Date of inspection June 1, 2015 The location is highly convenient as it is located approx. 2-minute walk from subway Ginza-itchome Station and Higashi-Ginza Station and is within walking distance from 8 stations on 7 lines including JR Yurakucho Station, subway Ginza Station and Takaracho Station. Located in Ginza, one of the largest commercial districts in Japan, the property stands in an area where restaurants and medium-scale offices are concentrated. The property has high visibility with a characteristic glass facade facing Showa-dori Street. The property is a medium-scale office building with two elevators in the open entrance offering a strong appeal to shop-visit type tenants. With the standard floor area of approx m 2 in a regular shape, the location and specifications are suitable for both office and shop use. Internal growth through flexible leasing can be expected. The property currently have 13 tenants, mainly companies that are economy-sensitive such as IT-related companies, a foreign bedclothing company s showroom, a gym and beauty clinic. The increase in the number of people working nearby due to a series of large-scale developments in Ginza and its surrounding areas also brings business opportunities for tenants. Tokio Marine & Nichido Risk Consulting Co., Ltd. Maintenance Cost 20 million (Note 2) (Total amount of 12 years from the date of inspection) Replacement Cost 943 million Summary of Rental status (as of May 31, 2015) No. of tenants 13 (Note 2) (Note 2) Gross rental income 21 million per month (excluding car parking space etc.) (Note 2) Security deposits 169 million Total rent space 2, m 2 Total rentable space 2, m 2 Occupancy rate 100% Assumed net operating income (NOI) 214 million per annum (Note) (Note) The net operating income (NOI) represents the assumed revenue/expenditure balance under stabilized occupancy, based on the terms of the lease contract, etc. at the scheduled acquisition date, but excluding extraordinary factors that may occur during the first year of acquisition. The preconditions are as below; these figures are not what OJR expects for the current fiscal year. 1) Occupancy rate: 96% 2) Taxes: Taxes are calculated on the standard tax amount for fiscal /27

6 Notes: 1. PML (Probable Maximum Loss) shows the ratio (%) of cost of recovering a building after it is damaged to its state before the damage occurred against replacement cost, when assuming an earthquake that may occur once in 475 years in average in probability statistics (recurrence interval of 475 years). The earthquake risk of a building is evaluated based on the event risk curve that shows the relationship of amount of expected loss (horizontal axis) and probability for the loss to exceed the year (vertical axis). However, the risk curve has variability because loss evaluation comes with uncertainties in earthquake resistance performance of the building, behavior of earthquake vibration, etc. Accordingly, the above PML figures use the risk curve with credibility level of 90%, and are rounded to the nearest whole number. 2. Figures are rounded down to the nearest million yen. Photo and map 6/27

7 (2) VIA INN SHINSAIBASHI BLDG. Specified asset category Real estate trust beneficial interest Trustee Term of trust agreement Scheduled acquisition date September 30, 2015 Acquisition price Appraisal value 3,200,000,000 Date of Appraisal July 1, 2015 Appraiser Address Mitsubishi UFJ Trust and Banking Corporation June 25, 2014 September 30, 2025(Scheduled) 3,100,000,000 (excluding national and local consumption taxes, etc.) Japan Real Estate Institute Nishishinsaibashi, Chuo-ku, Osaka-shi, Osaka Approx. 2-minute walk from Shinsaibashi Station on Osaka Subway Public transit access Midosuji Line and Approx. 3-minute walk from Shinsaibashi Station on Osaka Subway Nagahori-Tsurumiryokuchi Line Registered Area 1, m 2 Land Building Usage restrictions Type of ownership Registered usage Registered completion date Commercial zone Fee simple ownership Hotel, Retail March 2011 Type of ownership Fee simple ownership Registered Area 4, m 2 Registered construction Architect Structural engineer General contractor Building inspection agency Main facilities and specifications Earthquake resistance (with or without earthquake insurance) Previous owner (beneficiary) Scheduled Property Manager Collateral Special notes Special features of the property Steel-frame with flat roof, 12 floors ASAI KEN Architectural Research Inc. ASAI KEN Architectural Research Inc. Asunaro Aoki Construction Co., Ltd. The Building Center of Japan Elevator: 3 Parking: 10 vehicles 10% (without) (Note 1) (based on Sompo Japan Nipponkoa Risk Management, Inc. report) ORIX Corporation CBRE K.K. None The fixed-term lease agreement concluded between the previous owner of the property (ORIX Real Estate Corporation) and the lessee of the property (West Japan Railway Daily Service Net Company Co., Ltd.) stipulates that, in the case the property is to be sold, the rights of first negotiation for acquisition of the property shall be granted to the lessee of the property and such agreement has been succeeded to the trustee. The property is located in Shinsaibashi area, Osaka s representative shopping spot which is also popular among foreign tourists. Out of a total of 205 guest rooms, 184 are single rooms. A convenience store on the 1st floor provides convenience to guests. 7/27

