Starts Proceed Investment CorporationTSE: 8979

Notice Concerning Disposition and Acquisition of Trust Beneficiary Interest in Domestic Real Estate

Apr 22, 2021 at 6:43 AM UTC · Issued by Starts Proceed Investment Corporation

April 22, 2021

Translation Purpose Only

For Immediate Release

REIT Issuer

Starts Proceed Investment Corporation

3-1-8 Nihonbashi, Chuo-ku, Tokyo

Kazuya Hiraide, Executive Director

(Security Code: 8979)

Asset Management Company

Starts Asset Management Co., Ltd.

Kazuya Hiraide, Representative Director

Inquiries: Hideki Hamaguchi, General Manager of

Financial Control and Administration Division

TEL. +81-3-6202-0856

Notice Concerning Disposition and Acquisition of Trust Beneficiary Interest in Domestic Real Estate

Starts Proceed Investment Corporation ("Starts Proceed") announces that Starts Asset Management Co., Ltd., to which Starts Proceed entrusts the management of its assets (the "Asset Management Company"), today decided to conduct disposition and acquisition of trust beneficiary interest in domestic real estate (respectively the "Disposition" and the "Acquisition," and collectively the "Transaction"). The details are as follows.

Since the counterparty of the Transaction is an interested party, etc. as defined in the Act on Investment Trusts and Investment Corporations (Act No.198, 1951, as amended (the "Investment Trusts Act")), the Asset Management Company, pursuant to its internal rules, has obtained consent from Starts Proceed to proceed with the transaction based on approval from the board of directors' meeting of Starts Proceed held today.

1. Overview of the Transaction

(1) Assets to Be Disposed Through the Disposition (the "Assets to Be Disposed")

Planned

Amount of

Planned

Assumed

difference between

disposition

Property

contract

disposition

book value

planned disposition

Property name

Buyer

price

No.

conclusion

date

(thousand yen)

price and assumed

(thousand yen)

date

(Note 1)

(Note 3)

book value

(Note 2)

(thousand yen)

C-21

Proceed Yachiyo

Starts Development

415,000

389,703

25,297

Midorigaoka I

April 26,

Corporation

Proceed Yachiyo

2021

C-22

(Note 4)

370,500

347,257

23,243

Midorigaoka II

Total

785,500

736,960

48,540

(Note 1) The settlement method for both properties is scheduled to be settlement of the entire amount on the planned disposition date.

(Note 2) "Planned disposition price" does not include miscellaneous disposition-related expenses, fixed property taxes, city planning taxes, consumption taxes and local consumption taxes.

(Note 3) "Assumed book value" is the book value assumed as of the planned disposition date.

(Note 4) Starts Development Corporation is an interested party, etc. of the Asset Management Company as defined in the Investment Trusts Act. For details, please refer to "5. Overview of Counterparty of the Transaction" below.

(2) Asset to Be Acquired Through the Acquisition (the "Asset to Be Acquired")

Planned

Property

Property name

Seller

Planned contract

Planned acquisition date

acquisition price

No.

conclusion date

(Note 1)

(thousand yen)

(Note 2)

C－85

Proceed Nagareyama

Starts Corporation

April 27, 2021

1,069,000

Otakanomori (Note 3)

Inc. (Note 4)

(Note 1) The settlement method is scheduled to be settlement of the entire amount on the planned acquisition date. The acquisition financing is scheduled to be the funds from the disposition of the Assets to Be Disposed and cash on hand.

(Note 2) "Planned acquisition price" does not include miscellaneous acquisition related expenses, fixed property taxes, city planning taxes, consumption taxes and local consumption taxes.

(Note 3) Although a trust has not been established as of today, it is planned to be established before the Acquisition upon the acquisition by Starts Proceed.

(Note 4) Starts Corporation Inc. is an interested party, etc. of the Asset Management Company as defined in the Investment Trusts Act. For details, please refer to "5. Overview of Counterparty of the Transaction" below.

Reason for the Transaction
Starts Proceed is promoting an asset replacement strategy to enhance the competitiveness of the portfolio. It conducted a careful examination of its portfolio in terms of management status over the medium to long term as well as individual property characteristics, etc. based on such strategy. As a result, Starts Proceed decided on the Disposition of the Assets to Be Disposed upon comprehensively considering the market trends and the competitiveness of the Assets to Be Disposed as well as the acquisition of the Asset to Be Acquired as an asset replacing the Assets to Be Disposed.
As the properties are 24 years old, the disposition of the Assets to Be Disposed was judged to be ideal at this point in time upon comprehensively taking into account the impacts to NOI caused by maintenance overhead including daily repair work.
In addition, the decision was made to acquire the Asset to Be Acquired based on the asset management targets and policies provided in the Articles of Incorporation of Starts Proceed on the judgment that it is an asset featuring a combination of younger property age, profitability, growth potential and stability as outlined in "3. Description of the Assets to Be Disposed and Asset to Be Acquired (2) Description of the Asset to Be Acquired Area/Property characteristics" below.
Description of the Assets to Be Disposed and Asset to Be Acquired

Description of the Assets to Be Disposed C-21: Proceed Yachiyo Midorigaoka I

	Overview of specified asset	Overview of leasing (as of March 31, 2021)
Type of specified asset	Trust beneficiary interest	Total number of tenants	1
Use		Rental housing	Number of leased units	27 (27)
Planned disposition price	415,000 thousand yen	(Total number of leasable units)

