Sosila Logistics Reit,inc.TSE: 2979

Notice Concerning Acquisition of Domestic Real Estate Trust Beneficiary Interest

Sep 27, 2021 at 6:01 AM UTC · Issued by Sosila Logistics Reit,inc.

September 27, 2021

FOR IMMEDIATE RELEASE

Issuer of REIT securities:

1-17-10 Kyobashi, Chuo-ku, Tokyo

SOSiLA Logistics REIT, Inc. (SLR)

Representative:	Masaaki Yano, Executive Director
	(Code: 2979)
Asset management company:
Sumisho Realty Management Co., Ltd.
Representative:	Hideki Yano, President & CEO
Inquiries:	Tomoaki Sato,
	General Manager, REIT Management
	Department

TEL: +81-3-4346-0579

Notice Concerning Acquisition of Domestic Real Estate Trust Beneficiary Interest

Sumisho Realty Management Co., Ltd. ("SRM"), to which SOSiLA Logistics REIT, Inc. ("SLR") entrusts the management of its assets, announced today that it determined to acquire one property (the "New Property") in the form of trust beneficiary interest. The details are described below.

1. Overview of the New Property

	Property				Anticipated
				acquisition price	Existence of
Classification	number		Property name	Location
	(million yen)	intermediaries
	(Note 1)
				(Note 2)


Logistics	L-09		LiCS Narita	Shibayama Town, Sambu District,	5,250	No
property		Chiba


	Total		‒	5,250	‒

(Note 1) "Property number" is a number allocated to each property according to property type; (L) stands for logistics property and (I) stands for industrial property. The same applies hereinafter.

(Note 2) "Anticipated acquisition price" is the purchase price of the New Property stated in the trust beneficiary interest purchase and sales agreement for the New Property (the "Purchase and Sales Agreement"). The purchase price does not include consumption tax, local consumption tax and expenses required for the acquisition. The same applies hereinafter.

(1)	Anticipated signing date of the	September 28, 2021
	Purchase and Sales Agreement
(2)	Anticipated acquisition date	October 20, 2021
(3)	Previous owner	Please refer to "4. Overview of the Previous Owner"
(4)	Financing for acquisition	Borrowings (Note 1) and cash on hand
(5)	Settlement method	Payment of deposit (Note 2) of 525 million yen on the scheduled signing date of
		the Purchase and Sales Agreement
		Payment of the remaining amount at the time of delivery

(Note 1) For details of the borrowings, additional press release will be announced as soon as they are determined.

(Note 2) Payment of the deposit is made as earnest money. Therefore, the seller nor the purchaser may cancel the Purchase and Sale Agreement by forfeiture or reimbursing twice the amount of deposit. If the purchase and sales agreement is cancelled, the seller shall return the deposit to the purchaser.

2. Reasons for Acquisition

SLR invests primarily in the SOSiLA Series, which are developed by Sumitomo Corporation with the aim of connecting "people" and "society." In addition, SLR continuously works to acquire logistics and industrial properties other than the SOSiLA Series by using the SRM's own network for the purpose of diversifying and enhancing its portfolio and has created the "LiCS" brand for these properties.

The New Property will be acquired as a property named after the LiCS brand to steadily expand the asset size of SLR and enhance its portfolio based on the objective and policy of asset management set forth under the Articles of Incorporation of SLR. For the features of the New Property, please refer to "3. Outline of the New Property" below.

3. Outline of the New Property

Outline of the New Property is described below.

"Classification" and items in "Outline of Specific Property," "Outline of Lease," "Summary of the Appraisal Report," and "Features of the Property" are defined as follows unless otherwise specified. They are stated based on information available as of September 27, 2021.