8 Summary of the Engineering Report Reporting Company Date of inspection June 12, 2015 The lessee of the hotel is West Japan Railway Daily Service Net Company Co., Ltd., a subsidiary of West Japan Railway Company, and the operating company is its subsidiary, West Japan Railway VIA INN Co., Ltd. Tokio Marine & Nichido Risk Consulting Co., Ltd. Maintenance Cost 43 million (Note 2) (Total amount of 12 years from the date of inspection) Replacement Cost 1,115 million Summary of Rental status (as of May 31, 2015) No. of tenants 4 (Note 2) (Note 3) Gross rental income Not-disclosed Contractual rent Fixed rent Security deposits (Note 3) Not-disclosed Total rent space 4, m 2 Total rentable space 4, m 2 Occupancy rate 96.7% Assumed net operating income (NOI) 153 million per annum (Note) (Note) The net operating income (NOI) represents the assumed revenue/expenditure balance under stabilized occupancy, based on the terms of the lease contract, etc. at the scheduled acquisition date, but excluding extraordinary factors that may occur during the first year of acquisition. The preconditions are as below; these figures are not what OJR expects for the current fiscal year. 1) Occupancy rate: 99.1% (Hotel:100%, Retail:97%) 2) Taxes: Taxes are calculated on the standard tax amount for fiscal Notes: 1. PML (Probable Maximum Loss) shows the ratio (%) of cost of recovering a building after it is damaged to its state before the damage occurred against replacement cost, when assuming an earthquake that may occur once in 475 years in average in probability statistics (recurrence interval of 475 years). The earthquake risk of a building is evaluated based on the event risk curve that shows the relationship of amount of expected loss (horizontal axis) and probability for the loss to exceed the year (vertical axis). However, the risk curve has variability because loss evaluation comes with uncertainties in earthquake resistance performance of the building, behavior of earthquake vibration, etc. Accordingly, the above PML figures use the risk curve with credibility level of 90%, and are rounded to the nearest whole number. 2. Figures are rounded down to the nearest million yen. 3. Figures are not disclosed because the consent of tenants could not be obtained. 8/27

9 Photo and map 9/27

10 (3) HOTEL KEIHAN SAPPORO Specified asset category Trustee Term of trust agreement Real estate trust beneficial interest Sumitomo Mitsui Trust Bank, Limited Scheduled acquisition date September 30, 2015 Acquisition price Appraisal value 2,720,000,000 Date of Appraisal July 1, 2015 Appraiser Location June 25, 2014 September 30, 2025 (Scheduled) 2,550,000,000 (excluding national and local consumption taxes, etc.) Japan Real Estate Institute and Other, Kita 6-jo Nishi, Kita-ku, Sapporo-shi, Hokkaido (Registered address for building) Public transit access Approx. 5-minute walk from Sapporo Station on JR Hakodate Main Line Registered Area m 2 Land Building Usage restrictions Type of ownership Registered usage Registered completion date Commercial zone Fee simple ownership Hotel April 2009 Type of ownership Fee simple ownership Registered Area 5, m 2 Registered construction Architect Structural engineer General contractor Building inspection agency Main facilities and specifications Earthquake resistance (with or without earthquake insurance) Previous owner (beneficiary) Scheduled Property Manager Collateral Special notes Special features of the property Steel-frame with flat roof, 14 floors FUJITA ARCHITECTS AND ENGINEERING OFFICE Y.K. EBINA Structure Research TODA CORPORATION City of Sapporo Elevator: 3 Parking: 21 vehicles (Mechanical Parking: 20, ground space:1) 0% (without) (Note 1) (based on Sompo Japan Nipponkoa Risk Management, Inc. report) ORIX Corporation CBRE K.K. None The fixed-term lease agreement concluded between the previous owner of the property (ORIX Real Estate Corporation) and the lessee of the property (Hotel Keihan) stipulates that, in the case the property is to be sold, the rights of first negotiation for acquisition of the property shall be granted to the lessee of the property. In line with the cancellation of the master lease agreement for the property concluded between the trustee and the previous beneficiary as of the scheduled acquisition date, such agreement shall be succeeded to the trustee. The property stands in an area in front of Sapporo Station, a hub for business and sightseeing in Hokkaido, where the demand is 10/27

