Notice Concerning Acquisition of Domestic Assets(LUCID SQUARE SEMBA)

August 8, 2025

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. +81-3-3669-8771

Notice Concerning Acquisition of Domestic Asset (LUCID SQUARE SEMBA)

HEIWA REAL ESTATE REIT, Inc. (hereinafter referred to as the "Investment Corporation") announces 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.

Details

1. Overview of the Acquisition

   Property Number	Property Name	Type of Specified Asset	Investment Category	Investment Area (Note 1)	Proposed Acquisition Price (million yen) (Note 2)	Appraisal Value (million yen)
   Of-62	LUCID SQUARE SEMBA	Real estate trust beneficiary right	Office	Regional Investment Area (Osaka-City,Osaka)	4,720	5,200

   (Note 1) 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 2) "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.

   1. Agreement execution date: August 8, 2025

   2. Scheduled acquisition date: August 29, 2025

   3. Seller: Undisclosed (Note1)

   4. Acquisition financing: Cash on hand and borrowings

   5. Payment method: Lump-sum payment at time of delivery

   6. Brokerage: Applicable(Note 2)

      (Note 1) Not disclosed as consent cannot be obtained from the seller. The seller does not fall under a party with a special interest in the Investment Corporation and the Asset Management Company.

      (Note 2) The broker does not fall under a party with a special interest in the Investment Corporation and the Asset Management Company.

2. Reason for the Acquisition

   The Investment Corporation's Articles of Incorporation stipulates that the "targets and policies of asset management" is to ensure the steady growth of the investment portfolio and medium- to long-term sustainable profit. Under the Articles of Incorporation, the Investment Corporation seeks to expand its assets through continuous property acquisitions and to improve the quality and profitability of the portfolio by replacing assets. The Asset Management Company has evaluated the Asset to be acquired on the following points and decided to acquire the property based on the belief that the Acquisition would help realize the policy above and improve unitholder value.

   The property to be acquired is a one-minute walk from Sakaisuji Honmachi Station on the Osaka Metro Chuo Line and Sakaisuji Line. Sakaisuji Honmachi area where the property to be acquired is located is a commercial area extending from Sakaisuji Honmachi Station and an office area with a relatively high concentration of financial institutions, large company-owned buildings and leasing buildings, among office areas in Osaka. The property is accessible from several subway lines, has excellent transportation convenience, and is considered to be a highly competitive office location. The Invest Corporation has decided to acquire the property because there is tenant demand from a large range of businesses and it is an area where further development is anticipated in the future.

   The property to be acquired is equipped with air conditioning in individual spaces and has parking facilities that accommodate 38 vehicles. In addition to the convenient access to multiple subway lines mentioned above, this property offers features that cater to tenants that rely on vehicles for business purposes. Moreover, as renovations of the entrance, water features of each floor and other common use area have been implemented, the rent gap at the time of acquisition is

   -15.2%, and internal growth is anticipated due to a potential increase in rent income (Note). Furthermore, as the property to be acquired has sufficient space of approximately 145 tsubo on the standard one floor to allow dividing the property into parcels, securing stable demand can be anticipated among tenants of medium-to small-size offices who are the major investment targets of the office portfolio of the Investment Corporation. In July 2023, the property received the highest rating of "Rank S" under CASBEE for Real Estate, a third-party certification system. This rating recognizes properties with high environmental performance and effective management, and it is expected to contribute to the initiatives of the Investment Corporation toward the realization of a low-carbon society.

   The expected NOI yield, which is calculated from the acquisition price and appraisal NOI, and the NOI yield after depreciation are 4.1% and 3.7% respectively, and based on the appraisal value and acquisition price, unrealized gain is expected to be 480 million yen.

   (Note) The rent gap of the Asset 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 July 2025, 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 Asset to be acquired valid as of June 2025 and monthly rent specified in the lease agreement to be concluded, by the total leasable area of the property.