		2-9 Midorigaoka,	Number of leased parking units
Location (Address)	(Total number of leasable parking	31 (32)
Yachiyo-shi, Chiba
		units)

PM Company / ML Company	Starts Amenity Corporation	Leased floor area	1,805.76 m2
Master lease type	Pass-through	Total leasable floor area	1,805.76 m2
Trustee		Resona Bank, Limited	Annual rent revenue	29,912 thousand yen
Period of trust agreement	From: May 2, 2006	Security and guarantee deposits, etc.	2,608 thousand yen
To: April 30, 2026	Occupancy rate	100．0%

	Ownership form	Proprietorship	Overview of appraisal report
	Site area	2,378.67 m2	Appraiser	Asset Research Inc.
	Zoning	Category 1 low-rise	Date of appraisal	October 31, 2020
Land	exclusive residential district

	Building-to-land	60%	Appraisal value	386,000 thousand yen
	ratio

	Floor-area ratio	100%	Overview of building condition evaluation report
	Ownership form	Proprietorship	Evaluation company	Japan Constructive
	Inspect Association

	Structure	Reinforced concrete	Date of evaluation	October 2018
	structure with flat roof / 3F
Building
Construction	February 12, 1997	Building replacement value	348,500 thousand yen

	completion date

	Total floor area	1,854．26 m2	Long-term repair costs (12 years)	10,362 thousand yen
	Use	Apartment complex	PML (Date of evaluation: November 2020)	6.9%

Collateral

None

Special notations / Status of the property

(structure and other matters that have significant impact on the price of the investment property)

1. The original building-to-land ratio of the property is 50%. However, due to mitigation measures regarding corner lots, it is set at 60%.

Remarks

10-minute walk from Yachiyo-Midorigaoka Station on the Toyo Rapid Railway Line

C-22: Proceed Yachiyo Midorigaoka II

	Overview of specified asset	Overview of leasing (as of March 31, 2021)
Type of specified asset	Trust beneficiary interest	Total number of tenants	1
Use		Rental housing	Number of leased units	23 (24)
Planned disposition price	370,500 thousand yen	(Total number of leasable units)

		2-8-2 Midorigaoka,	Number of leased parking units
Location (Address)	(Total number of leasable parking	27 (31)
Yachiyo-shi, Chiba
		units)

PM Company / ML Company	Starts Amenity Corporation	Leased floor area	1,538.24 m2
Master lease type	Pass-through	Total leasable floor area	1,605.12 m2
Trustee		Resona Bank, Limited	Annual rent revenue	25,596 thousand yen
Period of trust agreement	From: May 2, 2006	Security and guarantee deposits, etc.	2,638 thousand yen
To: April 30, 2026	Occupancy rate	95.8%

	Ownership form	Proprietorship	Overview of appraisal report
	Site area	2,328.81 m2	Appraiser	Asset Research Inc.
	Zoning	Category 1 low-rise exclusive	Date of appraisal	October 31, 2020
Land	residential district

	Building-to-land	60%	Appraisal value	348,000 thousand yen
	ratio

	Floor-area ratio	100%	Overview of building condition evaluation report
	Ownership form	Proprietorship	Evaluation company	Japan Constructive
	Inspect Association

	Structure	Reinforced concrete	Date of evaluation	October 2018
	structure with flat roof / 3F
Building
Construction	February 12, 1997	Building replacement value	309,020 thousand yen

	completion date

	Total floor area	1,655.29 m2	Long-term repair costs (12 years)	8,782 thousand yen
	Use	Apartment complex	PML (Date of evaluation: November 2020)	6.9%

Collateral

None

Special notations / Status of the property

(structure and other matters that have significant impact on the price of the investment property)

1. The original building-to-land ratio of the property is 50%. However, due to mitigation measures regarding corner lots, it is set at 60%.

Remarks

10-minute walk from Yachiyo-Midorigaoka Station on the Toyo Rapid Railway Line

(2) Description of the Asset to Be Acquired

C-85: Proceed Nagareyama Otakanomori

	Overview of specified asset	Overview of leasing (as of March 31, 2021)
Type of specified asset	Trust beneficiary interest	Total number of tenants	1
Use		Rental housing	Number of leased units	50 (50)
Planned acquisition price	1,069,000 thousand yen	(Total number of leasable units)

		1-2-3 Otakanomorikita,	Number of leased parking units
Location (Address)	(Total number of leasable parking	0 (0)
Nagareyama-shi, Chiba
		units)

PM Company / ML Company	Starts Amenity Corporation	Leased floor area	1,730.96 m2
Master lease type	Pass-through	Total leasable floor area	1,730.96 m2
Trustee		Starts Trust Co., Ltd.	Annual rent revenue	64,397 thousand yen
Period of trust agreement	From: April 27, 2021	Security and guarantee deposits, etc.	13,032 thousand yen
To: April 30, 2051	Occupancy rate	100.0%

	Ownership form	Proprietorship	Overview of appraisal report
	(co-ownership)

	Site area	4,200.00 m2	Appraiser	Chuo Real Estate
	Appraisal Co., Ltd.
Land
Zoning	Commercial district	Date of appraisal	March 1, 2021

	Building-to-land	100%	Appraisal value	1,100,000 thousand yen
	ratio

	Floor-area ratio	400%	Overview of building condition evaluation report
	Ownership form	Sectional ownership	Evaluation company	Tokio Marine & Nichido
	Risk Consulting Co., Ltd.

