Heiwa Real Estate REIT : Notice Concerning Acquisition of Domestic Assets (Kitahama 1-Chome Heiwa Building and Kita Nijo Building)

May 20, 2024

This notice is the English translation of the Japanese announcement on May 20, 2024

REIT Issuer

HEIWA REAL ESTATE REIT, Inc.

5-1 Nihonbashi Kabuto-cho,Chuo-ku, Tokyo

Aya Motomura, Executive Director

(Securities Code: 8966)

Asset Management Company

HEIWA REAL ESTATE Asset Management CO., LTD.

Masanori Hirano, Representative Director, President and Chief Executive Officer

Inquiries: Naomi Kawasaki, General Manager of Planning & Finance Department

TEL. [phone]

Notice Concerning Acquisition of Domestic Assets

(Kitahama 1-Chome Heiwa Building and Kita Nijo Building)

HEIWA REAL ESTATE REIT, Inc. (hereinafter referred to as the "Investment Corporation") announced today that HEIWA REAL ESTATE Asset Management CO., LTD. (hereinafter referred to as the "Asset Management Company"), the company to which the Investment Corporation entrusts its asset management operations, decided to execute the acquisition (hereinafter referred to as the "Acquisition") of assets (hereinafter referred to as the "Assets to be acquired"). The details are as follows. As Heiwa Real Estate Co., Ltd., the seller of the assets to be acquired is considered an interested party, etc. as defined by the Financial Instruments and Exchange Act (hereinafter referred to as the "FIEA") and the Act on Investment Trusts and Investment Corporations (hereinafter referred to as the "Investment Trust Act") as well as an interested party under the Regulations to Prevent Acts in Conflict of Interest of the Asset Management Company, the Asset Management Company has performed decision-making procedures required under the said regulations and other rules prior to conducting a transaction with the counterparty.

Details

1. Overview of the Acquisition

Property		Type of	Investment	Investment Area	Proposed	Appraisal
Property Name	Acquisition Price	Value
Number	Specified Asset	Category	(Note 2)
	(million yen) (Note 3)	(million yen)
		Real estate trust
		beneficiary		Regional investment
	Kitahama 1-Chome Heiwa	right
Of-55	(additional	Office	area	1,130	1,210
Building
	acquisition of 25%		(Osaka-City, Osaka)
		of quasi co-
		ownership interest)
		(Note 1)
		Real estate trust		Regional investment
			area
Of-59	Kita Nijo Building	beneficiary	Office	1,535	1,610
(Sapporo-City,
		right
			Hakkaido)
		Total			2,665	2,820

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(Note 1) As a result of the additional acquisition, the Investment Corporation will own the entire property.

(Note 2) The Primary Investment Area refers to the 23 Wards of Tokyo, the Secondary Investment Area refers to Tokyo excluding the Primary Investment Area, major urban areas in Kanagawa Prefecture, Chiba Prefecture and Saitama Prefecture, and the Regional Investment Area refers to major urban areas in the metropolitan area excluding the Primary Investment Area and the Secondary Investment Area. The metropolitan area is the urban area and the surrounding municipalities that are socially and economically connected to Tokyo and the central cities of the metropolitan area are the special wards of Tokyo and the government-designated cities. The same will apply below.

(Note 3) "Proposed acquisition price" is the price described in the real estate trust beneficiary right transaction agreement (consumption tax excluded), and does not include the amounts of settlement for fixed property tax, city planning tax, etc.

Of-55 Kitahama 1-Chome Heiwa Building

(1) Agreement execution date:	May 20, 2024
(2)	Scheduled acquisition date:	June 6, 2024
(3)	Seller:	Heiwa Real Estate Co., Ltd.
(4) Acquisition financing:	The proceeds from the issuance of new investment units (Note) and cash on
		hand
(5)	Payment method:	Lump-sum payment at time of delivery
(6)	Brokerage:	Not applicable
Of-59 Kita Nijo Building
(1) Agreement execution date:	May 20, 2024
(2)	Scheduled acquisition date:	June 6, 2024
(3)	Seller:	Heiwa Real Estate Co., Ltd.
(4) Acquisition financing:	The proceeds from the issuance of new investment units (Note) and cash on
		hand
(5)	Payment method:	Lump-sum payment at time of delivery
(6)	Brokerage:	Not applicable

(Note) For more details, please refer to "Notice Concerning Issuance of New Investment Units and Secondary Offering of Investment Units" announced today.