11 Summary of the Engineering Report Reporting Company Date of inspection June 19, 2015 strongest in both aspects, and is located approx. 5-minute walk from the station. Out of a total of 200 guest rooms, 112 are single rooms. As to facilities, a large bath is a differentiating feature. The lessee and operating company of the hotel, Hotel Keihan, is a subsidiary of Keihan Electric Railway Co., Ltd. Tokio Marine & Nichido Risk Consulting Co., Ltd. Maintenance Cost 99 million (Note 2) (Total amount of 12 years from the date of inspection) Replacement Cost 1,453 million Summary of Rental status (as of May 31, 2015) No. of tenants 1 (Note 2) (Note 3) Gross rental income Not-disclosed Contractual rent Fixed rent Security deposits (Note 3) Not-disclosed Total rent space 5, m 2 Total rentable space 5, m 2 Occupancy rate 100% Assumed net operating income (NOI) 148 million per annum (Note) (Note) The net operating income (NOI) represents the assumed revenue/expenditure balance under stabilized occupancy, based on the terms of the lease contract, etc. at the scheduled acquisition date, but excluding extraordinary factors that may occur during the first year of acquisition. The preconditions are as below; these figures are not what OJR expects for the current fiscal year. 1) Occupancy rate: 100% 2) Taxes: Taxes are calculated on the standard tax amount for fiscal Notes: 1. PML (Probable Maximum Loss) shows the ratio (%) of cost of recovering a building after it is damaged to its state before the damage occurred against replacement cost, when assuming an earthquake that may occur once in 475 years in average in probability statistics (recurrence interval of 475 years). The earthquake risk of a building is evaluated based on the event risk curve that shows the relationship of amount of expected loss (horizontal axis) and probability for the loss to exceed the year (vertical axis). However, the risk curve has variability because loss evaluation comes with uncertainties in earthquake resistance performance of the building, behavior of earthquake vibration, etc. Accordingly, the above PML figures use the risk curve with credibility level of 90%, and are rounded to the nearest whole number. 2. Figures are rounded down to the nearest million yen. 3. Figures are not disclosed because the consent of the tenant could not be obtained. 11/27

12 Photo and map 12/27

13 (4) Richmond Hotel Yamagata Ekimae Specified asset category Real estate trust beneficial interest Trustee Term of trust agreement Sumitomo Mitsui Trust Bank, Limited Scheduled acquisition date September 30, 2015 Acquisition price Appraisal value 2,380,000,000 Date of Appraisal July 1, 2015 Appraiser Location Public transit access Land Building Registered Area Usage restrictions Type of ownership Registered usage Registered completion date June 25, 2014 September 30, 2025 (Scheduled) 2,300,000,000 (excluding national and local consumption taxes, etc.) Japan Real Estate Institute Hotel: Futaba-cho, Yamagata-shi, Yamagata (Address) Parking: and Other, Futaba-cho, Yamagata-shi, Yamagata (Registered address for land) Approx. 5-minute walk from Yamagata Station on JR Yamagata Shinkansen Line and JR Ou Main Line Hotel: 1, m 2 Parking: m 2 Commercial zone Fee simple ownership Hotel December 2007 Type of ownership Fee simple ownership Registered Area 7,169.56m 2 Registered construction Architect Structural engineer General contractor Building inspection agency Main facilities and specifications Earthquake resistance (with or without earthquake insurance) Previous owner (beneficiary) Scheduled Property Manager Collateral Special notes Special features of the property Reinforced concrete with flat roof, 12 floors Hiroshi Kanno Architect & Associate co., Ltd Fujita Corporation Fujita Corporation Bureau Veritas Japan Elevator: 2 Parking: 54 vehicles (Mechanical Parking: 36, ground space:3, parking at a distance:15) 1% (without) (Note 1) (based on Sompo Japan Nipponkoa Risk Management, Inc. report) ORIX Corporation CBRE K.K. None None The property is located in front of Yamagata Station, where there is a low new supply of hotels and the supply-demand environment is favorable. As there are commercial facilities such as a supermarket nearby, the location is highly convenient for guests. Out of a total of 220 rooms, 170 are single rooms. High customer satisfaction is achieved by providing large guest rooms and breakfast using local ingredients. 13/27