	Structure	Reinforced concrete	Date of evaluation	March 2021
	structure with flat roof / 14F

	Construction	February 4, 2020	Building replacement value	559,462 thousand yen
	completion date

	Total floor area	1,641.62 m2	Long-term repair costs (12 years)	5,671 thousand yen
Building Use	Apartment complex and	PML (Date of evaluation: March 2021)	0.1%
retail

	Building designer	Nikken Housing System
	Ltd.

		Starts Construction and
	Constructor	Asset Management Co.,
		Ltd.

Building inspector	The Building Center of
Japan

	Collateral
None
	Special notations / Status of the property
(structure and other matters that have significant impactｍ on the price of the investment property)

1． The building-to-land ratio of the property is essentially 80% as it stands in a commercial district. However, due to the mitigation measures for fireproof buildings in fire-prevention districts and mitigation measures for corner lots, it is set at 100%.

2． Site area indicates the area of the entire site, and the percentage of co-ownership interest (right of site) in proprietorship is 173,186/1,616,791.

Remarks

2-minute walk from Nagareyama-Otakanomori Station on the Tsukuba Express Line and Tobu Urban Park Line

Area/Property characteristics

The Nagareyama Otakanomori area where the Asset to Be Acquired is located is approximately 25 minutes from Akihabara Station via the Tsukuba Express rapid train and offers direct access to the stations of Kashiwa, Funabashi, and Omiya via the Tobu Urban Park Line. In addition, the area has become livelier and more convenient with the development of shopping centers and hotels after large-scale land readjustment projects were completed around the station, and further concentration of residential and commercial facilities can be expected in the area as development of large apartments is also in progress. The Asset to Be Acquired is directly connected to the station via a pedestrian deck and is installed with bathroom dehumidifiers and bidet toilets. It also offers free Wi-Fi, and plans for the property were made to enable users to live with comfort and convenience.

[Explanation]

"Type of specified asset" indicates the type as a specified asset, such as trust beneficiary interests, real estate, etc. "Use" is indicated in accordance with the stated categories in "Part I. Fund Information, Item 1. Situation of the Fund, 2. Investment Policies, (1) Investment Policies, 3) Portfolio Construction Policies" set out in the Securities Report.
"Planned disposition price" and "Planned acquisition price" indicate the amount (transaction price stated in the trust beneficiary interest transaction agreement, etc.) excluding the various expenses (real estate transaction brokerage fee, etc.) required for the disposition and acquisition of the Assets to Be Disposed and Asset to Be Acquired.
"PM Company / ML Company" indicates the property management company that has concluded a property management agreement and the master lease company that has concluded a master lease agreement, agreements that are effective as of today for each property, or indicates the property management company that is scheduled to conclude a property management agreement and the master lease company that is scheduled to conclude a master lease agreement at the time of acquisition by Starts Proceed. For "Master lease type," "Pass-through" is indicated for a master lease in which the trustee and the master lease company has agreed that the master lease company pays the same amount as the rent stated in the sublease agreement concluded between the master lease company and the end tenant to the trustee.
"Trustee" indicates the trustee or planned trustee at the time of disposition or acquisition by Starts Proceed. As to "Period of trust agreement," the starting date is the effective date of the trust agreement that is effective as of today (for trust agreement that is scheduled to be concluded, the scheduled effective date is indicated), and the ending date is the termination date of the trust agreement that is scheduled to be agreed (including agreement for amendments) between the parties of the trust agreement on the same date as acquisition by Starts Proceed.
Concerning the description of "Land" and "Building"

"Site area," "Structure," "Construction completion date" and "Total floor area" are in accordance with information described in the certificate of entry in real estate registration. For properties that have annex buildings, the annex buildings are not included in "Total floor area." However, it may be different if the description has been found incorrect as a result of investigation.
"Zoning" indicates the type of zoning district classified in accordance with Article 8, Paragraph 1, Item 1 of the City Planning Act (Act No. 100 of 1968, as amended).
"Building-to-landratio" is the ratio of the building area of the building to the site area as stipulated in Article 53 of the Building Standards Act (Act No. 201 of 1950, as amended; the "Building Standards Act") and indicates the maximum figures stipulated in the city plan in accordance with the zoning, etc. Pursuant to Article 53, Paragraph 3 or Paragraph 5 of the Building Standards Act, corner lots in a block and fireproof buildings, etc. in fire prevention districts may be subject to mitigation of building-to-land ratio or may not be subject to building-to-land ratio restriction itself. There are cases in which separate restrictions, mitigations, etc. may apply in accordance with the Building Standards Act or other administrative laws and regulations. In such cases, figures after application of such restrictions, mitigations, etc. are indicated.
"Floor-arearatio" is the ratio of the total floor area of the building to the site area as stipulated in Article 52 of the Building Standards Act and indicates the maximum figures stipulated in the city plan in accordance with the zoning, etc. Pursuant to Article 52, Paragraph 2 or Paragraph 9 of the Building Standards Act, restrictions due to frontage road width rules or mitigations due to specified road rules may apply in some cases. There are cases in which separate restrictions, mitigations, etc. may apply in accordance with the Building Standards Act or other administrative laws and regulations. In such cases, figures after application of such restrictions, mitigations, etc. are indicated.
If more than one zoning exists for one property, pursuant to Article 53, Paragraph 2 or Article 52, Paragraph 7 of the Building Standards Act, "Building-to- land ratio" and "Floor-area ratio" indicate the weighted average figures in accordance with the size of area of each zoning that are on the design drawing / completion drawing, etc. from the time of construction.
Companies contracted for building design, construction and inspection are listed by name of the companies at the time of design, construction and

inspection of the Asset to Be Acquired.