2. Reason for the Acquisition

The Investment Corporation will continue to implement its basic principles, namely the steady growth of its investment portfolio and the achievement of medium and long term sustainable profit. We will aim to maximize unitholder value by striking a balance between steady growth & sustainable profit. In January 2024, the Investment Corporation established its NEXT VISION II medium-term target, and it has aimed to achieve sustainable shareholder returns based on the internal growth of existing properties through value-enhancing construction, the realization of unrealized gains through the sale of property, and the new purchase of properties that have the potential to grow profit due to large gaps between actual and market rents. The Investment Corporation has decided the Acquisition, viewing the public offering as a growth opportunity to securing properties that will contribute to the further internal growth in the future.

1. Kitahama 1-Chome Heiwa Building (additional acquisition of 25% of quasi co-ownership interest)
   The asset to be acquired was constructed as part of a redevelopment project for Kitahama district in Osaka conducted by Heiwa Real Estate Co., Ltd. (referred to as "Heiwa Real Estate" in 2. Reason for the Acquisition), the sponsor. The construction completion of Osaka Securities Exchange Building., Hotel Brighton City Osaka Kitahama, Kitahama Tower & Plaza, and Heiwa Real Estate Kitahama Building was followed by that of Kitahama 1-chome Heiwa Building in 2015. The Kitahama district in Osaka where the asset to be acquired is located had a

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long history as a prosperous financial center, bringing together many money exchangers, etc. It still forms a vibrant financial district around Osaka Securities Exchange. The asset to be acquired was constructed on the site of the former main wing of Osaka Shoken Kaikan Building. which was home to many securities brokerage firms. Moreover, on the land where Kitahama 1-chome Heiwa Building is located was a Japanese restaurant where Okubo Toshimichi, Kido Takayoshi, Itagaki Taisuke held the Osaka Conference of 1875. The restaurant still exists in the new building with a stone monument at its gate, giving a feeling of the depth of the history of the district as one of Japan's political and economic centers. Together with the 75% quasi co-ownership interest acquired in June 2023, the Acquisition will result in the 100% ownership of the entire building. This is expected to facilitate an increase in asset value and liquidity in the trading market, and an unrealized gain of approximately 322 million yen based on the appraisal value of the entire building (4,840 million yen).

The asset to be acquired has direct access through an underpass to Kitahama Station of the Osaka Metro Sakaisuji Line and the Keihan Railway's Keihan Main Line and Yodoyabashi Station of the Osaka Metro Midosuji Line, offering excellent convenience of transportation. On the north side of the asset to be acquired is the spectacular scenery of Nakanoshima Park located on the other side of the Tosabori River. It is a sophisticated office building that can offer comfortable office space, with a terrace along the Tosabori River.

In terms of the level of the facilities provided, the asset to be acquired has individual air-conditioning, vibration control systems (TMD dampers and oil dampers), LED lighting for the entire building and installation of solar power generation panels. Moreover, the property has received the highest evaluation rank of S based on the CASBEE scale, which assesses and certifies the environmental performance of buildings. As the asset to be acquired has excellent environmental features, it is expected to contribute to the Investment Corporation's initiatives towards the realization of a low-carbon society.

1. Kita Nijo Building
   The asset to be acquired is a four-minute walk from Sapporo Station on the Sapporo Municipal Subway Namboku Line and Toho Line and a ten-minute walk from Sapporo Station on the JR Hakodate Line. The area around Sapporo Station, in which the asset to be acquired is located, is a commercial center where approximately 60% of the entire office market of Sapporo is located. The vacancy rate has remained low during and after the COVID-19 pandemic, suggesting the soundness of the market environment. A number of redevelopment projects are currently under way in the area around Sapporo Station, and Heiwa Real Estate join in these projects to further develop the area. The Investment Corporation has decided to purchase the property using its warehousing function leveraging sponsor support.
   In addition to the individual air-conditioning, the equipment provided for the asset to be acquired include a parking lot with a capacity of 30 vehicles and is capable of meeting demand from tenants regarding the parking of commercial vehicles. The renovation of the first-floor entrance and the plumbing on each floor was completed in 2021. The rent gap rate at the time of acquisition was -16.7%, suggesting a potential increase in future rent income (Note). In addition, the smallest unit in the asset to be acquired is approximately eight tsubo (approx. 26 ㎡) and the building has many small units. This is appealing to tenants and demand, particularly for small and medium-sized offices which are a large part of the Investment Corporation's office portfolio, can be expected.