14 Summary of the Engineering Report Reporting Company Date of inspection June 16, 2015 The lessee and operating company of the hotel, RNT HOTELS Co., Ltd, is a subsidiary of ROYAL HOLDINGS Co., Ltd. Tokio Marine & Nichido Risk Consulting Co., Ltd. Maintenance Cost 3 million (Note 2) (Total amount of 12 years from the date of inspection) Replacement Cost 1,524 million Summary of Rental status (as of May 31, 2015) No. of tenants 2 (Note 2) (Note 3) Gross rental income Not-disclosed Contractual rent Fixed rent Security deposits (Note 3) Not-disclosed Total rent space 7, m 2 Total rentable space 7, m 2 Occupancy rate 100% Assumed net operating income (NOI) 143 million per annum (Note) (Note) The net operating income (NOI) represents the assumed revenue/expenditure balance under stabilized occupancy, based on the terms of the lease contract, etc. at the scheduled acquisition date, but excluding extraordinary factors that may occur during the first year of acquisition. The preconditions are as below; these figures are not what OJR expects for the current fiscal year. 1) Occupancy rate: 100% 2) Taxes: Taxes are calculated on the standard tax amount for fiscal Notes: 1. PML (Probable Maximum Loss) shows the ratio (%) of cost of recovering a building after it is damaged to its state before the damage occurred against replacement cost, when assuming an earthquake that may occur once in 475 years in average in probability statistics (recurrence interval of 475 years). The earthquake risk of a building is evaluated based on the event risk curve that shows the relationship of amount of expected loss (horizontal axis) and probability for the loss to exceed the year (vertical axis). However, the risk curve has variability because loss evaluation comes with uncertainties in earthquake resistance performance of the building, behavior of earthquake vibration, etc. Accordingly, the above PML figures use the risk curve with credibility level of 90%, and are rounded to the nearest whole number. 2. Figures are rounded down to the nearest million yen. 3. Figures are not disclosed because the consent of tenants could not be obtained. 14/27

15 Photo and map 15/27

16 5. Profile of Owner/Seller 1)DUPLEX GINZA TOWER 2/11 (as of July 13, 2015) Company name Godo Kaisha London Silver ( the Company ) c/o Tokyo Kyodo Accounting Office Address Marunouchi, Chiyoda-ku, Tokyo Representative Partner: General Incorporated Association Mexico City Gold Representative Functional Manager: Masato Kaida Primary business Acquisition, holding, disposition, leasing and management, etc. of real estate Shareholders equity 1.3 million Not-disclosed Major shareholders *Major shareholders are not disclosed as the consent of the Company could not be obtained. Not-disclosed Net Assets *Net Assets are not disclosed as the consent of the Company could not be obtained. Not-disclosed Total Assets *Total Assets are not disclosed as the consent of the Company could not be obtained. Date of establishment July 6, 2012 Relationships with OJR or its asset management company There is no capital relationship required for reporting between OJR or OAM and the Company. ORIX Corporation, the parent company of Capital relationship OAM (a related party of OAM as stipulated in the Act on Investment Trusts and Investment Corporations (the Investment Trusts Act )), has a silent partnership investment in the Company. Personal relationships There is no personal relationship required for reporting between OJR or OAM and the Company. Business relationships Applicability to related parties There is no business relationship required for reporting between OJR or OAM and the Company. The Company does not fall under related party of OJR. Furthermore, ORIX Real Estate Investment Advisors Corporation (a related party of OAM as stipulated in the Investment Trusts Act) is contracted to provide asset management for the Company. The Company falls under related party as stipulated in the Affiliated Company Transaction Regulations, which are internal rules of OAM. 2)VIA INN SHINSAIBASHI BLDG., 3)HOTEL KEIHAN SAPPORO, 4)Richmond Hotel Yamagata Ekimae (as of July 22, 2015) Company name ORIX Corporation ( the Company ) Address Hamamatsu-cho, Minato-ku, Tokyo Representative President and CEO: Makoto Inoue Primary business Lease, installment sales and other financial services, real estate-related businesses, etc. Shareholders equity (as of June 30, 2015) 220,456 million Major shareholders (as of March 31, 2015) Japan Trustee Services Bank, Ltd. (trust account) Net Assets (as of March 31, 2015) 2,318,071 million yen Total Assets (as of March 31, 2015) 11,443,628 million yen Date of establishment March 28, /27