6. Concerning the description of "Overview of leasing"

For all Assets to Be Disposed and Asset to Be Acquired, a master lease agreement with Starts Amenity Corporation as a lessee and a sublessor is concluded or scheduled to be concluded among Starts Proceed, the trustee and Starts Amenity Corporation at the time of disposition or acquisition by Starts Proceed. Thus "Total number of tenants" indicates the number with the master lease company as a tenant as of now or after the acquisition.
"Number of leased units (Total number of leasable units)," "Leased floor area," "Total leasable floor area," "Annual rent revenue" and "Security and guarantee deposits, etc." are indicated in accordance with the same standards as the description of notes for the table illustrated in "Part I. Fund Information, Item 1. Situation of the Fund, 5. Management Status, (2) Investment Assets, 3) Other Major Investment Assets, (iv) Overview of Leasing Status, a. Overview of Leasing Status" set out in the Securities Report. "Number of leased parking units (Total number of leasable parking units)" is indicated in accordance with the same standards as the description of notes at the beginning of "Part I. Fund Information, Item 1. Situation of the Fund, 5. Management Status, (2) Investment Assets, 3) Other Major Investment Assets, (vi) Individual Overview of Real Estate in Trust for Acquired Assets" set out in the Securities Report.
"Occupancy rate" is the ratio of leased floor area to each tenant to the total leasable floor area of each property and is rounded off to the first decimal place.

7. "Overview of appraisal report" describes the content indicated in the appraisal report prepared for the Assets to Be Disposed and Asset to Be Acquired.

8. Concerning the description of "Overview of building condition evaluation report"

Contents described in the building condition evaluation report and the seismic risk evaluation report that were prepared for the Assets to Be Disposed and Asset to Be Acquired are provided.
"Building replacement value" is the total amount of appropriate costs required assuming to reconstruct the subject building on the date of evaluation.
"Long-termrepair costs" is the total amount of expected long-term repair costs (12 years) based on the building condition evaluation report.
Figures of "PML" are the figures in the report prepared by Tokio Marine & Nichido Risk Consulting Co., Ltd. "PML" represents the probable maximum loss that the subject facility or group of facilities may suffer from an earthquake with a 10% probability of exceedance in 50 years (earthquake

corresponding to a 475-year return period) by expressing the amount of physical loss corresponding to a 90% non-exceedance probability in the event of such earthquake as a percentage of the building replacement value.

"Collateral" describes the existence/non-existence of collateral as on the date of disposition and acquisition of the Assets to Be Disposed and Asset to Be Acquired.
Concerning the description of "Special notations / Status of the property (structure and other matters that have significant impact on the price of the investment property)"

In principle, it describes (1) the rights of third parties other than the tenants housed in the Assets to Be Disposed and Asset to Be Acquired and restrictions, etc. based on such rights, and (2) restrictions, etc. from administrative laws and regulations related to the Assets to Be Disposed and Asset to Be Acquired, as of today. In case a specific description refers to fact situations as on the date of disposition and acquisition by Starts Proceed, description is made based on future prediction that is as rational as possible as of today.
When the type of a specified asset that Starts Proceed is acquiring is trust beneficiary interest, description of "acquired by Starts Proceed" also refers to acquisition by Starts Proceed through trust beneficiary interest. In such cases, legal owner or right holder of the real estate that is the trust asset of the trust

beneficiary interest is the trustee, and Starts Proceed acquires the trust beneficiary interest.

11. "Area/Property characteristics" is based on the description on the appraisal report, market report, etc. prepared for the Asset to Be Acquired.

4. Overview of Appraisal Report of the Assets to Be Disposed and Asset to Be Acquired

(1) Overview of Appraisal Report of the Assets to Be Disposed

			Property name	Proceed Yachiyo Midorigaoka I


			Appraisal value		386,000 thousand yen
			Appraiser	Asset Research Inc.

			Date of appraisal	October 31, 2020

					(Unit: thousand yen)
			Item	Amount	Details

Income approach value	386,000	Estimated by relating income approach value based on direct
capitalization method and value based on DCF method

	Value based on direct capitalization	391,000	Assessed by returning net income (NCF) that is stable over the medium to
	method	long term by capitalization rate

		Operating revenue	30,819	-

					Assessed gross income that is stable over the medium to long term, taking
			Effective gross income	32,530	into account rent based on the current lease agreement, new rent assumed
					when the property is newly leased, etc.
					Assessed by taking into account the current lease agreement conditions
			Vacancy loss, etc.	1,711	and setting an occupancy rate (vacancy rate) that is stable over the
					medium to long term
		Operating expenses	6,109	-

			Maintenance expenses	764	Assessed based on current terms and conditions of the agreement, past
			results of the property and that of similar properties

			Utility expenses	408	Assessed based on current terms and conditions of the agreement, past
			results of the property and that of similar properties

					Repair expenses: Recorded 30% of the levelled amount of the estimate in
			Repair expenses	389	the engineering report. Expenses to restore original state: Assessed taking
			into account the levels, actual results and turnover rates of similar

					properties
			PM fees	894	Assessed based on the current agreement, the level of similar properties, etc.
			Tenant solicitation expenses,	741	Assessed based on the current agreement
			etc.

			Taxes and public dues	2,821	Assessed based on actual results considering fluctuation rate, age
			depreciation, etc.

			Non-life insurance fees	80	Recorded actual amount based on non-life insurance policy, etc.