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(Note) The rent gap of the property to be acquired was calculated using the following formula. Rent gap

= (monthly contract rent per tsubo for the property - market rent) / monthly contract rent per tsubo for the property x 100

Market rent refers to the maximum rent per tsubo including CAM fees which, according to the appraisal of CBRE K.K., is a reasonable level of rent under a new contract as of March 2024, based on comprehensive consideration of a range of factors including contracts concluded most recently for the property, contracts concluded for competing properties with the same use in the surrounding area, and the market environment. Monthly contract rent per tsubo is calculated by dividing the total amount of monthly rent specified in the lease agreement for the property to be acquired valid as of March 2024 and monthly rent specified in the lease agreement to be concluded, by the total leasable area of the property.

3. Details of the Assets to be acquired

Of-55 Kitahama 1-Chome Heiwa Building

Property number / Property name	Of-55 Kitahama 1-Chome Heiwa Building
Type of asset	Real estate trust beneficiary right (quasi-co-ownership interest: 25%)
Trustee (Planned)	Mitsubishi UFJ Trust and Banking Corporation
Trust term (Planned)	From June 6, 2023 to June 30, 2033
				(Building address on real estate registry)
Location (Note 1)	1-29-1, Kitahama, Chuo-ku, Osaka City, Osaka, and 7 others
(Lot number)
				1-1-14, Kitahama, Chuo-ku, Osaka City, Osaka
			Form of ownership	Ownership
				Entire site: 651.63 ㎡
			Area (Note 1)	Interest in the right of site: 162.90 ㎡ (Note 5)
Land			(651.63 ㎡ including already owned section of the building)
	Use district (Note 2)	Commercial district
			Building coverage ratio	80%
			(Note 3)
			Floor area ratio (Note 4)	800%
			Form of ownership	Ownership
			Use (Note 1)	Office, store, parking
			Structure/Floors (Note 1)	Steel beam / steel-framed reinforced concrete
			Flat roof 1 floor below ground and 9 floors above ground
Building			Total floor space: 5,475.33 ㎡
			Total floor space (Note 1)	Proprietary area: 1,368.83 ㎡ (Note 5)
				(5,475.33 ㎡ including already owned section of the building)
			Construction	February 28, 2015
			completion date (Note 1)
Collateral	None
Property management company	Heiwa Real Estate Property Management Co., Ltd.
Master lease company	Heiwa Real Estate Property Management Co., Ltd.
Master lease type	Pass through
Tenant details (Note 6)
		Total number of tenants	18
		Total rent income (Note 7)	51,911 thousand yen
		Leasehold and security	37,754 thousand yen
		deposits (Note 7)
		Total leased floor space	904.76 ㎡
		(Note 7)

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	Total leasable floor space	904.76 ㎡
	(Note 7)
	Occupancy rates	100% (as of March 31, 2024)
	(Based on Floor Space)
NOI yield (Note 8)	4.2%
		Survey company	Tokyo Bldg.-Tech Center Co., Ltd.
		Survey date	March 13, 2024
Outline of the engineering report	Replacement value (Note 9)	329,750 thousand yen
Probable maximum loss (PML)	14.1%
		Long-term repairs	40,705 thousand yen
		(next 15years) (Note 10)
Overview of real estate	Appraiser	Tanizawa Sogo Appraisal Co., Ltd.
Value date	April 1, 2024
appraisal report
Appraisal value	1,210,000 thousand yen
		・A deck built above the river that is adjacent to north side of the real
		estate in trust is in use. If the real estate in trust is transferred with the
		said deck, it would be necessary to conclude a memorandum of
		understanding on installation and operation of the deck above the river
Other items of special note	with Kitahama Waterfront Committee, which has obtained permission
for occupancy of the deck above the river from the river management
		authority, and to perform other prescribed procedures.
		・Part of the underground structure in the land in trust crosses over the
		boundary to the adjacent land on the south side. A memorandum has
		been concluded regarding the crossing of the boundary.

(Note 1) "Location (excluding indication of residential address)," "Area," "Use," "Structure/Floor" "Total floor space" and "Construction completion date" are as stated in the real estate registry.