17 Relationships with OJR or its asset management company Capital relationship There is no capital relationship required for reporting between OJR and the Company. However, the Company is the parent company of OAM and falls under related parties of OAM as stipulated in the Investment Trusts Act. Personal relationships Business relationships Applicability to related parties As of July 31, 2015, 60 persons of the officers and employees of OAM are seconded from the Company. OJR acquired three properties (total acquisition price: 19,500 million) in the Fiscal Period ended February 2015 and a property (acquisition price: 7,030) in the Fiscal Period ended August 2015 from the Company. The Company does not fall under related party of OJR. As mentioned above, the Company falls under the related parties of OAM as stipulated in the Investment Trusts Act. 6. Information of previous Ownership, etc. (1) DUPLEX GINZA TOWER 2/11 Previous owner Owner before previous owner Company name Godo Kaisha London Silver Not a party having special relationship of interest Special relationships Refer to Section 5 Profile of involved Owner/Seller above - Background to and reason for Acquired for the purpose of acquisition investment and management - Acquisition date August 1, Acquisition price Omitted, as previous owner held - property for over a year (2) VIA INN SHINSAIBASHI BLDG. Previous owner Owner before previous owner Company name ORIX Corporation Not a party having special relationship of interest Special relationships Refer to Section 5 Profile of involved Owner/Seller above - Development Background to and reason for (Construction completed in March acquisition 2011) - Acquisition date - - Acquisition price - - (3) HOTEL KEIHAN SAPPORO Previous owner Owner before previous owner Company name ORIX Corporation Not a party having special relationship of interest Special relationships Refer to Section 5 Profile of involved Owner/Seller above - Development Background to and reason for (Construction completed in April acquisition 2009) - Acquisition date - - Acquisition price /27

18 (4) Richmond Hotel Yamagata Ekimae Previous owner Company name ORIX Corporation Special relationships Refer to Section 5 Profile of involved Owner/Seller above - Development Background to and reason for (Construction completed in acquisition December 2007) - Acquisition date - - Acquisition price - - Owner before previous owner Not a party having special relationship of interest 7. Profile of Intermediary (All Properties) None 8. Transaction with Related-Party, etc. The following transaction has followed procedures in accordance with the Affiliated Company Transaction Regulations which are internal rules of OAM. Property Acquisition OJR will acquire DUPLEX GINZA TOWER 2/11 from Godo Kaisha London Silver and VIA INN SHINSAIBASHI BLDG., HOTEL KEIHAN SAPPORO and Richmond Hotel Yamagata Ekimae from ORIX Corporation. For a summary of these related parties, please see 5. Profile of Owner/Seller above. 9. Future Outlook With regard to impact on the financial forecast for the 28 th fiscal period (from September 1, 2015 through February 29, 2016) and the 29 th fiscal period (from March 1, 2016 through August 31, 2016) due to the property acquisitions, please refer to the press release ORIX JREIT Announces Revisions of Earnings & Distributions Forecasts for the 27 th Fiscal Period (Ending August 31, 2015) and the 28 th Fiscal Period (Ending February 29, 2016), and Earnings & Distributions Forecasts for the 29 th Fiscal Period (Ending August 31, 2016) announced today. 18/27

