Japan Excellent : Notice Concerning Acquisition of Domestic Real Estate Trust Beneficiary Rights (BIZCORE SHIBUYA)

For Immediate Release

For Translation Purposes Only

July 26, 2022

Japan Excellent, Inc. (TSE: 8987)

Shuichiro Kayama, Executive Director

Asset Management Company:

Japan Excellent Asset Management Co., Ltd.

Representative:

Shuichiro Kayama, President

Contact:

Kazue Horikawa

General Manager, Corporate Planning Dept.

TEL: +81-3-5412-7911

Notice Concerning Acquisition of Domestic Real Estate Trust Beneficiary Rights

(BIZCORE SHIBUYA)

Japan Excellent, Inc. (hereinafter "JEI") hereby announces that Japan Excellent Asset Management Co., Ltd. (hereinafter "JEAM"), to which JEI entrusts asset management, made a decision today regarding the acquisition of an asset (domestic real estate trust beneficiary rights) as described below.

1. Overview of Acquisition

(Note 1) "Planned Acquisition Price" does not include consumption tax, local consumption tax or fees required for the acquisition.

(Note 2) For details of the seller, please refer to "3. Details of the Property to BeAcquired / (4) Overview of the Seller" later in this document.

(Note 3) For details of the debt financing, please refer to the press release "Notice Concerning Debt Financing" separately announced today.

2. Background of Acquisition

The BIZCORE series developed by Nippon Steel Kowa Real Estate Co., Ltd., a core sponsor of JEI, consists of medium- sized, high-grade office buildings that are competitive in terms of location and specifications. JEI positions the BIZCORE series as an ongoing pipeline from the company. Acquisition of the Property follows BIZCORE AKASAKA-MITSUKE and BIZCORE JIMBOCHO to mark JEI's third acquisition from the series. For aspects that JEI recognized upon determining the acquisition of the Property, please refer to "(1) Evaluation of the Property to Be Acquired" in "3. Details of the Property to Be Acquired" below.

Acquisition of the Property has translated into accumulation of quality assets and also greater source of distributions for JEI.

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3. Details of the Property to Be Acquired

1. Evaluation of the Property to Be Acquired A. Location

The Property offers high traffic convenience at an approximately four-minute walk from Shibuya Station on the Tokyo Metro Hanzomon Line, Ginza Line, and Fukutoshin Line, as well as the Tokyu Toyoko Line and Den-en-toshi Line, an approximately seven-minute walk from Shibuya Station on the JR Yamanote Line, Saikyo Line, and Shonan- Shinjuku Line, as well as the Keio Inokashira Line, and an approximately nine-minute walk from Omotesando Station on the Tokyo Metro Hanzomon Line, Ginza Line, and Chiyoda Line.

The area surrounding Shibuya Station where the Property is located has been demonstrating dramatically greater potential as an office district in terms of location with successive completion of large-scale redevelopment projects in recent years as well as several large redevelopment projects which are currently underway. The area is expected to continue developing as an office district in this manner and office demand there will likely be solid.

B. Building and Facilities

Designed as a property constituting part of the BIZCORE series of medium-sized,high-grade office buildings developed by Nippon Steel Kowa Real Estate Co., Ltd. the Property is equipped with specifications equivalent to most modern large office buildings.

The Property is equipped with an advanced office environment combined with superb seismic and business continuity capacity, including rental spaces equipped with a ceiling height of 2,800 mm on standard floors (with OA floor of 100 mm), grid-type system ceiling, office floor area of approximately 105 tsubos, floor load capacity of 500 kg/m2, power outlet capacity of 60 VA/m2 (expandable to 75 VA/m2), an individual air-conditioning system (eight zones), as well as an emergency supply warehouse, in addition to emergency power supply for up to 48 hours. In addition, as of the time of its completion, the Property is a green building certified asArank in the CASBEE Certification for Buildings (Note).

(Note) Comprehensive Assessment System for Built Environment Efficiency (CASBEE) Certification for Buildings is a method for evaluating and rating the environmental performance of buildings and the built environment. The system is a comprehensive assessment of the environmental performance of buildings and the built environment from not only the aspects of reduction of environmental loads, such as energy conservation, resource conservation and recycling performance, but including also considerations for scenic aesthetics and such.

(2) Overview of the Property to Be Acquired

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(Note 1) Indicated here is the typeof the property to be acquired by JEI.Areal property management and disposition trust agreement with the Property as theprimary trust asset is planned to be executed between JEI, the seller, and the trustee on the scheduled acquisition date.