(a) Outline of Specific Property

"Anticipated acquisition date" is the date of acquisition stated in the Purchase and Sales Agreement. It may be changed upon agreement between SLR and the relevant seller.
"Anticipated acquisition price" is the purchase price of the New Property stated in the Purchase and Sales Agreement. The purchase price does not include consumption tax, local consumption tax and expenses required for the acquisition.
"Trustee" is the trustee of the New Property.
"Entrustment date" is the planned entrustment date after the change due to the acquisition of properties by SLR.
"Trust maturity date" is the planned trust maturity date after the change due to the acquisition of properties by SLR.
"Ownership form" is the type of right retained by the trustee.
The location of "Land" is the location of the building in the registry (if there is more than one building, the location of one of them). "Land area" of "Land," and "Gross floor area," "Completion date," "Purpose" and "Structure/No. of stories" of "Building" are based on those stated in the registry and may be different from information about the actual land and building. "Gross floor area" of "Building" is the gross floor area of the main building plus that of the annexes. "Completion date," "Purpose" and "Structure/No. of stories" of "Building" are those of the main building alone.
"Zoning" of "Land" is a type of zone under Article 8, Paragraph 1, Item 1 of the City Planning Act.
"BCR" of "Land" is the maximum BCR (specified BCR) for the type of zone specified in the city planning. The specified BCR may be relaxed, raised or reduced due to being a fire-proof building in a fire prevention district, among other reasons, and may be different from the actual BCR.
"FAR" of "Land" is the maximum FAR (specified FAR). The specified FAR may be relaxed or raised, or reduced due to the width of the road connected to the site, among other reasons, and may be different from the actual FAR.
"Property manager" is the property management company that is commissioned to fulfill property management responsibilities.
"Number of tenants" is the number of tenants based on trust property lease agreements (excluding photovoltaic facilities lease agreements, roof lease agreements and parking lot lease agreements) under which leasing had started as of September 27, 2021.
"Extra description" is a description of important matters about rights related to the New Property, its use, and other matters considered important in terms of their effects on the appraisal value, profitability, and disposal of the New Property as of September 27, 2021.

(b) Outline of Lease

"Leasable area" of a property that is not a limited proprietary right of land or land with superficies or the right to lease land that is not a land lease right is the sum of the leased area and the area of vacant space considered rentable based on the building drawings stated in the trust property lease agreement (excluding the photovoltaic facility lease agreement, the roof lease agreement and the parking lot lease agreement; the same applies hereinafter) under which leasing had started as of September 27, 2021. Leasable area of a limited proprietary right of land or land with superficies or the right to lease land that is not a land lease right is the leased area stated in the land lease agreement for the trust property

under which leasing had started as of September 27, 2021. The same applies hereinafter.

"Leased area" is the leased area stated in the trust property lease agreement under which leasing had started as of
September 27, 2021.
"Annual rent" is the annualized rent calculated by multiplying the monthly rent (including a common service fee) stated in the lease agreement as of September 27, 2021 by 12. If the amount has a number less than the given unit, it is rounded down.
"Security deposit" is the security deposit stated in the trust property lease agreement under which leasing had started as of September 27, 2021. If the amount has a number less than the given unit, it is rounded down.
"Occupancy rate" is the ratio of the leased area to the leasable area at the New Property as of September 27, 2021. The rate is rounded to the first decimal place.

"Summary of the Appraisal Report" is a summary of the real estate appraisal report prepared by The Tanizawa Sogo Appraisal at the request of SLR and SRM. The real estate appraisal report consists of the judgments and opinions of the appraiser at a certain point of time. The adequacy and accuracy of the report and business possibilities at the appraisal value are not guaranteed. Neither SLR nor SRM has any special stake in The Tanizawa Sogo Appraisal. The figures in this section are rounded down if the amount has a number less than the given unit. The percentages are rounded to the first decimal place.

(d) Features of the Property

"Features of the Property" are described based on the market report prepared by K.K. Ichigo Real Estate Service, which conducted a real estate survey commissioned by SLR and SRM statements on the appraisal report and conducted analysis by SRM, etc. The analyses are judgments and opinions of SLR and SRM based on reports at a certain point in time. Their adequacy and accuracy are not guaranteed.