19 10. Appraisal Summary I. Appraisal summary (1) DUPLEX GINZA TOWER 2/11 Name of asset DUPLEX GINZA TOWER 2/11 Date of Value Appraisal Value (In thousands of yen) Appraiser Capitalization Method Item Content 5,420,000 Valuation by the Direct Capitalization Method 5,620,000 (1) Gross Operating Revenue [(a)-(b)] 284,611 (a) Effective gross revenue 301,240 (b) Vacancy loss 16,629 (2) Operating Expenses 67,256 Maintenance Expenses 9,430 July 1, ,420,000 The Tanizawa Sōgō Appraisal Co., Ltd. Grounds (In thousands of yen) Calculated with the DCF method as a standard and by conducting verification based on the direct capitalization method. The rent revenues, common service fee revenues, utilities revenues, parking lot revenues, etc. considered to be stable assessed in consideration of the competitiveness of the subject real estate, past results, market trends, recent rent examples, etc. Assessed based on vacancy rate considered to be stable in consideration of the competitiveness of the subject real estate, past results, market trends, etc. Assessed in reference to past results, contract details, levels for similar real estate, etc. Utility Expenses Repair Expenses Property Management Fee 19, ,425 Assessed in reference to past results, levels for similar real estate, etc. Assessed in reference to the engineering report, levels for similar real estate, etc. Assessed in reference to contract details, levels for similar real estate, etc. Tenant Advertisement Cost 4,103 Tax and Public Dues Casualty Insurance Other Expenses Assessed based on turnover rate considered to be stable in consideration of the competitiveness of the subject real estate, past results, market trends, etc. 19,509 Assessed based on the actual tax amount for FY2015, etc. 288 (3) Net Operating Income [(1)-(2)] 217,355 (4)Profit from Managing Security Deposit (5)Capital Expenditure Assessed in reference to the estimate amount, levels for similar real estate, etc. 5,654 Assessed in reference to past results 3,201 Calculated with investment yield at 2.0% 1,410 (6)Net Revenue [(3)+(4)-(5)] 219,146 (7)Cap Rate 3.9% DCF Method 5,340,000 Discount Rate 4.0% Assessed in reference to the engineering report, levels for similar real estate, etc. Assessed based on the lease format, control of rights, etc. in consideration of the use, location, and building conditions of the subject real estate, real estate market trends, transaction examples, etc. Assessed based on the lease format, control of rights, etc. in consideration of the use, location, and building conditions of the subject real estate, levels and trends for funding procurement costs, etc. 19/27

20 Terminal Cap Rate 4.1% Cost Approach 5,390,000 Ratio of Land 86.3% Ratio of building 13.7% Assessed based on current capitalization yield at the time of price estimate in consideration of factors such as future uncertainty Any special considerations made in the reconciliation of estimated value Market participants make decisions with a focus on revenue stability, growth potential, liquidity at the time of resale, etc., and revenue prices incorporating this process are highly standardized. Accordingly, the appraisal value has been determined based on the revenue price (2) VIA INN SHINSAIBASHI BLDG. Name of asset VIA INN SHINSAIBASHI BLDG. Date of Value Appraisal Value (In thousands of yen) Appraiser Item Content July 1, ,200,000 Japan Real Estate Institute Grounds (In thousands of yen) Capitalization Method 3,200,000 Valuation by the Direct Capitalization Method 3,240,000 (1) Gross Operating Revenue [(a)-(b)] 211,036 (a) Effective gross revenue 212,868 (b) Vacancy loss 1,832 (2) Operating Expenses 57,114 Maintenance Expenses 3,070 [Hotel section] Recorded the rent revenues based on assessment of unit level of rents, etc. that can stably collected over the mid- to long-term, which was obtained based on the rent calculated from the current lease agreements, operating status of the hotel and rent levels assumed in the new leasing. [Retail section] Recorded the rent revenues (including common service fees) based on assessment of unit level of rents, etc. that can stably collected over the mid- to long-term, which was obtained based on the average rent calculated from the current lease agreements, rent levels assumed in the new leasing (both including common service fees), occupying end tenants' attributes, etc. [Utilities revenues] Recorded utilities revenues in the case of 100% occupancy rate, taking into account the status of occupancy based on past amounts. [Hotel section] It is general in the case of a building lease for hotel operation that the agreement is concluded with precondition of long-term operation. Thus we have decided that vacancy risks, etc. due to the move-out of tenants should be considered in the cap rate, and thus vacancy loss is not recorded. [Retail section] Recorded vacancy loss with the assumption of occupancy rate level, which is a stable occupancy rate over the mid- to long-term assessed based on occupancy rates and demand trends of similar properties as well as past and future occupancy trends of target retails. Estimated by referring to historical figures and current cost as well as cost of comparable properties, and considering the specific characteristics of the property 20/27