(Note 2) The descriptions of "Lot Number," "Structure," and "Completion Date" are based on information in the registration record.

(Note 3) The descriptions of "Use" are based on information in the registration record.

(Note 4) Indicated here is the total site area of land presented in the registration record.

(Note 5) Indicated here is the total floor area presented in the registration record.

(Note 6) The "Type of Ownership" indicates the type of rights held by the trustee for the Property.

(Note 7) Indicated here is the property management company that is planned to be hired after acquisition of the Property by JEI.

(Note 8) Indicated here is the master lease company that plans to lease the Property after acquisition of the Property by JEI. The type of master lease is a pass-through type.

(3) Tenant Summary

(Note 1) "Leasable Floor Space" and "Leased Floor Space" are calculated excluding warehouses and other annexed constructions and accompanying facilities.

(Note 2) A master lease agreement is planned to be executed with the above-mentioned master lease company with the said master lease company as the tenant. Therefore, the number of tenants is indicated as one with the total number of end tenants shown in parentheses. "Leased Floor Space" is the floor space for which lease agreements are currently executed between the seller and the end tenants out of the leasable floor space.

(Note 3) The "Monthly Rent" amount (rounded down to the nearest thousand yen) is the sum (excluding consumption taxes, etc.) of the monthly rents (including common-area charges but excluding user fees for parking and other accompanying facilities) based on and indicated on the lease agreements executed with the end tenants.

(Note 4) The "Leaseholds and Security Deposits" amount (rounded down to the nearest thousand yen) is the balance (after deducting any portions that are non- refundable) of the leaseholds and security deposits (excluding those for parking, warehouse and other accompanying facilities) to be paid by the end tenants in accordance with the lease agreements.

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(4) Overview of the Seller

(5) Status of Owners of Property

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1. Details of Brokerage Not applicable.
2. Conflicts of Interest of JEAM with Regard to the Property to Be Acquired

Nippon Steel Kowa Real Estate Co., Ltd., which is the seller and planned master lease company and property management company for the Property, falls under the category of "related party" as defined in the Investment TrustsAct and "sponsor company" in the "Regulations for Transactions with Sponsor Companies." Upon concluding the trust beneficiary right purchase agreement for the Property with said sponsor company, JEAM, in compliance with said Regulations, has had the transaction approved at a meeting of its Compliance Committee, which includes outside experts, and deliberated and approved at a meeting of its Investment Committee. In addition, Mizuho Trust & Banking Co., Ltd., which is the trustee for the Property, plans to appoint Nippon Steel Kowa Real Estate Co., Ltd. as the master lease company and the property management company for the Property, consigning the management operations for the Property along with leasing the building of the Property to said company. Upon such decision-making, JEAM has completed the procedures in compliance with the "Regulations for Transactions with Sponsor Companies" in the same manner as the purchase agreement.

1. Core Sponsor's New Mid-Term Management Plan and Future External Growth
   Nippon Steel Kowa Real Estate Co., Ltd., a core sponsor of JEI, launched a new mid-term management plan in April 2021. In the management plan, further strengthening and expansion of the office development and rental business is set as a key strategy, with plans for many development projects to be underway, mainly in central Tokyo. In particular, in the BIZCORE series of medium-sized,high-grade office buildings that the core sponsor has been developing since fiscal 2017, more than 10 properties are slated for completion/operation during the five-year period of the management plan, with the acquisition of sites and projects currently steadily underway due in part to high market needs. The property to be acquired this time marks JEI's third acquisition from the series.
   Considering that the BIZCORE series requires property owners capable of taking responsibility for quality control in management and operation and such in view of maintaining and promoting the brand offering, acquisition by JEI upon sale in the series by the core sponsor can be expected to continue. Additionally, discussions toward acquisition by JEI will be pursued for also the core sponsor's portfolio properties other than the BIZCORE series and other properties as properties in the sponsor pipeline.
   In this manner, JEI will strive for steady growth of distributions along with aiming to grow investment assets and secure stable revenue over the medium to long term through acquisition of properties with the pipeline linked to the core sponsor's new mid-term management plan at the core.
2. Future Outlook
   The impact of this transaction on the operating forecasts for the fiscal period ending December 31, 2022 (from July 1, 2022, to December 31, 2022) is considered negligible and there is no change to the forecasts.

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