			Other expenses	12	Assessed based on past results

		Net operating income (NOI)	24,710	-
			Gain on management of		Assessed by multiplying the amount which is obtained by subtracting
			income from lump-sum	22	vacancy loss equivalent from the amount of security deposit, etc. by yield
			payment		at 1.0%
			Capital expenditures	864	Recorded the average of accumulated total amount of renewal expenses
			for facilities, etc. over the past 12 years stated in the engineering report

		Net income (NCF)	23,868

		Capitalization rate	6.1%	Assessed by reflecting fluctuation risks of profit and principal, etc. into
		the discount rate

	Value of earnings calculated by	385,000	-
	discounted cash flow (DCF) method

					Assessed based on the basis yield comprehensively taking into account
		Discount rate	5.8%	market trends, etc. after considering risk factors of regional
					factors/individual characteristics of the property
					Assessed based on capitalization rate taking into account future
		Terminal capitalization rate	6.2%	unpredictability of fluctuation in net income, future deterioration of
					buildings and sales risks
Cost method value	648,000	-
	Land ratio	61.0%	-

	Building ratio	39.0%	-

Other items considered by real estate appraisal agent upon appraisal

Since demand for the property comes mostly from investors emphasizing profitability, appraisal value was determined based on income approach value using cost method value only as reference.

			Property name	Proceed Yachiyo Midorigaoka II

			Appraisal value		348,000 thousand yen
			Appraiser	Asset Research Inc.
			Date of appraisal	October 31, 2020
					(Unit: thousand yen)
			Item	Amount	Details
Income approach value	348,000	Estimated by relating income approach value based on direct
capitalization method and value based on DCF method

	Value based on direct capitalization	352,000	Assessed by returning net income (NCF) that is stable over the medium to
	method	long term by capitalization rate

		Operating revenue	27,572	-
					Assessed gross income that is stable over the medium to long term, taking
			Effective gross income	29,114	into account rent based on the current lease agreement, new rent assumed
					when the property is newly leased, etc.
					Assessed by taking into account the current lease agreement conditions
			Vacancy loss, etc.	1,542	and setting an occupancy rate (vacancy rate) that is stable over the
					medium to long term
		Operating expenses	5,415	-
			Maintenance expenses	710	Assessed based on current terms and conditions of the agreement, past
			results of the property and that of similar properties

			Utility expenses	228	Assessed based on current terms and conditions of the agreement, past
			results of the property and that of similar properties

					Repair expenses: Recorded 30% of the levelled amount of the estimate in
			Repair expenses	346	the engineering report. Expenses to restore original state: Assessed taking
			into account the levels, actual results and turnover rates of similar

					properties.
			PM fees	801	Assessed based on the current agreement, the level of similar properties,
			etc.

			Tenant solicitation expenses,	659	Assessed based on the current agreement
			etc.

			Taxes and public dues	2,588	Assessed based on actual results considering fluctuation rate, age
			depreciation, etc.

			Non-life insurance fees	71	Recorded actual amount based on non-life insurance policy, etc.
			Other expenses	12	Assessed based on past results
		Net operating income (NOI)	22,157	-
			Gain on management of		Assessed by multiplying the amount which is obtained by subtracting
			income from lump-sum	20	vacancy loss equivalent from the amount of security deposit, etc. by yield
			payment		at 1.0%
			Capital expenditures	732	Recorded the average of accumulated total amount of renewal expenses
			for facilities, etc. over the past 12 years stated in the engineering report

		Net income (NCF)	21,445
		Capitalization rate	6.1%	Assessed by reflecting fluctuation risks of profit and principal, etc. into
		the discount rate

	Value of earnings calculated by	347,000	-
	discounted cash flow (DCF) method

					Assessed based on the basis yield comprehensively taking into account
		Discount rate	5.8%	market trends, etc. after considering risk factors of regional
					factors/individual characteristics of the property
					Assessed based on capitalization rate taking into account future
		Terminal capitalization rate	6.2%	unpredictability of fluctuation in net income, future deterioration of
					buildings and sales risks
Cost method value	607,000	-
	Land ratio	62.6%	-
	Building ratio	37.4%	-

Other items considered by real estate appraisal agent upon appraisal

Since demand for the property comes mostly from investors emphasizing profitability, appraisal value was determined based on income approach value using cost method value only as reference.

(2) Overview of Appraisal Report of the Asset to Be Acquired

			Property name	Proceed Nagareyama Otakanomori

			Appraisal value		1,100,000 thousand yen
			Appraiser	Chuo Real Estate Appraisal Co., Ltd.
			Date of appraisal	March 1, 2021
					(Unit: thousand yen)
			Item	Amount	Details
					Determined by emphasizing income approach value obtained through the
Income approach value	1,100,000	DCF method while also relating value based on direct capitalization
					method
	Value based on direct capitalization	1,100,000	Assessed by returning net income (NCF) that is stable over the medium to
	method	long term by capitalization rate

		Operating revenue	64,559	-
					Assessed gross income that is stable over the medium to long term,
			Effective gross income	66,397	considering the building lease agreement, profitability of the property,
			etc. and taking into account new rent assumed when the property is newly

					leased, etc.
					Assessed after setting an occupancy rate (vacancy rate) that is stable over
			Vacancy loss, etc.	1,838	the medium to long term, taking into account past occupancy results, etc.
					of the property and similar properties
		Operating expenses	17,206	-
			Maintenance expenses	0	Not recorded as it is included in management expenses
			Utility expenses	0	Not recorded as it is included in management expenses
			Repair expenses	1,064	Assessed based on the engineering report, past results, etc.
			PM fees	1,870	Assessed based on the business entrustment agreement
			Tenant solicitation expenses,	1,997	Assessed based on the business entrustment agreement and past results
			etc.