Property	L-09	Property	LiCS Narita	Classificati	Logistics property
Number	Name	on


			Outline of Specific Property

Type of specific property	Beneficiary interest of real	Outline of	Trustee	Mitsubishi UFJ Trust and
estate in trust	Banking Corporation
			trust

Anticipated acquisition date	October 20, 2021	beneficiary	Entrustment date	October 20, 2021
				interest
Anticipated acquisition price	5,250 million yen	Trust maturity date	October 19, 2031


	Ownership form	Proprietary		Ownership form	Proprietary

			1033 -1, Aza Matsuyama,
	Location		Yamada, Shibayama Town,		Gross floor area	21,836.94 m2
			Sambu District, Chiba

Land	Land area	33,112.83 m2	Building	Completion date	February 15, 2005
	Zoning		Not designated		Purpose	Warehouse, office

	BCR		60%		Structure/	Steel-reinforced concrete
					two-story building with alloy-

	FAR		200%		No. of stories
			plated steel sheet plate


Property manager		CRE, Inc.	Number of tenants	3

Extra description: ‒

(Note) The trust property pertaining to the trust beneficiary interest includes photovoltaic facilities, and the trustee and Godo Kaisha Lys, a special purpose company that includes the electricity sales business, are to enter into a lease contract on the acquisition date of the trust beneficiary interest by SLR. The rent based on the lease contract is to be variable rent that is linked to the photovoltaic business operated by Godo Kaisha Lys, which will become the lessee, and it is to be an amount obtained by deducting necessary expenses for the photovoltaic business from the electricity sales revenues received by the lessee, in principle. The variable rent after the acquisition by SLR is not disclosed because it does not match the historical rents prior to the acquisition by SLR.

Outline of Lease

Name of major tenant	Not disclosed (Note)

Lease arrangement term	Not disclosed (Note)

Leasable area	20,927.35 m2
Leased area	20,927.35 m2
Annual rent	Not disclosed (Note)

Security deposit	Not disclosed (Note)

Occupancy rate	100.0%

(Note) These items are not disclosed because consent of the tenants is not obtained.

Summary of the Appraisal Report

Property name		LiCS Narita

Appraisal value		5,420 million yen

Appraiser		Tanizawa Sogo Appraisal Co., Ltd

Date of appraisal		June 30, 2021

			Item		Appraisal (thousand yen)	Outline

Income approach value		5,420,000

	Direct capitalization method	5,630,000

		(1) Operating revenue	316,469

							Assessed and recorded by receivable rents over the medium
							and long-term, of which revenues from photovoltaic power
			a. Total potential revenue	323,790	generation are 30,130 thousand yen.
			Revenue from photovoltaic power generation is assessed as
							the standardized rent income for a single year based on the
							remaining period of the agreement

			b. Loss such as vacancy	7,321

		(2) Operating expenses	62,984

			a. Maintenance costs	13,243

			b. Utilities costs		17,076

			c. Repair costs		6,080	Assessed by reference to the annual average amount of
							repair and renewal costs in the engineering report.
			d. Property management fees	3,840

			e. Tenant solicitation expenses	1,074	Recorded based on the estimated turnover period of the
			lessee.

			f. Property taxes		18,566

			g. Non-life insurance	1,520	Recorded in consideration of the insurance premium rate
			etc. of the target building and similar buildings.

			h. Other expenses	1,582

		(3) Net operating income	253,485	(1) - (2)

							Assessed by multiplying the amount of security deposit
							which was assessed based on the current lease conditions,
		(4) Interest on deposit	620	etc. by the investment yield (assessed to be 1.0%, taking
							into account the interest rate level of both investment and
							procurement).

		(5) Capital expenditures	12,160	Assessed by reference to the annual average amount of
		repair and renewal costs in the engineering report.

		Net income		241,945	(3) + (4) - (5)

		Capitalization rate		4.3%	Appraised by considering the income and capital
			fluctuation risk, in addition to the discount rate

	Discounted cash flow method	5,330,000

							Appraised by comprehensively taking into account overall
		Discount rate		Non-cancellable period 4.2%	transaction market trends, etc. after considering risk factors
			Cancellable period 4.4%	of location and individual characteristics of the subject real

							estate as well as standard cap rate.

							Appraised by considering uncertainty of fluctuation
		Terminal capitalization rate	4.5%	projections for future net income, future deterioration of the
							building, and risk of sale, in addition to the cap rate.

Total estimated price		5,140,000

	Proportion of land		50.1%

	Proportion of building		49.9%

Other items that the appraiser paid	‒
attention to in its appraisal

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