21 Utility Expenses 30,863 Estimated based on historical figures and by referring to occupancy rates, etc. of rental room portions Repair Expenses 1,880 Estimated by referring to considering historical figures, the level of such costs of similar properties and an annual average of repair costs in the engineering report, etc. Property Management Fee 2,335 Estimated considering the rate for similar properties and the specific characteristics of the property Tenant Advertisement Cost 426 Estimated based on the average annual amount calculated based on the anticipated turnover period of the tenant for the retail section by judging that recording of tenant advertisement costs is not necessary for the hotel section after considering the content of the lease agreement, etc. Tax and Public Dues 18,296 Estimated based on the standard taxable value, etc. for fiscal 2015 Casualty Insurance Other Expenses 244 Estimated considering insurance quotes and insurance rates of similar properties, etc. 0 No other expenses (3) Net Operating Income [(1)-(2)] 153,922 (4)Profit from Managing Security Deposit 3,509 Profit from Managing Security Deposits is assessed by multiplying the balance of deposits based on the current lease agreement by investment yield. Investment yield considered appropriate for fund management during the deposit period is assessed as 2.0% with consideration to the interest rate levels of both fund management and procurement. (5)Capital Expenditure 1,737 (6)Net Revenue [(3)+(4)-(5)] 155,694 (7)Cap Rate 4.8% DCF Method 3,160,000 Discount Rate 4.6% Terminal Cap Rate 5.0% Cost Approach 2,550,000 Ratio of Land 65.1% Ratio of building 34.9% Calculated under an assumption that expected expenditure is accumulated every term on average, considering the level of capital expenditure and age of similar properties and an annual average of renewal costs in the engineering report. Calculated by adding or subtracting a spread derived from the hotel's competitiveness such as locational, building conditions as well as other conditions of the property to/from the standard yield set by the appraiser for each district, also considering future uncertainties and investment yields for transactions of similar properties, etc. Calculated comprehensively considering specific characteristics of the property by referring to investment yields for transactions of similar properties, etc. Calculated comprehensively considering future trends of investment yields, risks in the property as an investment target, general forecasts for economic growth rate and trends in property prices and rents, etc. by referring to investment yields for transactions of similar properties, etc. Any special considerations made in the reconciliation of estimated value Determined using the Income Approach Value with the Cost Approach Value used only for reference considering that the Income Approach Value is more convincing because the price determination process is accurately reproduced with respect to earnings. 21/27

22 (3) HOTEL KEIHAN SAPPORO Name of asset HOTEL KEIHAN SAPPORO Date of Value Appraisal Value (In thousands of yen) Appraiser Item Content July 1, ,720,000 Japan Real Estate Institute Grounds (In thousands of yen) Capitalization Method 2,720,000 Valuation by the Direct Capitalization Method 2,740,000 (1) Gross Operating Revenue [(a)-(b)] 168,146 (a) Effective gross revenue 168,146 Recorded the rent revenues based on assessment of unit level of rents, etc. that can stably collected over the mid- to long-term, which was obtained based on the rent calculated from the current lease agreements, operating status of the hotel and rent levels assumed in the new leasing and attributes of the lessee, etc. Utilities revenues are not recorded since utilities bills are directly paid by the lessee as stipulated in the lease agreement. (b) Vacancy loss 0 (2) Operating Expenses 19,809 Maintenance Expenses 0 It is general in the case of a building lease for hotel operation that the agreement is concluded with precondition of long-term operation. Thus we have decided that vacancy risks, etc. due to the move-out of tenants should be considered in the cap rate, and thus vacancy loss is not recorded. Maintenance expenses are not recorded since maintenance bills are directly paid by the lessee as stipulated in the lease agreement. Utility Expenses 0 Utility Expenses are not recorded since utilities bills are directly paid by the lessee as stipulated in the lease agreement. Repair Expenses 1,745 Estimated by referring to considering historical figures, the level of such costs of similar properties and an annual average of repair costs in the engineering report, etc. Property Management Fee 2,304 Estimated considering the rate for similar properties and the specific characteristics of the property Tenant Advertisement Cost 0 Judged that recording of tenant advertisement costs is not necessary after deciding costs for tenant replacement or contract renewal should be considered in the cap rate, taking into account the contents of the lease agreement, etc. Tax and Public Dues 15,434 Estimated based on the standard taxable value, etc. for fiscal 2015 Casualty Insurance 326 Estimated considering insurance quotes and insurance rates of similar properties, etc. Other Expenses (3) Net Operating Income [(1)-(2)] 148,337 0 No other expenses 22/27

