Supplementary Materials for the Following Press Release Published on June 29, 2023

Notice Concerning Acquisition and Transfer of Domestic Real Estate Trust Beneficiary Rights (Acquisition of BIZCORE TSUKIJI, Transfer of Kowa Kawasaki Nishiguchi Building and JEI Kyobashi Building)

AKASAKA INTERCITY

AIR

June 29, 2023

AKASAKA INTERCITY

  • Overview of Property Replacement
  • The Kowa Kawasaki Nishiguchi Building (occupancy rate has been low for a prolonged period; high unrealized loss) will be transferred to Nippon Steel Kowa Real Estate, the core sponsor.
    The loss on transfer will be offset by the part of gain on transfer of the JEI Kyobashi Building, and the distributions for the 34th fiscal period will be maintained at the forecast level (minimum target)
  • As a replacement, BIZCORE Tsukiji (low building age, 100% occupancy rate) will be acquired from Nippon Steel Kowa Real Estate, and further property acquisitions are also being considered

■ Overview of Property Replacement■ Overview of the Property to be Acquired (BIZCORE TSUKIJI)

Transfer

Sponsor support

Acquisition

Asset

replacement

Property name

Kowa Kawasaki

JEI Kyobashi Building

Nishiguchi Building

Location

Kawasaki City, Kanagawa

Osaka City, Osaka

Access

8-min walk from

3-min walk from

Kawasaki Station

Kyobashi Station

Years since built

35 years

36 years

Acquisition price

¥20,800 million

¥3,308 million

Planned transfer

¥16,050 million

¥6,300 million

value(*1)

Book value(*2)

¥18,796 million

¥2,688 million

Gain/loss on transfer(*3)

-¥2,746 million

¥3,611 million

Appraisal Value(*4)

¥16,000 million

¥4,000 million

Unrealized gain/loss(*2)

-¥2,796 million

¥1,321 million

Occupancy Rate(*5)

58.4%

100.0%

NOI yield(*6)

0.7%

8.2%

NOI yield after

-1.0%

5.7%

depreciation(*6)

Scheduled Transfer

June 30, 2023

(1) June 30, 2023 (80%)

Date

(2) January 22, 2024 (20%)

Transferee

Nippon Steel Kowa Real Estate

Not disclosed

(*1) Does not include fees related to the transfer, the JEI share of the real estate tax and city planning tax, the consumption tax or the local consumption tax.

(*2) Figures as of December 31, 2022.

(*3) These are reference figures calculated as the difference between planned transfer value and the book value as of December 31, 2022 and differ from gain (loss) on transfer in accounting.

(*4) Figures as of June 1, 2023.

(*5) Figures as of May 31, 2023.

(*6) Results for the fiscal period ended December 31, 2022.

Property name

BIZCORE TSUKIJI

Location

Chuo Ward, Tokyo

Access

3-min walk from Tsukiji Station

Years since built

4 years

Planned acquisition

¥9,800 million

price(*7)

Appraisal Value(*8)

¥10,200 million

Difference between

planned acquisition price

¥400 million

and appraisal value

Occupancy Rate(*9)

100.0%

NOI yield(*10)

3.6%

NOI yield after

3.0%

depreciation(*10)

Scheduled Acquisition

July 4, 2023

Date

Seller

Nippon Steel Kowa Real Estate

(*7) Planned acquisition price does not include consumption tax, local

consumption tax or fees required for the acquisition. (*8) Figures as of June 1, 2023.

(*9) Figures as of May 31, 2023.

(*10) NOI yield and NOI yield after depreciation are calculated based on the assumed balance for the first 5 years excluding special

factors in the acquisition year.

1

Location

Tsukiji, Chuo Ward, Tokyo

Structure

S, SRC, flat roof, 8 stories with 1 basement floor

Total floor area

6,728.37 m2

Standard floor area

Approx. 661 m2 (approx. 200 tsubo)

Completed

July 2019

It has high area visibility with expectations for future development in major redevelopment, etc., and is located with easy access in all directions

  • There are plans for large redevelopment of the former site of Tsukiji Market and the surrounding area
  • It is in a highly visible location new the intersection of Shin-Ohashi Dori and Harumi Dori
  • It is a 3-minute walk from Tsukiji Station on the Tokyo Metro Hibiya Line, and accessible from 5 stations on 6 lines
  • Highly convenient: 5 minutes to Tokyo Station, 12 minutes to Shinagawa Station, 18 minutes to Shinjuku Station, etc.