			Taxes and public dues	5,423	Assessed based on the most recent actual amount, etc.
			Non-life insurance fees	118	Recorded estimated amount
			Other expenses	6,734	Assessed based on past results
		Net operating income (NOI)	47,353	-
			Gain on management of
			income from lump-sum	93	Assessed assuming management yield at 1.0%
			payment
			Capital expenditures	0	Separate recording is judged to be unnecessary due to the recording of
			reserve fund for repairs

		Net income (NCF)	47,446	-
					Assessed based on the basis yield comprehensively taking into account
		Capitalization rate	4.3%	transaction yield of similar properties within the same supply and demand
					zone, risks from individuality/regional factors of the property, etc.
	Value of earnings calculated by	1,100,000	-
	discounted cash flow (DCF) method

		Discount rate	4.1%	Assessed based on capitalization rate reflecting current economic growth
		rate, market trends outlook, etc.


					Assessed based on capitalization rate taking into account risk premiums
		Terminal capitalization rate	4.5%	such as price fall risk due to deterioration from aging, market fluctuation
					risk, etc.
Cost method value	924,000	-
	Land ratio	34.5%	-
	Building ratio	65.5%	-

Other items considered by real estate appraisal agent upon appraisal

Since demand for the property comes mostly from investors emphasizing profitability, appraisal value was determined based on income approach value using cost method value only as reference.

Capital relationship

Personnel relationship

Business relationship

Related party or not

Capital relationship

Personnel relationship

Business relationship

Related party or not

Starts Development Corporation

3-1-8Nihonbashi, Chuo-ku,Tokyo

Kazuyoshi Yoshizawa, President

Real estate development, planning and sales

320 million yen

October 3, 2005

-4,645million yen

33,628 million yen

Starts Corporation Inc. (100%)

5. Overview of Counterparty of the Transaction

(1) Overview of Buyer (as of March 31, 2020)

Name

Location

Representative

Main business activities

Capital

Established

Net assets

Total assets

Major shareholder and shareholding ratio

Relationship with Starts Proceed and the Asset Management Company

The company is a subsidiary whose shares issued and outstanding are wholly owned by Starts Corporation Inc., the parent company of the Asset Management Company. Accordingly, the company falls within the scope of an interested party, etc. as defined in the Investment Trusts Act.

There is no personnel relationship to report concerning Starts Proceed and the Asset Management

Company with the company.

The company has concluded a pipeline support agreement with the Asset Management Company and has been providing the Asset Management Company with property information, warehousing function, etc. Starts Proceed acquired three properties (3,093 million yen) from the company in the fiscal period ended October 2020.

The company does not fall within the scope of a related party of Starts Proceed. The company is a fellow subsidiary of the Asset Management Company under the same parent company as described above and thus falls within the scope of a related party of the Asset Management Company.

(2) Overview of Seller (as of March 31, 2020)

Name	Starts Corporation Inc.
Location	3-4-10 Nihonbashi, Chuo-ku, Tokyo
Representative	Kazuo Isozaki, President
Main business activities	Holding company of Starts Group
Capital	11,039 million yen
Established	September 30, 1972
Net assets	52,507 million yen
Total assets	145,581 million yen
Major shareholder and	K.K. Toyosu (20.73%)
shareholding ratio	Custody Bank of Japan, Ltd. (12.15%)

Relationship with Starts Proceed and the Asset Management Company

The company is the parent company owning all shares issued and outstanding of the Asset Management Company. Accordingly, the company falls within the scope of an interested party, etc. as defined in the Investment Trusts Act.

A director of the company also serves as an auditor of the Asset Management Company.

The company has concluded a pipeline support agreement with the Asset Management Company and has been providing the Asset Management Company with property information, warehousing function, etc. The company falls within the scope of a related party of Starts Proceed. The company is the parent company of the Asset Management Company as described above and thus falls within the scope of a related party of the Asset Management Company.

6. Transaction with Interested Parties of the Transaction

Starts Development Corporation, the buyer of the Assets to Be Disposed, Starts Corporation Inc., the seller of the Asset to Be Acquired, Starts Amenity Corporation, to which master lease and property management after the acquisition of the Asset to Be Acquired are planned to be entrusted, Starts Pitat House Co., Ltd., to which leasing business of the property management is subcontracted, and Starts Trust Co., Ltd., to which trust services of the Asset to Be Acquired are planned to be entrusted, each fall within the scope of an interested party, etc. of the Asset Management Company as defined in the Investment Trusts Act. Accordingly, all transactions have been determined after following appropriate procedures based on the internal rules of the Asset Management Company and pursuant to standards stipulated by laws and regulations.

Overview of Planned Company Entrusted with Master Lease and Property Management (as of March 31, 2020)

Name	Starts Amenity Corporation
Location	8-4-3 Ichinoe, Edogawa-ku, Tokyo
Representative	Manabu Nakamatsu, President
Main business	Real estate management and operation, construction, interior finishing and other businesses
activities

Capital	350 million yen
Established	April 1, 1985
	The company is a subsidiary whose shares issued and outstanding are wholly owned by Starts
	Corporation Inc., the parent company of the Asset Management Company. Accordingly, the company
	falls within the scope of an interested party, etc. as defined in the Investment Trusts Act.
	There is no personal relationship to report concerning Starts Proceed and the Asset Management
Relationship with	Company with the company.
Starts Proceed and	The company is leasing all properties excluding one of the assets acquired in a lump based on the
the Asset Management	master lease agreement. The company has concluded a pipeline support agreement with the Asset
Company	Management Company and has been providing the Asset Management Company with property
	information, warehousing function and such.
	The company does not fall within the scope of a related party of Starts Proceed. The company is a
	fellow subsidiary of the Asset Management Company under the same parent company as described
	above and thus falls within the scope of a related party of the Asset Management Company.