23 (4)Profit from Managing Security Deposit 3,363 Profit from Managing Security Deposits is assessed by multiplying the balance of deposits based on the current lease agreement by investment yield. Investment yield considered appropriate for fund management during the deposit period is assessed as 2.0% with consideration to the interest rate levels of both fund management and procurement. (5)Capital Expenditure 6,666 (6)Net Revenue [(3)+(4)-(5)] 145,034 Calculated under an assumption that expected expenditure is accumulated every term on average, considering the level of capital expenditure and age of similar properties and an annual average of renewal costs in the engineering report. (7)Cap Rate 5.3% Calculated by adding or subtracting a spread derived from locational, building conditions as well as other conditions of the property to/from the standard yield set by the appraiser for each district, also considering future uncertainties and investment yields for transactions of similar properties, etc. DCF Method 2,690,000 Discount Rate 5.1% Terminal Cap Rate 5.5% Cost Approach 1,790,000 Ratio of Land 37.2% Ratio of building 62.8% Calculated comprehensively considering specific characteristics of the property by referring to investment yields for transactions of similar properties, etc. Calculated comprehensively considering future trends of investment yields, risks in the property as an investment target, general forecasts for economic growth rate and trends in property prices and rents, etc. by referring to investment yields for transactions of similar properties, etc. Any special considerations made in the reconciliation of estimated value Determined using the Income Approach Value with the Cost Approach Value used only for reference considering that the Income Approach Value is more convincing because the price determination process is accurately reproduced with respect to earnings. 23/27

24 (4) Richmond Hotel Yamagata Ekimae Name of asset Richmond Hotel Yamagata Ekimae Date of Value Appraisal Value (In thousands of yen) Appraiser Item Content July 1, ,380,000 Japan Real Estate Institute Grounds (In thousands of yen) Capitalization Method 2,380,000 Valuation by the Direct Capitalization Method 2,390,000 (1) Gross Operating Revenue [(a)-(b)] 165,955 (a) Effective gross revenue 165,955 Recorded the rent revenues based on assessment of unit level of rents, etc. that can stably collected over the mid- to long-term, which was obtained based on the rent calculated from the current lease agreements, operating status of the hotel and rent levels assumed in the new leasing. (b) Vacancy loss 0 After judging comprehensively the contents of lease agreement (contract period, non-cancellation period, etc.) for each use, individual factors of the property such as locational and building conditions, and attributes/credibility, etc. of the occupying lessee, we have decided that vacancy risks, etc. due to the moveout of tenants should be considered in the cap rate, and thus vacancy loss is not recorded. (2) Operating Expenses 22,510 Maintenance Expenses 2,196 Estimated by referring to historical figures and current cost as well as cost of comparable properties, and considering the specific characteristics of the property Utility Expenses 0 Utility Expenses are not recorded since utilities bills are directly paid by the lessee as stipulated in the lease agreement. Repair Expenses 140 Estimated by referring to considering historical figures, the level of such costs of similar properties and an annual average of repair costs in the engineering report, etc. Property Management Fee 2,298 Estimated considering the rate for similar properties and the specific characteristics of the property Tenant Advertisement Cost 0 Judged that recording of tenant advertisement costs is not necessary after deciding costs for tenant replacement or contract renewal should be considered in the cap rate, taking into account the contents of the lease agreement, etc. Tax and Public Dues 17,499 Estimated based on the standard taxable value, etc. for fiscal 2015 Casualty Insurance Other Expenses 348 Estimated considering insurance quotes and insurance rates of similar properties, etc. 29 Recorded telephone charges and road occupying charges. (3) Net Operating Income [(1)-(2)] 143,445 24/27