Specs on par with the latest large office buildings

- Ceiling height of 2,800 mm, approx. 200 tsubo per floor and a bright, open, pillar-

free space

  • An exterior with a strong presence, an elegant entrance and a rooftop garden full of greenery

High business continuity in the event of a disaster

  • Emergency stockpile warehouse on each floor, holding three days of food, water, etc.
  • In the event of a disaster, 15 VA/ m2 is supplied to the exclusive areas for up to 36 hours by the emergency power supply

〉 Effect of Property Replacement

◆ This property replacement will result in qualitative improvement of the portfolio, improvement of occupancy rate and increases in acquisition capacity and NAV

(1) Qualitative improvement of portfolio

Transfer

Acquisition

2 Transferred

Acquired Property

Properties

NOI yield after depreciation

-0.1%(*1)

3.0%(*2)

(*1) Results for the fiscal period ended December 31, 2022.

(*2) Calculated based on the assumed balance for the first 5 years excluding special factors in the acquisition year.

■ Kowa Kawasaki

Nishiguchi Building

(Acquisition price 20.8 billion yen)

- Delay in recovery of occupancy rate after

major departure (Prolonged deterioration of

Transfer to core sponsor

  • BIZCORE TSUKIJI

(Planned acquisition price: ¥9.8 billion)

Acquisition from core sponsor

End of 33rd Period

Percentage within 5-min

89.7%

walk from station

Percentage in area around

12.7%

Kawasaki Station

Average building age

23.0 years

Ratio of top 5 properties

40.0%

(*3) Figures after replacement are when the transfer of JEI Kyobashi Building is completed.

(*4) The above figures are calculated based on the acquisition price.

After Replacement(*3)

93.6%

5.8%

22.2 years

39.6%

supply and demand in the area around

Kawasaki Station)

- Decline in property revenues and expenses

- Rise in capex burden in future

- Large unrealized loss (approx. -2.8 billion yen)

(loss on transfer: -2.74 billion yen)

Part of the gain on transfer will offset the loss on transfer, and the remainder will be kept as an internal reserve

(To be allocated for funding future distributions)

Sponsor support

Asset

replacement

  • Low building age (4 years)
  • 100% occupancy (May 31, 2023)
  • Located in central Tokyo
  • 3-minutewalk from station

(2) Improvement of portfolio occupancy rate

  • JEI Kyobashi Building

(Acquisition price 3.31 billion yen)

Adhere to the 2,800 yen minimum target for distributions for 34th Period!!

Announced figures(February 2023)

93.0%

After Replacement

97.6%

96.5%

95.5% 94.4%

  • Concern about decline in status of Kyobashi area (Increased office supply in central Osaka)
  • Rise in capex burden in future
  • Request to purchase at a price significantly higher than the appraisal value

Transfer to third party (gain on transfer: approx. 3.61 billion yen)

  • Properties underconsideration

(Being discussed with core sponsor)

90.8%

Recorded across two periods (34th and 36th)

(*) Gain/loss on transfer are reference figures calculated as the difference between planned transfer value and the book value as of December 31, 2022 and differ from gain (loss) on transfer in accounting.

32nd Period

33rd Period

(Result)

(Result)

34th Period

35th Period

  • Occupancy rate of Kowa Kawasaki Nishiguchi Building
  • The occupancy rate plan as of December 2022 is as follows.
  • Value of work performed on 2 transferred properties (for the next 10 years)

(3) Increase in acquisition capacity and NAV

End of 33rd

After

Change

Period

Replacement

Acquisition capacity

19 billion yen

Approx. 30

+ Approx 11

(LTV up to 47%)

billion yen

billion yen

NAV per unit

169,418 yen

171,467 yen(*5)

+2,048 yen

(*5) This is a reference figure taking into account only the impact of the replacement on NAV at the end of the 33rd fiscal period .

FP12/2022

FP6/2023

FP12/2023

FP6/2024

(Result)

(Plan)

(Plan)

(Plan)

Period-end

56%

63%

74%

87%

occupancy rate

  • The pace of recovery may be further delayed depending on the leasing environment.
  • A large amount of capex is expected to be required in future for renewal of power supply and air conditioning equipment

(millions of yen)

2023

2024

2025

2026

2027 onwards

Kawasaki

170

154

102

99

1,926

Nishiguchi

Kyobashi

25

32

249

275

345

(*) Planned values as of December 2022.

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Japan Excellent Inc. published this content on 29 June 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 29 June 2023 06:36:08 UTC.