Overview of Planned Company Entrusted with Trust Services (as of March 31, 2020)

Name	Starts Trust Co., Ltd.
Location	3-1-8 Nihonbashi, Chuo-ku, Tokyo
Representative	Sadao Watanabe, President
Main business	Trust services, purchase/sales of trust beneficiary interest in real estate, purchase/sales and leasing
activities	agent and brokerage, etc. of real estate
Capital	300 million yen
Established	September 3, 2009
	The company is a subsidiary whose shares issued and outstanding are wholly owned by Starts
	Corporation Inc., the parent company of the Asset Management Company. Accordingly, the company
Relationship with	falls within the scope of an interested party, etc. as defined in the Investment Trusts Act.
Starts Proceed and	There is no personal relationship to report concerning Starts Proceed and the Asset Management
the Asset Management	Company with the company.
Company	The company does not fall within the scope of a related party of Starts Proceed. The company is a
	fellow subsidiary of the Asset Management Company under the same parent company as described
	above and thus falls within the scope of a related party of the Asset Management Company.

Overview of Brokerage Not applicable.
Status of Parties Related to the Acquisition of the Asset to Be Acquired

Property	Property		Current owner			Previous owner
No.	name


						(Land)	Other than one with a
		Name	Starts Corporation Inc.	Name	relationship of special
							interest

Proceed

C-85 Nagareyama

Otakanomori

Relationship	Please refer to "5. Overview of
with related	Counterparty of the Transaction"
parties	above

Acquisition	Property developed by the current
background and
owner
reason, etc.

Acquisition price Omitted as the current owner's ownership exceeds one year

Acquisition	(Land)	February 1,	2019
period	(Building) February 4,	2020

Relationship with related parties

Acquisition background and reason, etc.

Acquisition

price

Acquisition

period

9. Future Outlook

Because the impact on the management status for the fiscal period ending April 2021 (November 1, 2020 to April 30, 2021) and the fiscal period ending October 2021 (May 1, 2021 to October 31, 2021) announced on December 15, 2020 is minimal, there will be no revisions to the management status forecast.

[Attachment 1] Portfolio List After the Transaction

[Attachment 2] Photos and Map of the Asset to Be Acquired

Distribution: Kabuto Club, Ministry of Land, Infrastructure, Transport and Tourism Press Club, and Ministry of Land, Infrastructure, Transport and Tourism Press Club for Construction Publications
Starts Proceed website:https://www.sp-inv.co.jp/en/

[Attachment] Portfolio List After the Disposition

				Acquisition price

Property		Property name		Acquisition price			Investment
				share
No.
			(thousand yen)

					(%)

				(Note 1)
						(Note 2)


C-1	Proceed Ichikawa	1,076,000	1.2
C-2	Proceed Toyocho	646,700	0.7
C-3	Proceed Kasai	688,700	0.8
C-4	Proceed Sangenjaya	555,900	0.6
C-5	Proceed Mizue	602,600	0.7
C-6	Proceed Funabashi Miyamoto	419,900	0.5
C-7	Proceed Minamikasai	303,500	0.3
C-9	Proceed Gyotoku	315,600	0.4
C-10	Proceed Makuharihongo	279,300	0.3
C-11	Proceed Minamigyotoku	287,300	0.3
C-12	Proceed Makuharihongo 2	223,400	0.3
C-14	Proceed Funabori	226,100	0.3
C-15	Proceed Takenozuka	169,400	0.2
C-16	Proceed Sengendai 2	86,700	0.1
C-17	Proceed Shoto	937,400	1.1
C-18	Proceed Sangubashi	497,600	0.6
C-19	Proceed Urayasu	431,400	0.5
C-20	Proceed Shinkoiwa	465,200	0.5
C-23	Proceed Toritsudaigaku	790,400	0.9
C-24	Proceed Toritsudaigaku 2	772,200	0.9
C-25	Proceed Honjoazumabashi	339,800	0.4
C-26	Proceed Meguro Aobadai	466,700	0.5
C-27	Proceed Suginami Miyamae	454,900	0.5
C-28	Proceed Ryogoku	443,900	0.5
C-29	Proceed Mita	1,537,200	1.7
C-30	Proceed Nakanoshimbashi	638,800	0.7
C-31	Proceed Kameido	339,000	0.4
C-32	Proceed Takadanobaba	223,700	0.3
C-33	Proceed Shinkoenji	742,100	0.8
C-34	Proceed Koenjiminami	277,400	0.3
C-35	Proceed Hasune	284,000	0.3
C-36	Proceed Oimachi	944,000	1.1
C-37	Proceed Jujo	533,000	0.6
C-38	Proceed Hakuraku	241,000	0.3
C-39	Proceed Shinmaruko	635,000	0.7
C-40	Proceed Motoyawata	307,000	0.3
C-41	Proceed Nishiarai	5,172,000	5.9
C-42	Proceed Chofu	460,500	0.5
C-43	Proceed TX Rokucho	156,800	0.2
C-44	Proceed Nakagawara	1,141,000	1.3
C-45	Proceed Oizumigakuen	268,300	0.3
C-46	Proceed Chitosekarasuyama	289,600	0.3
C-47	Proceed Mitaka	477,200	0.5
C-48	Proceed Kashiwa Est	732,000	0.8