(Note 2) "Use district" is the type of use district as listed in Article 8, Paragraph 1, Item 1 of the City Planning Act.

(Note 3) Building-to-land ratio is the ratio of building area to site area as stipulated in Article 53 of the Building Standards Act, and is a figure determined by city planning according to zoning and other factors. The asset to be acquired is a fireproof building in a commercial district and a fire prevention district, so the building-to-land ratio has been relaxed to 100%.

(Note 4) Floor-area ratio is the ratio of the total floor area of a building to the site area as stipulated in Article 52 of the Building Standards Act, and is a figure determined by city planning according to zoning and other factors.

(Note 5) "Interest in the right of site" is calculated by multiplying the site area or the total floor area of one building by quasi-co-ownership interest ratio (25%), rounded down to two decimal places.

(Note 6) Figures in "Tenant details" are as of March 31, 2024 and the amounts are rounded down to the nearest thousand yen. Furthermore, "Total rent income" is the annualized figure (multiplied by 12) of the monthly rent (including common expenses but not including fees for the usage of parking, storage rooms and such as well as consumption tax) as of March 31, 2024, based on lease agreements and sub-leasing agreements concluded between the trustee or the Investment Corporation and the master lease company or end tenants, with amounts below a thousand yen round off.

(Note 7) The figure is equivalent to the quasi-co-ownership interest in the trust beneficiary right (25%), which the Investment Corporation plans to acquire.

(Note 8) "NOI yield" indicates the NOI yield calculated by using the net operating income (NOI) for the 12 months, which serves as the assumption for the value indicated by the income approach under the direct capitalization method shown in the appraisal report for the property, and is rounded to the first decimal place.

(Note 9) The replacement value is calculated by multiplying the replacement value of one building as stated in the engineering report by the quasi-co-ownership interest ratio of 25%, rounded down to the nearest thousand yen.

(Note 10) The long-term repairs are calculated by multiplying The long-term repairs of one building as stated in the engineering report by the quasi-co-ownership interest ratio of 25%, rounded down to the nearest thousand yen.

Of-59 Kita Nijo Building

Property number / Property name	Of-59 Kita Nijo Building
Type of asset	Real estate trust beneficiary right
Trustee (Planned)	Mitsubishi UFJ Trust and Banking Corporation

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Trust term (Planned)	From December 22, 2023 to June 30, 2034
				(Building address on real estate registry)
Location (Note 1)	1-2-9,1-2-10, Kitanijohigashi, Chuo-ku, Sapporo City, Hokkaido
(Lot number)
				1-2-9,1-2-10, Kitanijohigashi, Chuo-ku, Sapporo City, Hokkaido
			Form of ownership	Ownership
			Area (Note 1)	477.31 ㎡
Land		Use district (Note 2)	Commercial district
	Building coverage ratio	80%
			(Note 3)
			Floor area ratio (Note 4)	600%
			Form of ownership	Ownership
			Use (Note 1)	Office, store, parking
			Structure/Floors (Note 1)	Reinforced concrete / Steel-framed reinforced concrete
Building		Flat roof 9 floors above ground
			Total floor space (Note 1)	2,887.33 ㎡
			Construction	February 21, 1990
			completion date (Note 1)
Collateral	None
Property management company	Taisay Building Management Co., Ltd.
Master lease company	HEIWA REAL ESTATE REIT, Inc.
Master lease type	Pass through
Tenant details (Note 5)
		Total number of tenants	40
		Total rent income	77,322 thousand yen
		Leasehold and security	25,623 thousand yen
		deposits
		Total leased floor space	2,071.78 ㎡
		Total leasable floor space	2,071.78 ㎡
		Occupancy rates	100% (as of March 31, 2024)
		(Based on Floor Space)
NOI yield (Note 6)	4.7%
				Survey company	Tokyo Bldg.-Tech Center Co., Ltd.
				Survey date	March 18, 2024
Outline of the engineering report	Replacement value	869,000 thousand yen
Probable maximum loss (PML)	0.2%
				Long-term repairs	127,500 thousand yen
				(next 15years)
				Appraiser	DAIWA REAL ESTATE APPRAISAL
Overview of real estate	CO.,LTD.
appraisal report	Value date	April 1, 2024
				Appraisal value	1,619,000 thousand yen
				・A portion of the concrete retaining wall crosses the boundary from the
				real estate in trust into the adjacent property to the south. A
				memorandum has been concluded regarding the crossing of the
Other items of special note	boundary.
・A portion of the concrete block wall, concrete retaining wall, and upper
				concrete block wall crosses the boundary from the adjacent property to
				the east into the real estate in trust. A memorandum has been concluded
				regarding the crossing of the boundary.