3. Details of the Asset to be acquired

   Of--62 LUCID SQUARE SEMBA

   Property number / Property name		Of-62 LUCID SQUARE SEMBA
   Type of asset		Real estate trust beneficiary right
   Trustee (Planned)		Mizuho Trust & Banking Co.,Ltd
   Trust term (Planned)		From August 29, 2025 to August 31, 2035
   Location (Note 1)		(Building address on real estate registry) 1-58, Kyutaromachi, Chuo-ku, Osaka City, Osaka, and 3 others (Lot number) 1-9-26,Kyutaromachi , Chuo-ku, Osaka City, Osaka
   Land	Form of ownership	Ownership
   	Area (Note 1)	Entire site: 834.39 ㎡
   	Use district (Note 2)	Commercial district
   	Building coverage ratio (Note 3)	80%
   	Floor area ratio (Note 4)	1,000%
   Building	Form of ownership	Ownership
   	Use (Note 1)	Office and Parking
   	Structure/Floors (Note 1)	Steel beam / steel-framed reinforced concrete Flat roof 1 floor below ground and 10 floors above ground
   	Total floor space (Note 1)	6,329.59 ㎡
   	Construction completion date (Note 1)	September 29, 1992
   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 5)
   	Total number of tenants	25
   	Total rent income	214,274 thousand yen
   	Leasehold and security deposits	163,688 thousand yen
   	Total leased floor space	4,451.54 ㎡
   	Total leasable floor space	4,451.54 ㎡
   	Occupancy rates (Based on Floor Space)	100% (as of June 30, 2025)
   NOI yield (Note 6)		4.1%
   Outline of the engineering report		Survey company	ERI Solution Co., Ltd.
   		Survey date	June 24, 2025
   		Replacement value (Note 8)	2,065,000 thousand yen
   		Probable maximum loss (PML)	10.5%
   		Long-term repairs (next 15years) (Note 9)	262,520 thousand yen
   Overview of real estate appraisal report		Appraiser	DAIWA Real Estate Appraisal Co., Ltd.
   		Value date	August 1, 2025
   		Appraisal value	5,200,000 thousand yen

   A projecting sign crosses over the boundary from the property to be acquired to the street on the northwest side. The Investment Corporation has obtained a valid road occupation permit.

   A fence, concrete floor (doma) and part of the fence supporting member crosses over the property line from the property to be acquired to the adjacent lot on the northeast side. The Investment Corporation has signed a memorandum of understanding regarding the fence, concrete floor (doma) and part of the fence supporting member that cross over the property line.

   Part of the concrete crosses over the property line from the lot on the southwest side to the property to be acquired and from the property to be acquired to the said lot, respectively. The Investment Corporation has signed a memorandum of understanding regarding the part of the concrete that crosses over the property line. Part of the valves of the property to be acquired crosses over the property line to the lot on the east side. The Investment Corporation has signed a memorandum of understanding regarding the part of the valves that crosses over the property line.

   Part of a concrete floor (doma) and vent cap from the adjacent lot on the east side encroach onto the property to be acquired, and portions of a steel plate and valve from the property to be acquired extend over the boundary to the adjacent lot.The Investment Corporation has signed a memorandum of understanding regarding part of a concrete floor (doma) and vent cap and

   portions of a steel plate and valve encroachments.

Other items of special note

(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) Figures in "Tenant details" are as of June 30, 2025 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.

1. Overview of the seller

   The Investment Corporation will acquire from different domestic business companies, but it has decided not to disclose them because their consent has not been obtained. The sellers of the properties are not considered as parties with a special interest in the Investment Corporation or the Asset Management Company.

2. Outlook

   For the impact of the Acquisition on the management status forecast for the fiscal period ending November 2025 (the 48th Fiscal Period) and May 2026 (the 49th Fiscal Period) published in the 47th Fiscal Period Financial Report dated July 16, 2025 is minor, and the management status forecasts will remain unchanged.

3. Overview of the appraisal report