						Acquisition price
Property		Property name				Acquisition price			Investment
						share
No.
				(thousand yen)

							(%)

						(Note 1)
								(Note 2)


C-49	Proceed Kashiwa Nord	689,000		0.8
C-50	Proceed Gyotokuekimae	331,000		0.4
C-51	Proceed Funabashi Honcho	531,700		0.6
C-52	Proceed Nishikawaguchi	881,000		1.0
C-53	Proceed Gumyoji	552,000		0.6
C-54	Proceed Tsurugamine	356,000		0.4
C-55	Proceed Sagamiotsuka	234,000		0.3
C-56	Proceed Shinozaki 2	913,300		1.0
C-57	Proceed Kashiwa Trois	537,100		0.6
C-58	Proceed Shinozaki Tower	1,564,000		1.8
C-59	Proceed Tobu Nerima	422,000		0.5
C-60	Proceed Yukigaya	323,000		0.4
C-61	Proceed Ichikawa Minami	687,000		0.8
C-62	Proceed Ichikawa Myoden	498,000		0.6
C-63	Proceed Fujisawa Kugenuma	729,000		0.8
C-64	Proceed Nihonbashi-horidomecho	1,485,800		1.7
C-65	Proceed TX Nagareyama Central Park	979,700		1.1
C-66	Proceed Gyotoku 2	830,000		0.9
C-67	Proceed Nishikasai	875,600		1.0
C-68	Proceed Kasai 2	750,000		0.8
C-69	Proceed Nihonbashi Honcho	2,449,000		2.8
C-70	Proceed Nishi Shinjuku	2,549,000		2.9
C-71	Proceed Unoki	917,000		1.0
C-72	Proceed Minamigyotoku 2	1,080,000		1.2
C-73	Proceed CO-Z East Building	1,830,000		2.1
C-74	Proceed CO-Z West Building	971,000		1.1
C-75	Proceed Shin Yokohama	4,330,000		4.9
C-76	Life Support Residence Funaboriekimae	380,000		0.4
C-77	Proceed Kinshicho	2,140,000		2.4
C-78	Proceed K2	1,170,000		1.3
C-79	Proceed K3 Annex	283,000		0.3
C-80	Proceed K5	269,000		0.3
C-81	Proceed Ichikawa Myoden II	800,000		0.9
C-82	The Parkhabio Yokohama Yamate	3,047,000		3.5
C-83	Proceed Monzennakacho	1,240,000		1.4
C-84	Proceed Maihama	1,029,000		1.2
C-85		Proceed Nagareyama Otakanomori			1,069,000			1.2
Tokyo metropolitan area major cites subtotal	66,602,400		75.5
G-8	Proceed Taikodori	403,400		0.5
G-11	Proceed Honamicho	275,000		0.3
G-13	Proceed Shinsakae	792,500		0.9
G-14	Proceed Chiyoda	309,300		0.4
G-15	Proceed Fukuoka Takamiya	453,600		0.5
G-17	Proceed Kanayama	1,022,000		1.2
G-18	Proceed Fukiage	499,000		0.6
G-19	Proceed Toyota		219,000		0.2

							Acquisition price
	Property			Property name			Acquisition price			Investment
							share
	No.
						(thousand yen)

								(%)

							(Note 1)
									(Note 2)


	G-21	Proceed Nishitenma	880,000		1.0
	G-22	Proceed Kobemotomachi	780,000		0.9
	G-23	Group Home Tanoshii Ie Taisho	158,000		0.2
	G-24	Proceed Kanayama 2	2,040,400		2.3
	G-25	Proceed Aratamabashi	2,129,600		2.4
	G-26	Proceed Bentencho	2,170,000		2.5
	G-27	Proceed Nagaikoendori	1,070,000		1.2
	G-30	Proceed Hyogoekimaedori	1,670,000		1.9
	G-31	Proceed Mizuho	535,000		0.6
	G-32	Proceed Osu	831,000		0.9
	G-33	Proceed Sendai Kozurushinden	698,000		0.8
	G-34	Proceed Sendai Kamisugi	1,560,000		1.8
	G-35	Proceed Kanayama 3	770,000		0.9
	Cabinet order designated cities subtotal		19,265,800		21.8
	R-2	Proceed Mito	383,700		0.4
	R-3	Proceed Mito 2	416,900		0.5
	R-4	Proceed Tsukuba Gakuentoshi	775,600		0.9
	R-5	Proceed Mito 3	824,000		0.9
Regional area major cities subtotal	2,400,200		2.7
Portfolio total				88,268,400		100.0

(Note 1) "Acquisition price" under "Acquisition price" is the transaction price stated in the trust beneficiary interest transaction agreement, etc. (excluding the various expenses, such as real estate transaction brokerage fee, required for the acquisition of the assets acquired).

(Note 2) "Investment share" under "Acquisition price" is the ratio of acquisition price of the assets acquired or the Asset to Be Acquired to the total acquisition price, and is rounded off to the first decimal place.

[Attachment 2] Photos and Map of the Asset to Be Acquired (C-85) Proceed Nagareyama Otakanomori

Location (Address): 1-2-3 Otakanomorikita, Nagareyama-shi, Chiba

Proceed Nagareyama

Otakanomori

Company analysis