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・A portion of the marble curbstone, CO curbstone, fence clasps, and concrete retaining wall crosses the boundary from the real estate in trust into the adjacent property to the west. In addition, a portion of intrusion prevention fence (doors) and clasps crosses the boundary from the adjacent property to the west into the real estate in trust. A memorandum has been concluded regarding the crossing of the boundary.

(Note 1) "Location (excluding indication of residential address)," "Area," "Use," "Structure/Floor" "Total floor space" and "Construction completion date" are as stated in the real estate registry. Because the lot number is not indicated, "Lot number" is the building address in the real estate register.

(Note 2) "Use district" is the type of use district as listed in Article 8, Paragraph 1, Item 1 of the City Planning Act.

(Note 3) Building-to-land ratio is the ratio of building area to site area as stipulated in Article 53 of the Building Standards Act, and is a figure determined by city planning according to zoning and other factors. The asset to be acquired is a fireproof building in a commercial district and a fire prevention district, so the building-to-land ratio has been relaxed to 100%.

(Note 4) Floor-area ratio is the ratio of the total floor area of a building to the site area as stipulated in Article 52 of the Building Standards Act, and is a figure determined by city planning according to zoning and other factors.

(Note 5) Figures in "Tenant details" are as of March 31, 2024 and the amounts are rounded down to the nearest thousand yen. Furthermore, "Total rent income" is the annualized figure (multiplied by 12) of the monthly rent (including common expenses but not including fees for the usage of parking, storage rooms and such as well as consumption tax), based on lease agreements and sub-leasing agreements concluded between the trustee or the Investment Corporation and the master lease company or end tenants, with amounts below a thousand yen round off.

(Note 6) "NOI yield" indicates the NOI yield calculated by using the net operating income (NOI) for the 12 months, which serves as the assumption for the value indicated by the income approach under the direct capitalization method shown in the appraisal report for the asset to be acquired, and is rounded to the first decimal place.

4. Overview of the seller

Name	Heiwa Real Estate Co., Ltd.
Head office address	1-10 Nihonbashi Kabuto-cho,Chuo-ku, Tokyo
Name and title of representative	Kiyoyuki Tsuchimoto, Representative Executive Officer, President and CEO
Line of business	1. Building Business
2. Asset Management Business
Capital stock	21,492 million yen (Note1)
Date of incorporation	July 1947
Consolidated net assets	125,645 million yen (Note1)
Consolidated total assets	405,979 million yen (Note1)
Major shareholders and	The Master Trust Bank of Japan, Ltd. (trust account)	13.34%
Mitsubishi Estate Co., Ltd.	11.89%
shareholding ratio (Note2)
CGML PB CLIENT ACCOUNT/COLLATERAL	10.85%
Relationship with the Investment Corporation and the Asset Management Company and the Company
		Heiwa Real Estate Co., Ltd. owns 148,645 units (12.92% of total investment units
		issued) of the Investment Corporation's investment units as of November 30, 2023. In
	Capital relationship	addition, Heiwa Real Estate owns 4,968 shares (100% of total shares issued) of the
		Asset Management Company's shares, and falls within the scope of interested persons,
		etc. as defined in the FIEA and the Investment Trusts Act.
	Personnel relationship	Of the officers and employees of the Asset Management Company, 2 persons
	(excluding part-time directors) is dispatched from Heiwa Real Estate as of today.
	Business relationship	In the fiscal period ended November 30, 2023 (44th Fiscal Period), the Investment
	Corporation acquired assets (2 properties) from the seller Heiwa Real Estate Co., Ltd..
	Whether or not a	Heiwa Real Estate falls under related party of the Investment Corporation and the Asset
	Management Company. In addition, Heiwa Real Estate falls under interested party of
	related party
	the Asset Management Company.

(Note1) Figures are as of March 31, 2024.

(Note2) Figures are as of September 30, 2023.

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5. Status of previous owner, etc. of the properties to be acquired Of-55 Kitahama 1-Chome Heiwa Building

		Current owner	Previous owner
		Heiwa Real Estate Co., Ltd.
		(Regarding a certain portion of the land, the
	Name	status of the Osaka Shoken Building	Person other than specially-interested party
		Incorporated at the time of acquisition was
		succeeded as a result of the merger.)
	Relationship with	Please refer to 4. Overview of the seller
	specially interested	"Relationship with the Investment Corporation	－
	party	and the Asset Management Company"
	Course, reason, etc.
	leading to	Development property	－
	acquisition
		The acquisition price for the land is omitted
		because it has been owned by the current owner
	Acquisition price	for more than a year. The acquisition price for	－
		the building is omitted because it has been
		developed by the current owner.
	Time of acquisition	July 31, 1964 May 22, 2012 (Land)	－
	February 28, 2015 (Building completed)
Of-59 Kita Nijo Building
		Current owner	Previous owner
	Name	Heiwa Real Estate Co., Ltd.	Person other than specially-interested party
	Relationship with	Please refer to 4. Overview of the seller
	specially interested	"Relationship with the Investment Corporation	－
	party	and the Asset Management Company"
	Course, reason, etc.
	leading to	Acquisition for use in the warehousing function	－
	acquisition
	Acquisition price	1,500,000,000 yen	－
	Time of acquisition	December 22, 2023	－

1. Broker profile None
2. Transactions with interested parties

In addition to interested persons, etc. as defined in the FIEA and the Investment Trusts Act, the Asset Management Company regulates transactions involving conflicts of interest with interested parties, stipulating in the Regulations to Prevent Acts in Conflict of Interest that an "interested party" shall refer collectively to: (i) A company, etc. that holds more than 10% of the voting rights of all shareholders of the Asset Management Company; (ii) A company, etc. in which more than 50% of the voting rights of all its shareholders are held by (i); or (iii) A company, etc. to which (i) or (ii) provides advice, etc. on the management and administration of its assets. As Heiwa Real Estate Co., Ltd., the seller of the assets to be acquired, is an interested party, etc. the Acquisition was resolved at a meeting of the Board of Directors of the Investment Corporation held today, upon receiving the unanimous approval of the Investment Committee, Compliance Committee and the Board of Directors, respectively, in accordance with the Regulations to Prevent Acts in Conflict of Interest and other rules.

8. Outlook

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As for the management status forecast following the Acquisition, please refer to "Notice Concerning Revision of Management Status Forecasts for Fiscal Period Ending November 2024 (46th Fiscal Period) and Forecasts for Fiscal Period Ending May 2025 (47th Fiscal Period)" dated today.

9. Overview of the appraisal report

Property number / Property name	Of-55 Kitahama 1-Chome Heiwa Building
Appraisal value	1,210,000 thousand yen
Appraiser	Tanizawa Sogo Appraisal Co., Ltd.
Value date	April 1, 2024
Item	Content	Overview, etc.
(thousand yen)
				(Note 1) (Note 2)
Value	1,210,000	Estimated by linking indicated value by DCF method and indicated
value by direct capitalization method.
	Value indicated by the income
	approach (direct capitalization	1,247,500
	method)
		Effective gross income	63,342
			Potential total profits	65,981	Appraised based on market rents compiled mainly using current rent
			levels and examples of renting in the area, among other factors, as
					reference.
			Losses from vacancies,	2,638	Appraised based on vacancy rates standardized on a medium- to
			etc.	long-term basis.
		Operating expenses	16,138
			Management fees	3,607	Estimated based on the integrated building management service
			agreement and actual results.
			Property management	1,177	Estimated based on cases of earnings and actual results.
			fee
			Utilities expenses	4,414	Estimated based on actual results, etc.
			Maintenance and repair	660	Assessed based on figures stated in the engineering report and
			similar cases by distributing them into repair expenses and capital
			cost
				expenditure in the proportion of 3:7.
			Tenant advertisement	552	Appraised based on the assumption that 10.0% of tenants will be
			expenses, etc.	replaced annually.
			Public charges and	5,054	Estimated based on actual results.
			taxes
			Casualty insurance	37	Posted in reference to actual numbers from past fiscal years.
			premiums
			Other expenses	633	Estimated based on actual results, etc.
		Net operating income (NOI)	47,204
		Interest on lump-sum	405	Estimated based on an assessed investment yield of 1.0%.
		payments
		Capital expenditures	1,485	Assessed based on figures stated in the engineering report and
		similar cases by distributing them into repair expenses and capital
					expenditure in the proportion of 3:7.
		Net cash flow (NCF)	46,124
					Appraised by comparing and examining several market
		Capitalization rate	3.7%	capitalization rates for properties situated in neighboring or similar
		districts in the same market area, while simultaneously taking into
					account anticipated variations in future net cash flows and paying
					attention to relevance to discount rates.
	Value indicated by the income
	approach (discounted cash flow	1,192,500
	method)
					Assessed by determining the base yield of the office building using
		Discount rate	3.8%	the accumulation method, etc. based on the yields of financial
		instruments, and taking into account the individual risks of the
					acquired property.
		Terminal capitalization rate	3.9%	Assessed using the capitalization rate as the standard and by
		evaluating the uncertainty of future projections.
Value indicated by the cost approach	942,500
using the cost accounting method

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	Percentage of land	70.3%
	Percentage of building	29.7%
Other notable items regarding the	－
appraisal as stated by the appraiser

(Note 1) "Appraisal value" is exclusive price indicated in the appraisal report due to an increase in economic value resulting from the whole ownership of the building achieved through this additional purchase. The appraisal value of the entire building after this additional purchase will be 4,840 million yen. The details are the figures relating to the entire building and the site, assuming 100% ownership as stated in the appraisal report, multiplied by the quasi co-ownership ratio of 25% in the beneficial interest in trust that the Investment Corporation plans to acquire.

(Note 2) The balance above is based on that in the appraisal report and is not that of the Investment Corporation or the Asset Management Company. The same will apply below.

Property number / Property name	Of-59 Kita Nijo Building
Appraisal value	1,610,000 thousand yen
Appraiser	DAIWA REAL ESTATE APPRAISAL CO.,LTD.
Value date	April 1, 2024
Item	Content	Overview, etc.
(thousand yen)
Value	1,610,000	Estimated by linking indicated value by DCF method and indicated
value by direct capitalization method.
	Value indicated by the income
	approach (direct capitalization	1,670,000
	method)
		Effective gross income	103,072
					Assessment based on current rental levels in contract, new rental
			Potential total profits	108,524	levels for comparable real estate in the same area with the same
			demand and supply as well as their trends, and taking into account
					the medium- to long-term competitiveness of the target real estate.
			Losses from vacancies,	5,452	Estimated after consideration of the competitiveness of the target
			property and other factors based on the typical vacancy rates of
			etc.
				similar properties
		Operating expenses	30,516
			Management fees	4,586	Appraised after referencing the maintenance and management fees
			of similar properties and scheduled contract amount.
			Property management	2,303	Posted after referencing the fee levels of similar properties and
			fee	expected contract details.
			Utilities expenses	12,780	Appraised and recorded based on the level and actual amount of
			utilities expenses of similar properties.
			Maintenance and repair		Repair expenses are stated upon appraisal based on such expenses
			802	described in the engineering report and using the cost levels of
			cost	similar properties. Tenant replacement expenses were not posted in
					consideration of tenants' restoration obligations.
			Tenant advertisement	627	Appraised in reference to tenant-seeking costs of comparable real
			expenses, etc.	estate.
			Public charges and	7,701	Appraised based on actual amounts and recorded in consideration of
			taxes	land price trends and burden levels, etc.
			Casualty insurance	173	With reference to insurance premiums for comparable real estate, an
			premiums	amount equivalent to 0.02% of building replacement cost is posted.
					Posted expenses for security equipment and communication lines
			Other expenses	1,542	and snow removal fees based on actual amounts after estimating a
			reserve fund for other miscellaneous expenses using the levels for
					similar properties as a reference.
		Net operating income (NOI)	72,555
		Interest on lump-sum	300	The investment yield is assessed to be 1.0% after comprehensively
		payments	considering both the investment and replacement.
		Capital expenditures	7,902	Posted after verifying the annual average amount of renovation
		expenses for repairs indicated in the engineering report and adding
					an amount equivalent to CM fees.
		Net cash flow (NCF)	64,954
					Assessment made after comprehensively taking into account
		Capitalization rate	3.9%	criteria of the location, building and other factors of the target real
		estate as well as examples of transactions of comparable real
					estate.
	Value indicated by the income	1,580,000
	approach (discounted cash flow

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